Recently, the Delhi Bench of the Income-tax Appellate Tribunal (the Tribunal) in the case of Ranbaxy Laboratories Ltd. has held that the difference between the market price and the issue price of the shares offered to employees under the Employee Stock Option Scheme (ESOP) is not an allowable expenditure since the loss incurred due to issue of shares at a discount is a notional loss and such notional loss cannot be considered as an allowable expenditure under the provisions of the Income-tax Act, 1961 (the Act). Though it was mandatory to record it as an expenditure as per the Securities Exchange Board of India (SEBI) guidelines.
In view of the vastness of the subject, the complications and listening at many of my colleagues, I have decided to present a small brief on Companies to be formed under the provisions of Companies Act, 1956, the difference between Private Limited and Public Limited Companies, the applicable law and also the complications. I know the vastness of the subject and I just want to present a small brief as follows:
The agitation by the revenue is that the assessee company was not entitled to deduction under section 10A as the CIT (A) failed to appreciate the fact that the assessee had commenced manufacture, production of software prior to its registration as STPI and the STPI authorities had granted approval
As per the Development Control Regulations of the Municipal Corporation of Greater Bombay, 1991 (‘DCR’), in the case of redevelopment of existing buildings, an additional FSI is granted tothe land owner. The additional FSI can be utilised in the following manner:
With the tax authorities out to prove that the existence of a large number of transactions in shares is to be treated as business income, while the focus of assessees generally has been on trying to refute the tax authorities arguments through stressing the various factual aspects related to the transactions, very often one tends to miss out on exploring the possible alternative contentions, which could mitigate the impact or at times even dissuade the Assessing Officer from treating such transactions as business transactions. What are these contentions?
What constitutes ‘Service’ is certainly a subject matter of discussion. Its plain meaning is an Act of helpful Activity or Rendering of Assistance or Help. Service is generally a feeling in the form of efforts and excludes sale of goods or property or commodities. It pre-supposes existence of a Service Provider. For Service Tax purposes, if there is no Service, then there should be no Tax.
Whether for the purpose of disallowance under Section 14A of the Act:-(a) Rule 8D is to be considered as retrospective; Whether before application of Rule 8D the Assessing Officer should give a holding that he is not satisfied for the basis or quantum of expenses disallowed by the Assessee; b) Whether disallowance is to be made if Investment is held as stock-in-trade?
Whether in determination of book profit u/s 115JB of I. T. Act, adjustment is to be made for:-(a) Depreciation not debited to P & L Account but a note is given in respect thereof; (b) Capital gain not credited to P & L account and taken to reserve; (c) Prior period expenses and extra ordinary items; (d) Difference in the amount of depreciation on account of change in the method of providing depreciation i.e. straight line to WDV or vice-versa?
Special Bench of the Income Tax Appellate Tribunal, New Delhi in the case of Cheminvest Ltd. (ITA Nos.87Del//2008, 4788/Del/2007 and 233/Ahd/ 2006) holds that expenditure relating to exempt income to be disallowed even if assessee has not earned any tax-free income.
The Income-Tax Appellate Tribunal, Mumbai in the case of Mr. Bomi S. Billimoria vs. A.C Cir 23(1), Mumbai (ITA No.2120/Mum/1998) held that in case no payment has been made for acquiring shares under Employee Stock Option Plan, the gain on sale of said shares should not be liable to capital gains tax. As the date of exercise of options and date of sale is same and further, there is no difference between the sale price and the deemed cost of acquisition, in any case, it is not short term capital gains.
