Cadence Design Systems India Pvt. Ltd. Vs PCIT (Delhi High Court)
Delhi High Court Grants Full Stay on Tax Demand Because Jurisdictional Precedent Favoured Assessee; 20% Tax Deposit Condition Set Aside Due to Binding High Court Ruling on ESOP Issue; Complete Stay of Recovery Allowed Because High Court Judgments Bind Tax Authorities; Delhi High Court Quashes Tax Recovery Condition in ESOP Expenditure Dispute.
The Delhi High Court considered two writ petitions filed under Articles 226 and 227 of the Constitution challenging an order dated 15.09.2025 passed by the Principal Commissioner of Income Tax, Delhi-1. The impugned order had effectively rejected the petitioner’s request for stay of tax demand for Assessment Years (AYs) 2020-21 and 2021-22 by directing the petitioner to deposit 20% of the disputed demand.
The dispute arose after the Assessing Officer passed separate assessment orders on 27.09.2023 for AY 2020-21 and on 23.12.2024 for AY 2021-22, raising tax demands related to disallowance of Employee Stock Option Plan (ESOP) expenditure.
The petitioner filed appeals and stay applications under Section 220(6) of the Income Tax Act, 1961. In support of the stay applications dated 31.10.2023 and 21.01.2025, the petitioner relied upon the Delhi High Court judgment in Principal Commissioner of Income Tax, Delhi v. Lemon Tree Hotels Pvt. Ltd. and other judicial precedents. The petitioner contended that the issue had already been decided in favour of the assessee by the jurisdictional High Court.
