DCIT CIRCLE-20(1), NEW DELHI vs. PROCESS NINE TECHNOLOGIES (P) LTD, NEW DELHI

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ITA 9310/DEL/2019Status: DisposedITAT Delhi02 May 2023AY 2016-176 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the CIT(A)'s deletion of the share premium addition, finding the DCF method acceptable and the AO's rejection based on subsequent performance incorrect. The Tribunal also upheld the deletion of ESOP expenses, relying on jurisdictional High Court decisions.

What were the facts?

The Revenue appealed against the deletion of additions made on account of share premium and ESOP expenses. The assessee had received share premium based on a DCF valuation report and claimed ESOP expenses.

What were the issues?

Whether share premium received in excess of face value is taxable when based on a DCF valuation, and whether ESOP expenses are allowable.

Which sections of the Income-tax Act were involved?

Section 56(2)(viib)

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(1)Show list

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Income Tax Appellate Tribunal, DELHI BENCH, ‘F’: NEW DELHI

Before: SHRI SHAMIM YAHYA & SHRI CHALLA NAGENDRA PRASAD

For Respondent: DR Assessee by Sh. Ashwani Kumar, CA
Hearing: 27.04.2023Pronounced: 02.05.2023

CIT(A) has passed a well reasoned order and rightly relied upon the order of the ITAT in the case of Cinestaan Entertainment (P) Ltd. vs Income Tax Officer, [(2019) 106 taxmann.com 300 (Del.-Trib.)]. Accordingly, we do not find any infirmity in the order of the Ld. CIT(A), hence we uphold the same.

Apropos the issue of ESOP Expenses

9.

The Assessing Officer disallowed the claim of Rs.3,40,297/- made by the assessee company on account of ESOP expenses by relying on the Bangalore Special Bench of ITAT order dated 16.07.2013 in the case of Biocon Ltd. vs DCIT.

10.

Upon assessee’s appeal, the ld. CIT(A) deleted the addition by holding as under:-

“7.3. I have gone through the assessment order and the submissions made on behalf of the assessee company by the AR and find that the jurisdictional Delhi High Court in the case of Lemon Tree Hotels and New Delhi Television Ltd. has held that expenditure under ESOP is an allowable expenses and respectfully following the same I hold that the claim of Rs.3,40,297/-.” 11. Against the above order, the Revenue is in appeal before us.

12.

We have heard both the parties and perused the records. We find that this issue is squarely covered by the decision of the jurisdictional Delhi High Court in the case of Lemon Tree Hotels and New Delhi Television Ltd. wherein it has been held that expenditure under ESOP is an allowable expense. Hence, we find that the Ld. CIT(A) has passed a correct order and we do not need to interference on our part. Accordingly, this appeal by the Revenue is dismissed.

13.

In the result, this appeal of the Revenue stands dismissed.

Order pronounced in the open court on 02nd May, 2023.

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