Dy. CIT v. ICRA Ltd. - Taxpublishers.in

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The Tax Publishers2021 TaxPub(DT) 5902 (Del-Trib)

INCOME TAX ACT, 1961

Section 37(1)

Employee Stock Option Scheme (ESOP) compensation was actually for the employees providing a part of the wealth to employees in order to motivate them to harness their potential in increasing the growth and thereby profits of assessee. Hence, loss could also be looked at as employees' welfare and was, therefore, allowable under section 37(1).

Capital or revenue expenditure - Employee Stock Option Scheme (ESOP) compensation - -

Assessee claimed deduction on account of Employee Stock Option Scheme (ESOP) compensation. AO held that expenditure was on account of issuance of share capital, and was, therefore, in the nature of capital expenditure. Held: Employee Stock Option Scheme (ESOP) compensation was actually for the employees--providing a part of the wealth to employees in order to motivate them to harness their potential in increasing the growth and thereby profits of assessee. Hence, loss could also be looked at as employees' welfare and was, therefore, allowable under section 37(1).

Followed:Biocon Limited & Ors. v. Dy. CIT (LTU) (2013) 35 Taxmann.com 335 (Bang-Trib)(SB) : 2013 TaxPub(DT) 2046 (Bang-Trib).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2011-12

INCOME TAX ACT, 1961

Section 14A Rule 8D(2)(iii)