Case Law Details
ACIT Vs Cvent India Pvt. Ltd. (ITAT Delhi)
ITAT Delhi held that ESOP (Employees Stock Option) expense is allowable expense under section 37(1) of the Income Tax Act in computing the income in profit and loss of business or profession.
Facts- During the course of assessment proceedings, AO noticed that assessee had claimed Employee Stock Option (ESOPs) expense of Rs.4,45,31,251/-. The assessee was asked to justify the claim of the expenditure. Assessee in response furnished detailed submissions but the same was not found acceptable to AO. AO noted that assessee did not furnish the break-up of expenses on shares exercise i.e. allotted during the year. He, therefore, held that the claim of the assessee cannot be allowed u/s 37(1) of the Act and accordingly disallowed Rs.4,45,31,251/-and made its addition.
Aggrieved by the order of AO, assessee carried the matter before CIT(A). CIT(A) held that AO was not justified in deleting the ESOP expenses. Aggrieved, revenue has preferred the present appeal.
Conclusion- The Hon’ble Delhi High Court in the case of PCIT v NDTV [398 ITR 57] held that expenditure arising on account of ESOP is an ascertained liability. Madras High Court in the case of CIT v PVP Ventures Ltd [2012] 211 Taxman 554 also held that discount on issue of shares to the employee under stock option scheme is an allowable expense in computing the income in profit and loss of business or profession.
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