DCIT Vs Avendus Capital Private Limited (ITAT Mumbai)
Tribunal examined Revenue’s challenge against CIT(A)’s order allowing deduction for ESOP expenditure claimed by Assessee, a management consultancy & investment banking company. AO treated ESOP cost of ₹3.80 crore as capital outlay on the ground that it related to issue of shares & increase in equity base, arguing that it did not constitute real expenditure & relied on the pending SLP in Biocon. CIT(A), however, followed multiple earlier orders in Assessee’s own case consistently holding ESOP cost to be allowable revenue expenditure u/s 37(1).
Before Tribunal, Assessee produced a compilation of past ITAT orders for AYs 2009-10, 2010-11, 2011-12, 2016-17 & 2017-18, all of which had accepted ESOP expenses as deductible revenue cost. Revenue could not point out any change in facts, law, or any contrary binding precedent. Tribunal held that the issue is no longer res-integra, as a long line of consistent decisions in Assessee’s own case as well as the Special Bench ruling in Biocon Ltd squarely cover the matter. The pendency of an SLP did not dilute the binding nature of existing decisions.
Accordingly, Tribunal upheld CIT(A)’s order deleting the disallowance & dismissed Revenue’s appeal, reiterating that ESOP expenditure is allowable u/s 37(1).
