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| The Tax Publishers2019 TaxPub(DT) 2024 (Del-HC) INCOME TAX ACT, 1961
Section 37(1)
Assessee was eligible for deduction in respect of expenditure incurred for allotment or issue of Employee Stock Ownership Plan, as such expenditure was incurred for welfare of its business staff.
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Business expenditure - Allowability - Expenditure incurred on issue of shares under Employee Stock Ownership Plan -
Revenue disallowed assessee's claim of expenditure towards Employee Stock Ownership Plan (ESOP) alleging that expenditure claimed for allotment or issue of ESOP was merely notional and unless the employer/assessee acquire shares from a third party, it could not claim any deduction. Held: Revenue's argument essentially was that unless the employer/assessee acquire shares from a third party, it could not claim any deduction. Such an argument ignored the realities of functioning of commercial entities, which would then be asked to purchase shares from market place or third party at prevailing rates, instead of allotting them. Therefore, Revenue was not justified in disallowing assessee's claim of expenditure towards ESOP.
REFERRED : CIT v. M/s. PVP Ventures Ltd. [TC (A) No. 1023 of 2005]: 2014 TaxPub(DT) 1924 (Mad-HC) CIT v. Lemon Tree Hotels Ltd. [ITA No. 107/2017]: 2015 TaxPub(DT) 4978 (Del-HC)
FAVOUR : In assessee's favour
A.Y. :
INCOME TAX ACT, 1961
Section 14A
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