Case Law Details
Northern Operating Services Private Limited Vs JCIT (ITAT Bangalore)
ITAT Bangalore held that expenditure towards Employees Stock Option Plan (ESOP) is allowable deduction u/s 37 of the Income Tax Act.
Facts- During the course of assessment proceedings, the case was referred to the Transfer Pricing Officer (TPO) to determine the Arm’s Length Price (ALP) of the international transactions undertaken by the assessee with its Associate Enterprises (AEs). The TPO vide order dated 30.10.2017 passed u/s 92CA of the Act, proposed total transfer pricing adjustment amounting to Rs.30,49,62,139. The Assessing Officer passed draft assessment order (DAO) incorporating the TP adjustment suggested by the TPO. Apart from the TP adjustment, the A.O. disallowed an amount of Rs.1,07,29,828 claimed as deduction u/s 37 of the Act. The expenditure claimed was towards Employees Stock Option Plan (ESOP).
Aggrieved by the DAO, the assessee filed objections before the Dispute Resolution Panel (DRP). The TP adjustment was reduced to Rs.19,35,28,445. However, the ESOP disallowances were sustained by the DRP. On receipt of the DRP’s directions, the impugned final assessment order was passed on 30.08.2018.
Aggrieved by the final assessment order, the assessee has filed the present appeal before the Tribunal.
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