Cost of granting stock options to employees is not deductible expenditure in the hands of employer

The assessee was an Indian company listed on a stock exchange in India. During the assessment year (AY) 2001-02, it granted stock options to it employees for 332,250 shares whereby shares with a face value of Rs 10 were to be issued at Rs 595 per share. The market price of the shares as on the date of grant was Rs. 738.95 per share.

The assessee claimed the difference between the market price and the issue price to its employees as employee compensation in its books of accounts. The charge to its financial statements was defer

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