JSW Cement Limited Vs PCIT (ITAT Mumbai)
ESOP Expense, Deemed Dividend and MAT: PCIT’s Section 263 Revision Fails on Every Issue
Mumbai ITAT quashes revision of JSW Cement’s assessments for AYs 2020–21 and 2021–22
The power under section 263 permits the Commissioner to correct an assessment that is both erroneous and prejudicial to the interests of the Revenue. It does not permit a fresh enquiry merely because the Commissioner would have examined a disclosed transaction differently. Applying that distinction, the Mumbai ITAT quashed the revision orders passed against JSW Cement Limited for AYs 2020–21 and 2021–22 in ITA Nos. 4866 and 4867/Mum/2026, decided on 23 September 2026.
The revision for AY 2021–22 covered several substantial items: ₹44.97 crore of ESOP expenditure, ₹5.02 crore of branding fees, a proposed ₹4.53 crore adjustment to book profit based on section 14A, loans of ₹80 crore and ₹15 crore proposed to be examined as deemed dividend under section 2(22)(e), and the interest paid on those loans. For AY 2020–21, the principal issues were ₹2.42 crore of ESOP expenditure and a proposed ₹4.42 crore MAT adjustment.
ESOP discount is employee compensation
The PCIT questioned the deduction of ₹44.97 crore claimed for AY 2021–22 under section 37(1). The Department particularly objected to ₹35.40 crore, which related to employee option grants made in earlier years. It argued that the AO should have examined why that amount was recognised in the year under appeal.
