ESOP

Process of ESOP Allotment in Listed companies

Company Law - Section 62 (1) (b) of Companies Act, 2013 states that where at any time, a company having a share capital proposes to increase its subscribed capital by the issue of further shares, such shares shall be offered to employees under a scheme of employees stock option, subject to special resolution passed by company and subject to such condit...

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Everything about Employee Stock Options Plans (ESOPs)

Company Law - Almost all of you must have heard the stories of many drivers, office assistants and secretaries of Infosys becoming millionaire. This all could become possible due to a system of making such stakeholders as stockholder of the Company by granting them what is generally known as ESOP( Employee Stock Options Plan)....

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ESOP vs Sweat Equity -Employee Retention Mechanism Instrument

Company Law - This article throws light on the situation pertaining to the aspect of employee retention for basic start up business and businesses which are already established. Promoters today have huge cost of retention and gone are those days when people stay for 30-40 years in a company i.e from their young 20’s to their super annuation 60...

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Procedure & Provisions for issue of ESOP by unlisted company

Company Law - 1. Draft the ESOP scheme. 2. Convene the Board Meeting and pass the scheme. 3. Call the general meeting to approve the scheme by Shareholders. The following disclosure will be made in the explanatory statement annexed to the notice for passing of the resolution-...

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Guidance Note on SEBI (Prohibition of Insider Trading) Regulations, 2015.

Company Law - 1. Does the contra trade restriction (for a period not less than six months) under clause 10 of Schedule B of the Regulations also apply to the exercise of ESOPs and the sale of shares so acquired?...

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Discount on ESOP being in the nature of employee cost, allowed u/s 37 subject to adjustment for lapsed /unvested options

ACIT Vs People Interactive India Private Ltd. (ITAT Mumbai) - ITAT Mumbai held In the case of ACIT vs. People Interactive India Private Ltd. that the issue in hand is squarely covered by the decision of Hon’ble Special Bench-Bangalore Tribunal in (2013) 35 taxmann.com 335(SB) Biocon Limited v. DCIT (LTU) in favour of the assessee company whereby the Hon’bl...

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Expenses debited as cost of ESOP in profit and loss account allowable

CIT Vs Lemon Tree Hotels Ltd (Delhi High Court) - In case of CIT vs. Lemon Tree Hotels Ltd Following the Madras High Court in CIT-III Chennai v. PVP Ventures Ltd. (TC(A) No. 1023 of 2005) it was held by Delhi High Court that ESOP could be debited to the profit and loss account of the Assessee....

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Discount on shares under ESOPs is allowable expenditure

M/s GlaxoSmithKline Consumer Healthcare Ltd. Vs The JCIT (ITAT Chandigarh) - ITAT Chandigarh held In the case of M/s GlaxoSmithKline Consumer Healthcare Ltd vs. The JCIT that it is a settled law that an unascertained liability has to be allowed even if the same is quantified on a future date....

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ESOP – Difference Between Market & Offer Price is Deductible Expenditure

CIT Vs PVP Ventures Limited (Madras High Court) - On the issue of expenditure of 66.82 lakhs towards the issue of shares to the Employees Stock Option is concerned, the Tribunal pointed out that the shares were issued to the employees only for the interest of the business of the assessee to induce employees to work in the best interest of the asses...

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Difference b/w Market & Offer Price of ESOP is deductible expenditure

Additional Commissioner of Income-tax, Circle 1(1) Vs Spray Engineering Devices Ltd. (ITAT Chandigarh) - The issue raised vide present grounds of appeal is in relation to the equity shares to be issued to the employees as sweat equity. The assessee vide special resolution passed at the extraordinary general meeting held on 31.3.2006 had allotted 394692 number of equity shares @ Rs. 106.26 amounting to ...

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Recent Posts in "ESOP"

Process of ESOP Allotment in Listed companies

Section 62 (1) (b) of Companies Act, 2013 states that where at any time, a company having a share capital proposes to increase its subscribed capital by the issue of further shares, such shares shall be offered to employees under a scheme of employees stock option, subject to special resolution passed by company and subject to such condit...

Read More
Posted Under: Income Tax |

Everything about Employee Stock Options Plans (ESOPs)

Almost all of you must have heard the stories of many drivers, office assistants and secretaries of Infosys becoming millionaire. This all could become possible due to a system of making such stakeholders as stockholder of the Company by granting them what is generally known as ESOP( Employee Stock Options Plan)....

Read More
Posted Under: Income Tax | ,

ESOP vs Sweat Equity -Employee Retention Mechanism Instrument

This article throws light on the situation pertaining to the aspect of employee retention for basic start up business and businesses which are already established. Promoters today have huge cost of retention and gone are those days when people stay for 30-40 years in a company i.e from their young 20’s to their super annuation 60...

Read More
Posted Under: Income Tax |

Discount on ESOP being in the nature of employee cost, allowed u/s 37 subject to adjustment for lapsed /unvested options

ACIT Vs People Interactive India Private Ltd. (ITAT Mumbai)

ITAT Mumbai held In the case of ACIT vs. People Interactive India Private Ltd. that the issue in hand is squarely covered by the decision of Hon’ble Special Bench-Bangalore Tribunal in (2013) 35 taxmann.com 335(SB) Biocon Limited v. DCIT (LTU) in favour of the assessee company whereby the Hon’ble Special Bench has held that the discou...

Read More

Expenses debited as cost of ESOP in profit and loss account allowable

CIT Vs Lemon Tree Hotels Ltd (Delhi High Court)

In case of CIT vs. Lemon Tree Hotels Ltd Following the Madras High Court in CIT-III Chennai v. PVP Ventures Ltd. (TC(A) No. 1023 of 2005) it was held by Delhi High Court that ESOP could be debited to the profit and loss account of the Assessee....

Read More

Discount on shares under ESOPs is allowable expenditure

M/s GlaxoSmithKline Consumer Healthcare Ltd. Vs The JCIT (ITAT Chandigarh)

ITAT Chandigarh held In the case of M/s GlaxoSmithKline Consumer Healthcare Ltd vs. The JCIT that it is a settled law that an unascertained liability has to be allowed even if the same is quantified on a future date....

Read More

Procedure & Provisions for issue of ESOP by unlisted company

1. Draft the ESOP scheme. 2. Convene the Board Meeting and pass the scheme. 3. Call the general meeting to approve the scheme by Shareholders. The following disclosure will be made in the explanatory statement annexed to the notice for passing of the resolution-...

Read More
Posted Under: Income Tax |

Guidance Note on SEBI (Prohibition of Insider Trading) Regulations, 2015.

1. Does the contra trade restriction (for a period not less than six months) under clause 10 of Schedule B of the Regulations also apply to the exercise of ESOPs and the sale of shares so acquired?...

Read More
Posted Under: Income Tax |

ESOP – All You want to know

The respective provisions of the Act and the Rules can be read in two perspectives i.e. provisions governing – Issue of ESOPs and Trust set-up, funding and operation for administration of ESOPs. The provisions relating to issue of ESOPs are common for all the unlisted Companies irrespective of their status being Private or Public; where...

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Posted Under: Income Tax |

Allowability of ESOP expenditure

CA Nitul Mehta What is an ESOP? In today’s world employers have become increasingly motivated to make the employees a part of their wealth creation process.  A scheme of Employee Stock Option (‘ESOP’) is one such process where employers reward employees by making them partners/ rightful owners in wealth which they have build togeth...

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Posted Under: Income Tax |
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