Discount on issue of ESOP is allowable expenditure u/s 37(1)

Morgan Stanley Advantage Services Pvt. Ltd Vs CIT (A) (ITAT Mumbai)

ITAT Held that discount on issue of ESOP is allowable as deduction under the head Profits & Gains of Business or Profession.

Facts- The assessee-company is engaged in the business of rendering front office and back office support to the Morgan Stanley group of companies globally. The assessee-company has shown income under the heads “Business & Profession”, “Capital Gains” and “Income from Other Sources”. During the proceedings, the assessee was given a show-cause notice regarding dis-allowability of claim towards the cost of Employees/Options Plans (ESOP) treating the same as being capital in nature.

 Conclusion- Held that the Co-ordinate Bench of Tribunal also in case of Goldman Sachs (I) Securities Pvt. Ltd. has held that discount on issue of ESOP is allowable as deduction under the head “Profits & Gains of Business or Profession”. So, the expenditure claimed by the assessee on account of ESOP under section 37(1) of the Act is allowable.

FULL TEXT OF THE ORDER OF ITAT MUMBAI

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