Sterling Holiday Resorts Ltd Vs DCIT (ITAT Mumbai)
The ITAT Delhi heard appeals filed by both Sterling Holiday Resorts Ltd (“the assessee”) and the revenue concerning the assessment for A.Y. 2018-19. The primary issues involved the disallowance of Employee Stock Option Plan (ESOP) expenses, computation of long-term capital gains (LTCG) on the sale of Kodaikanal land, and the deferral of income from time-share membership fees.
ESOP Expense Disallowance: The assessee challenged the disallowance of Rs. 54,53,100 claimed as ESOP expenses, arguing that the costs were properly recognized over the vesting period in accordance with accounting principles and SEBI guidelines, forming part of employee remuneration and wholly incurred for business purposes. ITAT observed that identical issues in the assessee’s previous years (A.Ys 2011-12 to 2013-14) were decided in its favor and relied on judicial precedents including Biocon Ltd. and PVP Ventures. Following principles of judicial consistency, ITAT directed the Assessing Officer (AO) to delete the disallowance.
Capital Gain Computation on Kodaikanal Land: The assessee claimed a long-term capital loss of Rs. 4.08 crore based on the fair market value as on 1 April 2001, while the AO recomputed the LTCG as Rs. 7.48 crore using the collector rate. ITAT noted that the assessee had sought time to provide the collector rate but could not submit it before the matter became time-barred. Considering fairness and procedural completeness, ITAT restored the matter to the file of the CIT(A) for fresh adjudication after calling for the appropriate collector/circle rate and providing opportunities to both parties.
