Nuvama Wealth Management Limited Vs DCIT (ITAT Mumbai)
The appeal by Nuvama Wealth Management Limited (formerly Edelweiss Securities Limited) before the ITAT Mumbai challenged the revisional order of the Principal Commissioner of Income Tax (PCIT), passed under section 263 of the Income-tax Act, 1961. The PCIT had set aside the assessment framed under section 143(3) read with section 144B, directing a fresh examination of the assessee’s claim of deduction of ₹73.30 crore towards Employee Stock Option Plan (ESOP) expenditure.
The PCIT held that the assessee had recovered ₹58.02 crore from its holding company, Edelweiss Financial Services Limited (EFSL), and that only the balance of ₹15.27 crore was allowable as deduction. He concluded that the Assessing Officer (AO) had not conducted proper verification, rendering the order erroneous and prejudicial to the Revenue.
However, the ITAT found that the AO had made a detailed and pointed enquiry during assessment. The record showed that the AO had specifically scrutinised the ESOP claim through notices under sections 143(2) and 142(1), sought justifications, and obtained detailed submissions, computations, and documentary evidence, including the ESOP scheme, tax deduction proofs, and financial statements. The AO had even issued a show-cause notice proposing disallowance, to which the assessee replied comprehensively. After examining all submissions, the AO accepted the claim, explicitly recording his satisfaction in the assessment order.
