DCIT Vs Goldman Sachs (India) Securities Pvt. Ltd (ITAT Mumbai)
ITAT Mumbai held that discount on issue of Employee Stock Option Plan [ESOP] is allowable as deduction in computing income under the head profits and gains of the business. Accordingly, appeal of revenue dismissed and order of CIT(A) upheld.
Facts- AO completed the assessment u/s. 143(3) read with section 144C(1) of the Act on 28.12.2016 by making disallowances towards Employee Stock Option Plan (ESOP) cost of Rs. 5 6,44,29,191/ -, holding the same to be notional and contingent in nature; and charges of Rs. 37,11,074/- paid to the stock exchanges, treating them as penal in nature and hence not allowable under section 37(1) of the Act.
CIT(A) deleted both the additions. Being aggrieved, revenue has preferred the present appeal.
Conclusion- The Special Bench of the Bangalore Tribunal in the case of Blocon Ltd 144 ITD 21 (Bang) wherein on similar facts the discount on issue of ESOP was allowed as deduction.
Held that the assessee has brought to our notice, for the first time, that the disallowance of Rs.564,429,191/ – includes an amount of Rs.153,747,734/– towards bonus paid to employees, which was inadvertently included in the ESOP cost. Since this factual aspect requires verification at the end of the Assessing Officer, we deem it appropriate to restore this limited issue to his file for necessary verification. Subject to such verification, the ESOP cost is to be allowed as deduction, in terms of the consistent view already taken by the Tribunal in assessee’s own case. The ground of the appeal are accordingly allowed for statistical purposes.
