ESOP Discount Deductible as Business Expense: Karnataka HC

CIT Vs Biocon Ltd. (Karnataka High Court)

In CIT vs. Biocon Ltd., the Karnataka High Court examined whether discounts on the issuance of Employee Stock Option Plans (ESOPs) qualify as deductible expenses under Section 37(1) of the Income Tax Act, 1961. The Revenue filed the appeal for Assessment Year 2004–05, challenging the decision of the Income Tax Appellate Tribunal (ITAT), which had ruled in favour of Biocon Ltd. The primary legal questions focused on whether the difference between the market value of shares at the time of granting the options and the offer price co

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