ACIT Vs Deutsche Asset Management (India) Pvt. Ltd. (ITAT Mumbai)
ITAT Mumbai held that deduction of unamortized brokerage expenses claimed through revised return of income is duly allowable.
Facts- The present appeal is preferred by the revenue. The revenue is aggrieved by the decision rendered by Ld CIT(A) in granting deduction of unamortized brokerage expenses of Rs.18.05 crores and granting deduction of ESOP expenses of Rs.19,48,373/-.
Conclusion- In the instant case, the assessee has claimed the deduction of unamortized brokerage expenses through revised return of income. Hence, we are of the view that the said claim was rightly made by the assessee.
In the instant case, there is no dispute that the upfront brokerage expenses were incurred during the year under consideration and it was revenue expenditure. Hence, the assessee could claim entire expenditure as deduction in the current year itself. Since the assessee was following a particular method of accounting in the books of accounts with regard to the above said expenditure, it has been claiming deduction in that method in the return of income also. However, as per the decision rendered by Hon’ble Supreme Court in the case of Taparia Tools Ltd, the same would not preclude the assessee from claiming entire expenditure in the current year itself. Accordingly, we are of the view that the Ld CIT(A) was correct in law in deleting this disallowance.
Held that the assessee is actually incurring expenses in purchasing shares of M/s Deutsche Bank AG. This is purchased as per the employee welfare scheme as per the agreement entered with the concerned employee. The deduction is claimed when the right is vested upon the employee. It is held by the Bangalore Special bench of ITAT in the case of Biocon Ltd (35 taxmann.com 335) that deduction can be claimed in the year of vesting. It can be noticed that it is a staff welfare expenditure incurred by the assessee and further, it is stated that the assessee has deducted TDS also thereon. Hence, we find no impediment in allowing this expenditure as deduction. Accordingly, we uphold the decision rendered by Ld CIT(A) on this issue.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
The appeal filed by the revenue and the cross objection filed by the assessee are directed against the order dated 30-09-2019 passed by Ld CIT(A)-4, Mumbai and they relate to the assessment years 2015-16. The revenue is aggrieved by the decision rendered by Ld CIT(A) in
(a) granting deduction of unamortized brokerage expenses of Rs.18.05 crores.
(b) granting deduction of ESOP expenses of Rs.19,48,373/-.
In the cross objection, the assessee has raised certain alternative contentions with regard to the above said additions.
2. The assessee company is an Asset management company of Deutsche Mutual Fund (DMF) and various other Deutsche Group Entities.
3. The first issue urged by the revenue relates to disallowance of unamortized brokerage expenses. During the year under consideration, the assessee filed original return of income on 4.11.2015 declaring a total income of Rs.23.03 crores. Subsequently, the assessee filed a revised return of income on 31.3.2017 declaring a total income of Rs.4.98 crores, wherein it claimed deduction of brokerage expenses of Rs.18,05,27,064/-. The facts relating to this expenditure are that the assessee usually incurs brokerage expenses during the course of its business. As per the method of accounting followed by it, the upfront brokerage paid by the assessee for any scheme was amortised during the tenure of scheme in the books of accounts. The assessee has been following the above said method of accounting. It so happened that the assessee had to discontinue its business in the succeeding financial year 2015-16. Accordingly, the unamortized brokerage expense outstanding as on 31.3.2016 was claimed as deduction in this current year, since the said expense was incurred during this year. The details of brokerage expenses were furnished by the Ld A.R as under:-
