The ACIT, Circle-1(1)(2), Vadodara V. Inox Leisure Ltd., Vadodara

ITA 3362/AHD/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 6341 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 1 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-01-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 04-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Earning of tax free income; Source of fund; Capital receipt; Revenue expenditure
• Section: 143(3); 14A

Judgement Text

ITA NOS.3330 & 3362/AHD/2015 ASSESSMENT YEAR: 2011-12 PAGE 1 OF 8 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH, AHMEDABAD [CORAM: PRAMOD KUMAR AM AND S S GODARA JM] ITA NO.3330/AHD/2015 ASSESSMENT YEAR: 2011-12 INOX LEISURE LIMITED, ............ ..... APPELLANT 2 ND FLOOR, ABS TOWERS, OLD PADRA ROAD, VADODARA 390 007. [PAN: AAACI 6063 J] VS. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 1(2), VADODARA. .................RESPONDENT ITA NO.3362/AHD/2015 ASSESSMENT YEAR: 2011-12 ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 1(1)(2), VADODARA. .....................APPELLANT VS. INOX LEISURE LIMITED, ................ . RESPONDENT 2 ND FLOOR, ABS TOWERS, OLD PADRA ROAD, VADODARA 390 007. [PAN: AAACI 6063 J] APPEARANCES BY BANDISH SOPARKAR FOR THE ASSESSEE SURENDRA KUMAR FOR THE REVENUE HEARING CONCLUDED ON: 02.01.2018 ORDER PRONOUNCED ON : 05.01.2018 O R D E R PER PRAMOD KUMAR, AM: ITA NOS.3330 & 3362/AHD/2015 ASSESSMENT YEAR: 2011-12 PAGE 2 OF 8 1. THESE CROSS APPEALS CHALLENGE CORRECTNESS OF THE ORDER DATED 09.09.2015 PASSED BY THE LEARNED CIT(A) IN THE MATTER OF ASSES SMENT UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER), FOR T HE ASSESSMENT YEAR 2011-12. 2. IN THE APPEAL FILED BY THE ASSESSEE, FOLLOWING G RIEVANCES ARE RAISED. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-I, BARODA, ERRED IN CONFIRM ING DISALLOWANCES AND ADDITIONS AND THE OBSERVATIONS MADE BY THE ASSESSIN G OFFICER IN THE ASSESSMENT ORDER IN RESPECT OF THE FOLLOWING POINTS. HE ERRED IN: 1. IN RESPECT OF DISALLOWANCE U/S 14A: A) IN CONFIRMING THE DISALLOWANCE OF RS.5,93,89,179 /- U/S 14A READ WITH RULE 8D. HE OUGHT TO HAVE DELETED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. B) IN CONCLUDING THAT THE CLAIM OF INTEREST IN R ESPECT OF BORROWINGS TO ACQUIRE CONTROLLING INTEREST IN A COMPANY ENGAGED IN THE SA ME BUSINESS CANNOT BE TREATED AS REVENUE EXPENDITURE AND SAME CANNOT BE A LLOWED U/S 36(1)(III). HE OUGHT TO HAVE APPRECIATED THAT ACQUISITION OF CO NTROLLING INTEREST IN A COMPANY ENGAGED IN THE SAME BUSINESS IS MERELY AN E XPANSION OF EXISTING BUSINESS AND HENCE THE INTEREST IS ALLOWAB LE U/S 36(1)(III). C) IN NOT APPRECIATING THAT THE COMPANY HAS NOT EAR NED DIVIDEND ON THIS INVESTMENT OR ANY OTHER INVESTMENT AND ALSO THE SAI D COMPANY IS SUBSEQUENTLY AMALGAMATED WITH THE APPELLANT COMPANY AND HENCE NO DISALLOWANCE IS REQUIRED U/S.14A. HE OUGHT TO HAVE APPRECIATED THAT IN VIEW OF THE AFORESAID FACTS, NO DISALLOWANCE U/S.14 A IS REQUIRED. D) IN NOT APPRECIATING THAT THERE IS NO DIVIDEND IN COME WHICH IS CLAIMED AS NOT FORMING PART OF TOTAL INCOME AND CONSEQUENTLY N O DISALLOWANCE UNDER SEC.14A CAN BE MADE FOR THE RELEVANT ASSESSMENT YEA R. E) IN NOT APPRECIATING THAT THE APPELLANTS OWN FUND S AND NON-INTEREST BEARING FUNDS EXCEEDS INVESTMENT IN TAX-FREE SECURITIES. 3. NOTWITHSTANDING ELABORATE WORDING OF THE GROUNDS OF APPEAL RAISED BEFORE US, SHORT GRIEVANCE OF THE ASSESSEE, IN SUBSTANCE, IS T HAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) ERRED IN UPHOLDING DISALLOWANC E OF RS.5,93,89,179/- UNDER SECTION 14A RED WITH RULE 8D. 4. TO ADJUDICATE ON THIS GRIEVANCE IT IS SUFFICIENT TO TAKE NOTE OF THE FACT THAT IN THE PRESENT YEAR THE ASSESSEE DID NOT HAVE ANY INCOME F ROM DIVIDEND AND YET A DISALLOWANCE OF RS.5,93,89,179/- HAS BEEN MADE ON T HE GROUND THAT THESE EXPENSES WERE INCURRED IN EARNING DIVIDEND INCOME WHICH IS E XEMPT FROM TAX. IT IS BY NOW SETTLED ITA NOS.3330 & 3362/AHD/2015 ASSESSMENT YEAR: 2011-12 PAGE 3 OF 8 LEGAL POSITION THAT DISALLOWANCE UNDER SECTION 14A OF THE ACT CANNOT EXCEED THE RELATED EXEMPT INCOME, AND THAT IN A CASE IN WHICH THE ASSE SSEE DOES NOT HAVE EARNED ANY TAX EXEMPT INCOME IN THE PARTICULAR YEAR, THE DISALLOWA NCE UNDER SECTION 14A OF THE ACT CANNOT BE MADE EITHER. IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2010-11, VIDE ORDER DATED 10.02.2017, A CO-ORDINATE BENCH OF THIS TRIBUNAL HAS INTER ALIA HELD AS FOLLOWS :- 19. WE HAVE CAREFULLY CONSIDERED THE ORDERS OF THE AUTHORITIES BELOW. IT IS NOT IN DISPUTE THAT THE ASSESSEE HAS NOT RECEIVED ANY E XEMPT INCOME DURING THE YEAR UNDER CONSIDERATION. THE DISALLOWANCE HAS BEEN MADE ON FINDING OF THE FACT THAT THE ASSESSEE HAS MADE CERTAIN INVE STMENTS OUT OF BORROWED FUNDS. IN OUR CONSIDERED OPINION, SINCE TH E ASSESSEE HAS NOT EARNED ANY EXEMPT INCOME, NO DISALLOWANCE U/S. 14A READ WITH RULE 8D IS CALLED FOR. OUR VIEW IS ALSO FORTIFIED BY THE DECIS ION OF THE HONBLE HIGH COURT OF GUJARAT IN THE CASE OF CORRTECH ENERGY LTD . 372 ITR 97. HELD THAT THE TRIBUNAL HAD RECORDED THE FINDING OF FACT THAT THE ASSESSEE DID NOT MAKE ANY CLAIM FOR EXEMPTION OF ANY INCOME FROM PAY MENT OF TAX. HENCE, NO DISALLOWANCE COULD BE MADE U/S. 14A OF THE I.T. ACT. 5. RESPECTFULLY FOLLOWING THE ABOVE LEGAL POSITION AND HAVING NOTED THAT THE ASSESSEE DID NOT HAVE ANY TAX EXEMPT INCOME DURING THE RELEVANT PREVIOUS YEAR, WE UPHOLD THE GRIEVANCE OF THE ASSESSEE AND DELETE THE IMPUGNED DISALLOWANCE OF RS.5,93,89,179/-. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . 7. WE NOW TAKE UP THE APPEAL FILED BY THE ASSESSING OFFICER. 8. IN THE FIRST GROUND OF APPEAL, THE ASSESSING OFF ICER HAS RAISED THE FOLLOWING GRIEVANCE:- 1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(APPEALS) ERRED IN BY ALLOWING THE ENTERTAIN MENT EXEMPTION TAX OF RS.102278787/- BY IGNORING THE FACT THAT IT WAS A REVENUE RECEIPTS BY OBSERVING THAT THE EXEMPTIONS WAS AVAIL ED BY THE ASSESSEE AFTER THE COMMENCEMENT OF COMMERCIAL OPERA TIONS OF THE MULTIPLEXES. 9. LEARNED REPRESENTATIVES FAIRLY AGREE THAT THIS I SSUE IS ALSO COVERED BY THE ORDER DATED 10.02.2017 PASSED BY THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2010-11 WHEREIN THE TR IBUNAL HAS INTER ALIA HELD AS FOLLOWS :- ITA NOS.3330 & 3362/AHD/2015 ASSESSMENT YEAR: 2011-12 PAGE 4 OF 8 10. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO TH E ORDERS OF THE AUTHORITIES BELOW QUA THE RIVAL CONTENTIONS. THE CL AIM OF SUBSIDY CAN BE SUMMARIZED IN THE FOLLOWING CHART:- SR.NO MULTIPLEX AT AMOUNT (RS.) BRIE F 1 BARODA (GUJARAT) 20,616,897 HELD TO BE A CAPITAL RECEIPT NOT EXIGIBLE TO TAX FOR ASSESSMENT YEARS 20O3-04 TO ASSESSMENT YEARS 2009- 10 BY CIT(A) AND THE SAME CONFIRMED BY ITAT, AHMEDABAD FOR AY 2003-04 TO 2005-06 2 NARIMAN POINT (MAHARASHTRA) 33,578,000 HELD TO BE CAPITAL RECEIPT NOT EXIGIBLE TO TAX FOR ASSESSMENT YEARS 2006-O7 TO 2009-10 BY CIT(A). THE APPLICABLE POLICY COVERED IN FAVOUR OF THE APPELLANT BY IT AT, AHMEDABAD'S COMMON ORDER FOR AY 20O3-04 TO AY2OO5-06 3 BURDWAN (WEST BENGAL) 3,050,769 HELD TO BE A CAPITAL RECEIPT NOT EXIGIBLE TO TAX FOR ASSESSMENT YEAR 2009-10 BY CIT(A). THE APPLICABLE POLICY COVERED IN FAVOUR OF THE APPELLANT BY IT AT, AHMEDABAD'S COMMON ORDER FOR AY 2003-04 TO AY 2005-O6 4 LUCKNOW (UTTAR PRADESH) 14,656,794 HELD TO BE A CAPITAL RECEIPT NOT EXIGIBLE TO TAX FOR ASSESSMENT YEARS 2008-09 TO 2009-10 BY CIT(A) 5 INDORE (MADHYA PRADESH) 5,656,806 HELD TO BE A CAPITA L RECEIPT NOT EXIGIBLE TO TAX FOR ASSESSMENT YEARS 2006-07 TO 2009-10 ASSESSMENT YEAR BY CIT(A) 6 NAGPUR2 (MAHARASHTRA) 11,372,664 FIRST YEAR OF CLAIM. HOWEVER, SAME FACTS AS IN PUNE AND NARIMAN POINT APPLY. THE APPLICABLE POLICY COVERED IN FAVOUR OF THE APPELLANT BY IT AT, AHMEDABAD'S COMMON ORDER FOR AY2003-04 TO 2005- 06 7 DARJEELING (WEST BENGAL) 2,633,719 HELD TO BE A CAPITAL RECEIPT NOT EXIGIBLE TO TAX FOR ASSESSMENT YEARS 2008-09 TO 2009-10. THE APPLICABLE POLICY COVERED IN FAVOUR OF THE APPELLANT BY IT AT, AHMEDABAD'S COMMON ORDER FOR AY 2003-04 TO AY 2005-06. 8 RAJA HAT (WEST BENGAL) 4,050,745 FIRST YEAR OF CLAIM. HOWEVER, SAME FACTS AS IN SALT LAKE, DARJEELING ITA NOS.3330 & 3362/AHD/2015 ASSESSMENT YEAR: 2011-12 PAGE 5 OF 8 AND BURDWAN APPLY. THE APPLICABLE POLICY COVERED IN FAVOUR OF THE APPELLANT BY IT AT, AHMEDABAD' 9 INDORE 2 (MADHYA PRADESH) 5,641,334 FIRST YEAR OF CLAIM. HOWEVER, SAME FACTS AS IN INDORE APPLY. 10 CRYSTAL PALM (RAJASTHAN) 5,731,329 FIRST YEAR OF CLAIM. NEW POLICY APPLIES. TOTAL (RS.) 106,989,057 11. WE FIND THAT THE CLAIM OF SUBSIDY AT VARIOUS MU LTIPLEXES FROM SERIAL NO. 1 TO 9 ABOVE HAVE BEEN ACCEPTED AS CAPIT AL RECEIPT IN EARLIER YEARS. THIS HAS NOT BEEN DISPUTED BY ANY OF THE LOWER AUTHORITIES. THE ONLY DISPUTE RELATES TO THE SUBSID Y RECEIVED FROM THE GOVERNMENT OF RAJASTHAN IN RESPECT OF ITEM NO. 10 A BOVE. IT IS ALSO NOT IN DISPUTE THAT IN PURSUANCE OF THE TERMS OF SC HEME INTRODUCED BY THE GOVERNMENT OF RAJASTHAN TO ENCOURAGE CONSTRUCTI ON OF NEW CINEMA HALLS, ASSESSEE WAS RUNNING A CINEMA HALL. I T IS ALSO NOT IN DISPUTE THAT THE ASSESSEE COULD RECEIVE THE SUBSIDY ONLY AFTER THE FULFILLMENT OF THE MANDATORY CONDITIONS. THESE FACT S HAVE NOT BEEN CONTROVERTED BY ANY OF THE LOWER AUTHORITIES. 12. THE HONBLE HIGH COURT OF RAJASTHAN HAD THE OCC ASION TO CONSIDER A SIMILAR ISSUE BEFORE IT THE FACTS OF WHI CH READ AS UNDER:- * THE ASSESSEE FIRM WAS RUNNING A CINEMA HALL. IT H AD SHOWN CERTAIN RECEIPTS, WHICH INCLUDED ENTERTAINMENT TAX. IN THE PROFIT AND LOSS ACCOUNT, THE ASSESSEE HAD TRANSFERRED A PART OF RECEIPTS TO ENTERTAINMENT SUBSIDY ACCOUNT AND CLAIMED SAME TO BE EXEMPT FROM TAX BEING IN THE NATURE OF C APITAL RECEIPTS. * THE ASSESSEE EXPLAINED THAT THERE WAS A SCHEME OF THE GOVERNMENT OF RAJASTHAN TO ENCOURAGE CONSTRUCTION OF NEW CINEMA H ALLS BY PROVIDING SUCH A SUBSIDY IN THE FORM OF ENTERTAINMENT TAX FOR A PART ICULAR PERIOD. A COPY OF NOTIFICATION ISSUED IN THIS REGARD WAS PLACED BEFOR E THE ASSESSING OFFICER. BUT THE ASSESSING OFFICER DID NOT AGREE WITH THE ASSESSEE A ND TREATED SAID AMOUNT AS ITS INCOME. * THE COMMISSIONER (APPEALS), HOWEVER, ACCEPTED THE PLEA OF THE ASSESSEE AFTER RE LYING, INTER ALIA, ON THE STATE GOVERNMENT'S NOT IFICATION AND DELETED THE ENTIRE ADDITION BY TREATING THE ENTERTAINMENT SUBSIDY AS A CAPITAL RECEIPT BECAUSE SAID AMOUNT HAD BEEN CREDITED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE AS A LIABILITY UNDER THE HEAD 'CAPITAL SUBSIDY'. * THE TRIBUNAL UPHELD THE ORDER OF THE COMMISSIONER (APPEALS). 13. AND ON APPEAL, THE HONBLE HIGH COURT HELD AS U NDER:- ITA NOS.3330 & 3362/AHD/2015 ASSESSMENT YEAR: 2011-12 PAGE 6 OF 8 *IN THE INSTANT CASE, IT IS MORE THAN APPARENT THAT THE STATE GOVERNMENT PROCEEDED TO EXEMPT ENTERTAINMENT TAX FOR A PERIOD OF 5 YEARS PAYABLE BY A 'NEW' CINEMA HALL CONSTRUCTED, SUBJECT TO THE CONDI TION THAT COMMERCIAL EXHIBITION OF FILMS IN SUCH CINEMA HALL WAS REQUIRE D TO BE STARTED BY 31-3-2000. *IN THE SCHEME OF THE RAJASTHAN ENTERTAINMENTS AND ADVERTISEMENTS TAX ACT, 1957, WHERE ENTERTAINMENT TAX IS DETERMINED AND REC OVERABLE FROM THE PROPRIETOR OF THE ENTERTAINMENT AND IS LEVIED WITH REFERENCE TO THE NUMBER OF ADMISSIONS TO THE ENTERTAINMENT, WHEN THE STATE GOV ERNMENT HAD EXEMPTED SUCH PROPRIETOR OF NEW CINEMA HALL FROM PAYMENT OF ENTERTAINMENT TAX ON THE GIVEN CONDITION, THE OBJECT WAS CLEARLY TO PROMOTE THE CONSTRUCTION OF NEW CINEMA HALLS. * MERELY BECAUSE THE AMOUNT WAS NOT DIRECTLY MEANT FOR REPAYING THE AMOUNT TAKEN FOR CONSTRUCTION OF THE CINEMA HALL, ITS PURP OSE COULD NOT BE CONSIDERED TO BE OTHER THAN THAT OF PROMOTING CONSTRUCTION OF NEW CINEMA HALL. AS HELD CONSISTENTLY BY THE COURTS, THE SOURCE OF FUNDS FOR CONSTRUCTION OF SUCH CINEMA HALL IS IRRELEVANT; AND IT WOULD ALSO NOT MATTER IF THE GRANT WOULD BE AVAILABLE AFTER THE BUSINESS HAS BEEN SET UP. * IN THE TOTALITY OF THE CIRCUMSTANCES; AND PARTICU LARLY LOOKING TO THE SCHEME OF THE ACT OF 1957 AS ALSO THE OBJECT AND PURPORT OF T HE EXEMPTION NOTIFICATION, THE ASSISTANCE IN QUESTION CANNOT BE SAID TO BE AN OPER ATIONAL SUBSIDY SO AS TO BE TAKEN AS A REVENUE RECEIPT. * THE SUBMISSION THAT ONCE THE ASSESSEE HAS COLLECT ED THE ENTERTAINMENT TAX FROM THE PERSONS ADMITTED TO THE ENTERTAINMENT AND HAS NOT DEPOSITED THE SAME WITH THE GOVERNMENT, IT IS REQUIRED TO BE TREATED A S REVENUE RECEIPT REMAINS DEVOID OF SUBSTANCE. THE REMISSION BY THE GOVERNMEN T HAD BEEN TO THE PROPRIETOR OF THE ENTERTAINMENT AND NOT TO THE PERS ON ADMITTED TO THE ENTERTAINMENT. THE REMISSION HAD BEEN THE METHODOLO GY ADOPTED BY THE STATE GOVERNMENT TO PROVIDE ASSISTANCE TO THE NEW CINEMA HALL; AND HAD BEEN ESSENTIALLY IN THE NATURE OF A SUBSIDY, IE., THE AS SISTANCE FROM THE GOVERNMENT TO THE NEW CINEMA HALL [PARAS 15,16 & 17] * ACCORDINGLY, IT IS HELD THAT THE TRIBUNAL WAS JUS TIFIED IN AFFIRMING THE DELETION OF ADDITION, BEING THE AMOUNT OF ENTERTAINMENT TAX CAP ITALIZED AS SUBSIDY. [PARA 18] * IN VIEW OF THE ABOVE, THE APPEAL FAILS AND IS, THER EFORE, DISMISSED. [PARA 19] 14. AS NO DISTINGUISHING DECISION HAS BEEN BROUGHT ON RECORD BEFORE US. RESPECTFULLY FOLLOWING THE DECISION OF T HE HONBLE HIGH COURT OF RAJASTHAN (SUPRA), WE DIRECT THE A.O. TO T REAT THE AMOUNT OF RS. 5731329/- ALSO AS A CAPITAL RECEIPT. GROUND NO. 1 IS ACCORDINGLY ALLOWED. 10. WE SEE NO REASONS TO TAKE ANY OTHER VIEW OF THE MATTER THAN THE VIEW SO TAKEN BY THE CO-ORDINATE BENCH IN ASSESSEES OWN CASE FOR THE IMMEDIATELY PRECEDING ASSESSMENT YEAR. RESPECTFULLY FOLLOWING THE SAME, WE CONFIRM THE ACTION OF THE LD. ITA NOS.3330 & 3362/AHD/2015 ASSESSMENT YEAR: 2011-12 PAGE 7 OF 8 CIT(A) WHO HAD MERELY FOLLOWED THE STAND IN THE ASS ESSMENT YEAR 2010-11. GRIEVANCE OF THE ASSESSING OFFICER IS ACCORDINGLY REJECTED. 11. GROUNDNO.1 IS THUS DISMISSED. 12. IN GROUND NO.2, THE ASSESSING OFFICER HAS RAISE D THE FOLLOWING GRIEVANCE:- 2 ) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(APPEALS) ERRED IN BY HOLDING EMPLOYEES STO CK OPTION PLAN AMOUNTING TO RS.1621904/- AS AN ALLOWABLE EXPENDITU RE U/S.37(1) OF THE INCOME TAX ACT, 1961 WITHOUT APPRECIATING TH E FINDINGS OF ASSESSING OFFICER . 13. LEARNED REPRESENTATIVES FAIRLY AGREE THAT THIS ISSUE IS ALSO COVERED IN FAVOUR OF THE ASSESSEE BY TRIBUNALS DECISION IN ASSESSEES O WN CASE FOR THE ASSESSMENT YEAR 2008-09 WHEREIN THE TRIBUNAL HAS INTER ALIA OBSERVED AS FOLLOWS :- 7. WE HAVE CAREFULLY CONSIDERED THE ORDERS OF THE AUTHORITIES BELOW. WE FIND FORCE IN THE CONTENTION OF THE LD. COUNSEL. THE CO-ORDINATE BENCH IN THE CASE OF THE CERA SANITARYWARE LTD. (SUPRA) H AS CONSIDERED THIS ISSUE AT PARA 9 OF ITS ORDER AND AT PARA 10, THE TR IBUNAL CONSIDERED THE DECISION OF THE SPECIAL BENCH IN THE CASE OF BIOCON LTD. 25 ITR (TRIB.) 602 AND AFTER CONSIDERING THE DECISION OF THE SPECIAL B ENCH DIRECTED THE A.O TO CLAIM OF DEDUCTION. 8. THE HONBLE HIGH COURT OF MADRAS IN THE CASE OF PVP VENTURES LTD. 25 TAXMANN.COM 286 HAS ALLOWED SUCH CLAIM AS BUSINE SS EXPENDITURE AND THE HONBLE HIGH COURT OF DELHI IN THE CASE OF LEMON TREE HOTELS LTD. IN ITA NO. 107/2015 HAS FOLLOWED THE DECISION OF TH E HONBLE HIGH COURT OF MADRAS HELD THAT COST OF ESOP COULD BE DEBITED IN P ROFIT AND LOSS ACCOUNT OF THE ASSESSEE. RESPECTFULLY FOLLOWING THE AFOREMENTIONED DECISIONS, WE DIRECT THE A.O TO ALLOW THE CLAIM OF DEDUCTION ON ACCOUNT OF REMUNERATION TO ESOP. GROUND NO. 1 IS ACCORDINGLY A LLOWED. 14. WE SEE NO REASONS TO TAKE ANY OTHER VIEW OF THE MATTER THAN THE VIEW SO TAKEN BY THE CO-ORDINATE BENCH IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2008-09. RESPECTFULLY FOLLOWING THE SAME, WE UPHOLD THE RELI EF GRANTED BY THE LEARNED CIT(A) AND DECLINE TO INTERFERE IN THE MATTER. GRIEVANCE OF T HE ASSESSING OFFICER IS ACCORDINGLY REJECTED. 15. GROUND NO.2 IS THUS DISMISSED. 16. IN THE RESULT, APPEAL OF THE ASSESSING OFFICER IS DISMISSED. ITA NOS.3330 & 3362/AHD/2015 ASSESSMENT YEAR: 2011-12 PAGE 8 OF 8 17. TO SUM UP, WHILE APPEAL OF THE ASSESSEE IS ALLO WED, APPEAL OF THE ASSESSING OFFICER IS DISMISSED. IT WAS SO PRONOUNCED IN THE OPEN COURT ON THIS 5 TH DAY OF JANUARY, 2018. SD/- SD/- S S GODARA PRAMOD KUMAR (JUDICIAL MEMBER) (ACCOUNTANT MEM BER) DATED: 5 TH JANUARY, 2018. PBN/* COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) CIT (4) CIT(A) (5) DR (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD