PCIT Vs Religare Securities Ltd (Delhi High Court)
Delhi High Court held that difference between purchase price of Stock Appreciation Right and the sale price at the time of exercise by the employees, holding the same to be revenue loss allowable as business deduction as expenditure incurred as per SEBI guidelines.
Facts- Revenue has preferred the present appeal mainly contesting that ITAT has erred in deleting the disallowance of Rs.2,04,87,736/- confirmed by the ld. CIT(A) on account of the difference between purchase price of Stock Appreciation Right ( SAR) and the sale price of such SAR at the time of exercise by the employees, holding the same to be revenue loss allowable as business deduction.
Conclusion- Held that the allotment of shares was done by the assessee in strict compliance of SEBI regulations, which mandate that the difference between the market prices and the price at which the option is exercised by the employees is to be debited to the Profit and Loss Account as an expenditure.
The expenditure in this behalf was an ascertained liability, thus the expenditure incurred being on lines of the SEBI guidelines, there could be no interference in the relief granted by the Assessing Authority for the expenditure arising on account of Employees Stock Option Plan. This expenditure incurred as per SEBI guidelines and granted by the Officer could not be considered as erroneous one calling for exercise of jurisdiction under Section 263 of the Act.
