Linde Engineering India Private Ltd. Vs DCIT (ITAT Ahmedabad)
Summary: The ITAT Ahmedabad considered the assessee’s challenge to adjustments made while processing its return under Section 143(1), the addition of Rs.2,92,09,322 under Section 41(1), and the disallowance of Rs.51,68,730 towards Employee Stock Option Plan (ESOP) expenses. The assessee had filed its return for Assessment Year 2021-22 declaring total income of Rs.191,58,60,950. The return was subsequently selected for scrutiny and notice under Section 143(2) was issued on 28.06.2022. CPC processed the return under Section 143(1), making aggregate adjustments of Rs.9,50,34,695 relating to bonus/incentive, leave encashment and Section 41(1).
The Assessing Officer subsequently completed assessment under Section 143(3), adopting the income determined under Section 143(1) as the starting point and making a further addition of Rs.51,68,730 towards ESOP expenses. The CIT(A) confirmed the action of the Assessing Officer.
Before the Tribunal, the assessee argued that once scrutiny proceedings under Section 143(2) had commenced, the CPC could not process the return under Section 143(1), and that the Section 143(1) adjustments should have been independently examined in the scrutiny assessment. It also contended that the Section 143(1) intimation was time-barred and that the Rs.2,92,09,322 relating to old liabilities written back had already been credited to the Profit and Loss Account and offered to tax. Regarding ESOP expenses, the assessee submitted that the expenditure represented employee compensation and was allowable under Section 37(1).
