Case Law Details
DCIT Vs Cleartrip Private Limited (ITAT Mumbai)
ITAT Mumbai held that disallowance of employee stock option expenses alleging it to be capital expenditure is unsustainable in law in as much as such expenditure are revenue in nature and hence allowable.
Facts- Revenue has preferred the present appeal contesting against deletion of the addition made by AO on account of Share issue receipt of ₹33,33,15,000/- received by Assessee from its Holding Company Cleartrip Inc. Mauritius. Addition is made by AO based on past assessment years and deleted by CIT(A) based on past years appellate orders.
Whereas, assessee has preferred the present appeal against disallowance of expenditure towards employee stock option scheme. The assessee has also debited a sum of ₹ 6,065,232/– to the profit and loss account because of employee stock option scheme cost. AO noted that it has been granted by the ultimate holding company i.e. clearTrip incorporation Cayman Island. AO held that such expenditure are capital expenditure and cannot be allowed as revenue expenditure to the assessee. Accordingly, the above sum was disallowed.
Conclusion- Held that the assessee has fairly demonstrated the identity, creditworthiness and the genuineness of the transition by producing extensive material independently for this year also. Proviso to section 68 does not apply to a non-resident investor. Even otherwise assessee has shown nature and source of funds in the hands of Nonresident 100 % holding company investor also independently. Hence, we confirm the order of the learned CIT (A) deleting the above addition. Accordingly, we do not find any merit in the appeal of the learned Assessing Officer. Hence, the solitary ground of appeal against the deletion of addition of ₹33,33,15,000/- is dismissed.
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