DCIT (LTU), MUMBAI V. STERLITE TECHNOLOGIES LTD.,

ITA 4755/MUM/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 2339 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 3 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-10-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2010-2011
• Appeal Filed On: 14-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R K SAHU
• Assessee Lawyers: B V JHAVERI
• Keywords: Capital expenditure

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL E B ENCH, MUMBAI BEFORE SHRI RAJENDRA, ACCOUNTANT MEMBER AND SHRI C.N. PRASAD, JUDICIAL MEMBER / I .TA NO. 4755/MUM/2014 ( / ASSESSMENT YEAR:2010-11 THE DCIT, LARGE TAX PAYER UNIT, WORLD TRADE CENTRE, CUFFE PARADE, MUMBAI-400 005 / VS. M/S. STERLITE TECHNOLOGIES LTD., SURVEY NO. 68/1, MADHUBAN DAM ROAD, RAKHOLI, UT OF DADAR & NAGAR HAVELI-396 230 ./ ./ PAN/GIR NO. AAECS 8719B . ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY: SHRI R.K. SAHU / RESPONDENT BY: SHRI B.V. JHAVERI / DATE OF HEARING :28.07.2016 ! / DATE OF PRONOUNCEMENT :26.10.2016 / O R D E R PER C.N. PRASAD, JM: THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORD ER OF THE LD. CIT(A)-24, MUMBAI DATED 18.03.2014 PERTAINING TO AS SESSMENT YEAR 2010-11. 2. THE ONLY ISSUE IN THE APPEAL OF THE REVENUE IS T HAT THE LD. CIT(A) ERRED IN DELETING THE DISALLOWANCE OF ESOP E XPENSES. ITA NO. 4755/M/2014 2 3. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE SUBMITS THAT AN IDENTICAL ISSUE HAS BEEN DECIDED BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEARS 2001-02, 2002-03 & 20 07-08 IN ITA NOS. 7136/M/2004, 3889/M/2006 AND 4841/M/2013 VIDE ORDERS DATED 8.1.2008, 19.1.2009 AND 14.11.2014 RESPECTIVE LY IN ITS FAVOUR ALLOWING THE ESOP EXPENSES. COPIES OF THE ORDERS A RE PLACE IN PAPER BOOK OF PAGES 57 TO 102. THE LD. COUNSEL FOR THE A SSESSEE THEREFORE SUBMITS THAT SINCE THE ISSUE IS SQUARELY COVERED IN ASSESSEES OWN CASE, THE SAME MAY BE FOLLOWED FOR THIS ASSESSMENT YEAR ALSO. 4. THE LD. DEPARTMENTAL REPRESENTATIVE PLACED RELIA NCE ON THE ORDERS OF THE ASSESSMENT ORDER. 5. HEARD BOTH SIDES, PERUSED THE ORDERS OF THE AUTH ORITIES BELOW AND THE ORDERS PLACED BEFORE US. WE FIND THAT THE ISSUE IN APPEAL HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE WHEREIN THE CO-ORDINATE BENCH ALLOWED THE ESOP EXPENSES INCURRED BY THE ASS ESSEE OBSERVING AS UNDER: 7. WE HAVE HEARD THE PARTIES AND CAREFULLY GONE TH ROUGH THE MATERIAL AVAILABLE ON RECORD. WE FOUND THAT THE CIT (A) IN ITS APPELLATE ORDER HAS OBSERVED THAT THE ESOP EXPENSES OF RS. 1,86,63,187/- REPRESENTED THE OPTION DISCOUNT, THAT IS, THE EXCESS OF THE MARKET PRICE OF THE SHARE ON THE DATE OF GRANT OF THE OPTION UNDER ESOP 2006 OVER THE EXERCISE PRICE OF THE OPTION. IT HAS BEEN SUBMITTED THAT (1) SEBI GUIDELI NES MANDATE THAT THE ESOP EXPENSES SHOULD BE DEBITED TO THE P&L ACCOUNT, (2) THE LIABILITY WAS NOT A CONTINGENT OR NOTIONAL LIABILITY BUT AN ASCERTAINED LIABILITY AND IT WAS ALSO NOT A CAPITAL EXPENDITURE, (3) ESOPS WERE GRANTED TO THE EMPLOYEES OF THE COMP ANY AS PER THE SCHEME FOR MOTIVATING THEM TO WORK FOR A CE RTAIN NUMBER OF YEARS AND SINCE THESE WERE TAXABLE IN THE HANDS OF THE EMPLOYEES, THE EXPENDITURE WAS ALLOWABLE AS REV ENUE DEDUCTION, WE FOUND THAT THE VERY SIMILAR ISSUE HAS BEEN DECIDED BY THE MUMBAI BENCH OF THE TRIBUNAL IN ASSE SSEE'S OWN CASE IN ITA NO.7136/MUM/2004 FOR AY.2001-02 & 2002- 03 IN FAVOUR OF ASSESSEE REGARDING THE CLAIM OF ASSESSEE FOR ESOP EXPENSES. THE CIT(A) AFTER CONSIDERING THE AFORESAI D DECISION ITA NO. 4755/M/2014 3 OF THE TRIBUNAL ALLOWED THE CLAIM OF ASSESSEE FOR E SOP EXPENSES. RESPECTFULLY FOLLOWING THE ORDER OF THE T RIBUNAL IN ASSESSEE'S OWN CASE, WE ARE OF THE CONSIDERED VIEW THAT THE CIT(A) HAS RIGHTLY ALLOWED THE CLAIM OF THE ASSESSE E. HENCE, WE UPHOLD THE DECISION OF THE CIT(A) REGARDING ALLOWIN G ESOP EXPENSES CLAIMED BY THE ASSESSEE AND DISMISS THE GR OUND NO.1 OF THE REVENUE. RESPECTFULLY FOLLOWING THE SAID DECISION OF THE CO -ORDINATE BENCH IN ASSESSEES OWN CASE, WE SUSTAIN THE ORDER OF THE LD. CIT(A) IN ALLOWING THE CLAIM OF THE ASSESSEE BY FOLLOWING THE DECISION OF THE CO-ORDINATE BENCH FOR THE ASSESSMENT YEARS 2001-02 AND 2002-03. 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH OCTOBER, 2016. SD/- SD/- (RAJENDRA) (C.N. PRASAD ) / ACCOUNTANT MEMBER $ % /JUDICIAL MEMBER MUMBAI; ( DATED 26 TH OCTOBER, 2016 . % . ./ RJ , SR. PS !'#$#! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ) ( ) / THE CIT(A)- 4. ) / CIT 5. *+ ,%%-. , -.! , / DR, ITAT, MUMBAI 6. , /01 / GUARD FILE. / BY ORDER, *% //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI