Case Law Details
Brief of the Case
ITAT Chandigarh held In the case of M/s GlaxoSmithKline Consumer Healthcare Ltd vs. The JCIT that it is a settled law that an unascertained liability has to be allowed even if the same is quantified on a future date. In this case the incentive plan so formulated by the assessee is a very common form of scheme formed by many of the companies popularly known as ‘ESOP’ scheme.
The terms and conditions of the investment plan of the assessee are same as in any general scheme of ESOP. The question of liability of this type of provision came before the Bangalore Bench of the Tribunal in the case of Biocon Limited 155 TTJ 649 (SB), in which it was held that in any case, if some of the options remain unvested or are not exercised, the discount hitherto claimed as deduction is required to be reversed and offered for taxation in such later year. Therefore, the discount in relation to options vesting during the year cannot be held as a contingent liability. Accordingly, discount on shares under the ESOP is an allowable expenditure.
Facts of the Case
ITA No.290/Chd/2014
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