JYOTI STRUCTURES LTD, MUMBAI V. DCIT CEN CIR 41, MUMBAI

ITA 5367/MUM/2015

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 3700 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 8 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-08-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2006-2007
• Appeal Filed On: 18-11-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AJIT K SRIVASTAVA
• Assessee Lawyers: ADITYA R AJGAONKAR
• Keywords: Business income; Business expenditure; Revenue expenditure; Capital expenditure
• Section: 143(3); 153A; 37(1); 37; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH J MUMBAI BEFORE SHRI JOGINDER SINGH (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 5367 /MUM/201 5 ASSESSMENT YEAR: 2006 - 07 JYOTI STRUCTURES LTD. VALECHA CHAMBERS, 6 TH FLOOR, NEW LINK ROAD, OSHIWARA, ANDHERI (W), MUMBAI - 400053. VS. DCIT CENTRAL CIRCLE - 7(2), MUMBAI, ROOM NO. 655, 6 TH FLOOR, AAYAKAR BHAVAN, MAHARSHI KARVE ROAD, MUMBAI - 400020. PAN NO. AAACJ2499R APPELLANT RESPONDENT ASSESSEE BY : MR. ADITYA R. AJ G AONKAR, AR REVENUE BY : MR. AJIT K. SRIVASTA V A , DR DATE OF HEARING : 05 /07/2018 DATE OF PRONOUNCEMENT : 08/08/2018 ORDER PER N.K. PRADHAN, AM THIS IS AN APPEAL FILED BY THE ASSESSEE . THE RELEVANT ASSESSMENT YEAR IS 2006 - 07 . THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMIS SIONER OF INCOME TAX (APPEALS) - 49 [IN SHORT CIT(A) ], MUMBAI AND ARISES OUT OF THE ASSESSMEN T COMPLETED U/S 143(3) R.W.S. 153A OF THE INCOME TAX ACT 1961, (THE ACT). 2. THE GROUNDS OF APPEAL READ AS UNDER: 1. THE LEARNED C IT( A ) HAS ERRED IN DISALLOWING THE AMOUNT OF RS.1,62,49,000/ - BEING THE E X P ENDITURE INCURRED A S EMPLOYEE COMPENSATION EXPENSE - ESOS . JYOTI STRUCTURES LTD. ITA NO. 5367/MUM/2015 2 2. THE LEARNED CIT(A) HAS ERRED IN NOT APPRECIATING THE FACT THAT THE AMOUNT OF RS. 1,62,49,300/ - CLAIMED AS EXPENDITURE WAS ACTUALLY AN EXPENDITURE INCURRED AS COMPENSATION FOR SERVICES RENDERED TO ELIGIBLE EMPLOYEES OF THE COMPANY AS PER THE EMPLOYEE S TOCK OPTION SCHEME AND THEREFORE THE SAME WAS A DEDUCTIBLE REVENUE EXPENDITURE. 3. THE LEARNED CIT ( A ) HAS ERRED IN HOLDING THAT THE EXPENDITURE ON ESOS CANNOT BE CONSIDERED AS EXPENDITURE AT ALL BY WRONGLY APPLYING THE DECISION OF THE HON'BLE SUPREME COURT A S LAID DOWN IN THE CASE OF EMICO KCP LTD. [2000] 109 TAXMAN 151 (SC) TO THE FACTS OF THE APPELLANT'S CASE. 4. THE LEARNED CIT (A) HAS ERRED IN NOT APPRECIATING THAT THE FACTS AS LAID DOWN BY THE HON'BLE SUPREME COURT AS WELL AS THE RATIO OF THE HON'BLE DELHI HIGH C OURT AS LAID DOWN IN THE CASE OF EMICO - KCP LTD. ARE NOT APPLICABLE TO THE FACTS AND THE ISSUE IN THE APPELLANT'S CASE. 5. THE LEARNED CIT (A) HAS ERRED IN NOT APPRECIATING THE CASE LAW QUOTED TO HIM REGARDING THE ALLOWABLY OF THE ESOS EXPENDITURE. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER (AO) FOUND FROM CLAUSE 17(A) OF FORM NO. 3CD THAT THE AUDITORS HAVE MENTIONED THAT AN AMOUNT OF RS.1,62,49,300/ - BEING EMPLOYEE COMPENSATION E XPENSE IS CAPITAL EXPENDITURE, HOWEVER, THE ASSESSEE - COMPANY HAS REDUCED THE SAID AMOUNT FROM THE COMPETITION OF ITS BUSINESS INCOME. IN RESPONSE TO A QUERY RAISED BY THE AO, THE ASSESSEE FILED A REPLY VIDE LETTER DATED 08.10.2013 STATING THAT THE ORIGINAL RETURN OF INCOME WAS FILED DECLARING TOTAL INCOME OF RS.28,41,85,172/ - . HOWEVER, IN THE LIGHT OF AMENDMENT TO SECTION 115WB AND BASED ON LEGAL ADVICE, THE ASSESSEE CLAIMED THE SAID EMPLOYEES STOCK PURCHA SE SCHEME (ESOP) EXPENDITURE OF RS.1,62,49,300/ - AS BUSINESS EXPENDITURE. BEFORE THE AO, THE ASSESSEE RELIED ON THE ORDER OF THE BANGALORE TRIBUNAL REPORTED IN 42 JYOTI STRUCTURES LTD. ITA NO. 5367/MUM/2015 3 TAXMANN.COM 168 (BANGALORE - TRIB) IN THE CASE OF NOVO NORDISK INDIA (P) LTD. V. DEPUTY COMMISSION OF INCOME TAX , CIRCLE - 12(2), BANGALORE . A LSO IT WAS STATED BEFORE THE AO THAT THIS POSITION OF LAW IS CONFIRMED FROM THE PROVISO TO SECTION 17(2)(III) AS IT STOOD FOR THE RELEVANT YEAR WHICH SPECIFICALLY EXEMPTED ESOP BENEFIT FROM BEING TREATED AS PERQUISITE THOUGH IT WAS AN EXPENDITURE OF THE EMPLOYER. HOWEVER, THE AO WAS NOT CONVINCED WITH THE ABOVE EXPLANATION OF THE ASSESSEE AND OBSERVED THAT THE AMENDMENT TO SECTION 115WB OF THE ACT IS W.E.F. 01.04.2008 AND HENCE, NOT APPLICABLE TO AY 2006 - 07. FURTHER, THE AO REL IED ON THE E XPLANATORY C IRCULAR ON FRINGE BENEFIT TAX ARISING ON ALLOTMENT OR TRANSFER OF SPECIFIED SECURITIES OR SWEAT EQUITY SHARES ( C IRCULAR NO. 9/2007). HE MADE A SPECIFIC REFERENCE TO QUESTION NO. 16, OF THE ABOVE CIRCULAR WHICH READS AS UNDER: Q.16: WHETHER THE FRINGE BENEFIT ARISING ON ACCOUNT OF SHARES ALLOTTED OR TRANSFERRED UNDER THE ESOP IS ALLOWED AS DEDUCTION IN CALCULATING THE TAXABLE INCOME OF THE EMPLOYER COMPANY? ANS: IN CASE WHERE THE EMPLOYER PURCHASES THE SHARES AND THEN SUBSEQUEN TLY TRANSFERS SUCH SHARES TO ITS EMPLOYEES, THE EXPENDITURE SO INCURRED IS ALLOWABLE AS DEDUCTION IN COMPUTING THE TAXABLE INCOME OF THE EMPLOYER COMPANY. HOWEVER, IF THE SHARES ARE ALLOTTED TO THE EMPLOYEES FROM THE SHARE CAPITAL OF THE COMPANY, NO DEDUCT ION IS ALLOWABLE IN COMPUTING THE TAXABLE INCOME OF THE COMPANY SINCE NO EXPENDITURE HAS BEEN INCURRED BY IT. IN THE ABOVE QUESTION ALTHOUGH ANSWERING WITH REGARDS TO QUESTION ARISING ON FRINGE BENEFIT TAX, IT HAS BEEN DULY MENTIONED THAT ANY FRINGE BENEFI T ARISING ON ACCOUNT OF ESOP IS NOT ALLOWABLE AS A DEDUCTION/EXPENDITURE IN THE HANDS OF THE COMPANY. JYOTI STRUCTURES LTD. ITA NO. 5367/MUM/2015 4 THE AO ALSO HELD THAT THE TAXABILITY OF PERQUISITE UNDER THE HEAD SALARY IS INDEPENDENT OF ALLOWABILITY OF EXPENDITURE IN THE HANDS OF THE COMPANY WH ICH HAS PROVIDED THE PERQUISITE TO THE ASSESSEE. THE AO ALSO HELD THAT WHEN THE SHARES ARE ISSUED AT BELOW MARKET PRICE THEN FORGOING OF THE SHARE PREMIUM BY ISSUING THE SHARES AT COST UNDER ESOP SCHEME CANNOT RESULT INTO LOSS OF INCOME TO THE TAXPAYER. THOUGH THE SEBI GUIDELINES AND THE ACCOUNTING STANDARDS REQUIRE THE TAXPAYER TO ACCOUNT FOR SHORT RECEIPT OF SHARE PREMIUM AS EMPLOYEE COMPENSATION EXPENDITURE, THE ALLOWABILITY OF THE EXPENDITURE SHOULD BE DETERMINED AS PER THE PROVISIONS OF INCOME TAX AC T. RELYING ON THE DECISION RANBAXY LABORATORIES V. ACIT 124 TTJ 771 (2009), M/S VIP INDUSTRIES V. DCIT , CC - 32 (ITAT MUMBAI) AND LOWRY (INSPECTOR OF TAXES) V. CONSOLIDATE AFRICAN SELECTION TRUST LTD. (1940) 8 ITR (SUPPL) 88 (HL), THE AO DISALLOWED CLAIM OF EXPENSES OF RS.1,62,49,300/ - INCURRED ON ESOP. 4. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT(A). DURING THE COURSE OF APPELLATE PROCEEDINGS, THE ASSESSEE FILED BEFORE HIM A COPY OF ESOS OF THE ASSESSEE. THE ASSESSEE ALSO SUBMITTED A COPY OF THE COMPUTATION OF ESOS EXPENDITURE, WHICH IS BASED ON THE MARKET CLOSING PRICE OF 05.09.2005 AT RS.295.25, THE EXERCISE PRICE OF RS.85 AND THE NUMBER OF OPTIONS GRANTED FOR 234,800 SHARES. REFERRING TO THE DECISION IN BIOCON LTD. V. DCIT (2013) 144 ITD 21 (BANGALORE - TRIB) (SB) , THE LD. CIT(A) OBSERVED THAT IN THE ABOVE ORDER, JYOTI STRUCTURES LTD. ITA NO. 5367/MUM/2015 5 THE SPECIAL BENCH HAVE NOT CONSIDERED THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF EIMCO KCP LTD. V. CIT (2000) 242 ITR 659(SC) . THE LD. CIT(A) WAS OF THE OPINION THAT THE DECISION IN THE ABOVE CASE SQUARELY APPLIES TO THE FACTS OF THE PRESENT CASE. THEN HE AGREED WITH THE AO THAT THE CASE OF M/S NOVO NORDISK INDIA (P) LTD. IS NOT APPLICABLE TO THE FACTS OF THE CASE. THUS , THE LD. CIT(A) CONFIRMED THE DISALLOWANCE OF RS.1,62,49,300/ - MADE BY THE AO. 5. BEFORE US, THE LD. COUNSEL OF THE ASSESSEE FIL ES A PAPER BOOK (P/B) CONTAINING THE DECISION IN DCIT V. KOTAK MAHINDRA BANK LTD. (2018) 89 TAXMANN.COM 223 (MUMBAI - TRIB), BIOCON LTD. (SUPRA) , CIT V. M/S PVP VENTURES LTD. (2012) 23 TAXMANN.COM 286 (MADRAS), CIT V. LEMON TREE HOTELS LTD. (ITA NO. 107/2015) BY DELHI HIGH COURT AND EIMCO KCP LTD. (SUPRA) . 6. ON THE OTHER HAND, THE LD. DR RELIES ON THE DEC ISION IN EIMCO KCP LTD. (SUPRA) AND THE ORDER OF THE TRIBUNAL IN RANBAXY LABORATORIES (SUPRA) . 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIALS ON RECORD. THE REASONS FOR OUR DECISIONS ARE GIVEN BELOW. WE BEGIN WITH THE DECISION IN THE CASE OF EIMCO KCP LTD. (SUPRA) RELIED ON BY THE LD. DR. IN THAT CASE THE ASSESSEE WAS A COMP ANY REGISTERED UNDER THE INDIAN COMPANIES ACT. IT WAS INCORPORATED IN THE YEAR 1965. TWO COMPANIES, EIMCO, AN AMERICAN COMPANY AND KCP LTD., AN INDIAN COMPANY, PROMOTED THE ASSESSEE. THE AUTHORIZED CAPITAL OF JYOTI STRUCTURES LTD. ITA NO. 5367/MUM/2015 6 THE ASSESSEE WAS RS.1,00,00,000/ - CONSISTING OF 10,00,000 EQUITY SHARES OF RS.10 EACH. EACH OF THEM AGREED TO SUBSCRIBE RS.4,70,000/ - OUT OF WHICH EACH WOULD HAVE TO PAY INITIALLY A SUM OF RS.2,80,000/ - TOWARDS ITS CONTRIBUTION. TOWARDS ITS SHARE, EIMCO CONTRIBUTED TECHNICAL KNOWHOW. IT VALUED THE KNOW HOW, ETC. AT A SUM OF RS.2,35,000/ - AND PAID THE BALANCE IN CASH AS ITS CONTRIBUTION. THE BOARD OF DIRECTORS OF THE ASSESSEE ALLOTTED EQUITY SHARES OF RS.2,35,000/ - BEING THE VALUE OF THE KNOWHOW, TO EIMCO BY RESOLUTION PASSED ON APRIL 29, 1968. IN THE ASS ESSMENT YEAR 1969 - 70, THE APPELLANT CLAIMED DEDUCTION OF RS.2,35,000/ - AS REVENUE EXPENDITURE PAID TO EIMCO TOWARDS CONSIDERATION FOR SUPPLY OF TECHNICAL KNOWHOW. THE ITO TREATED THAT AMOUNT AS A CAPITAL EXPENDITURE AND ALLOWED 1/14 TH OF THE SAID AMOUNT AS ALLOWABLE EXPENDITURE U/S 35A OF THE ACT. THE APPELLANT CHALLENGED THAT ORDER BEFORE THE APPELLATE ASSISTANT COMMISSIONER ON THE GROUND THAT THE WHOLE EXPENDITURE OUGHT TO HAVE BEEN ALLOWED AS REVENUE EXPENDITURE. WHILE SO, THE COMMI SSIONER OF INCOME TAX IN EXERCISE OF HIS POWER U/S 263(1) OF THE ACT REVISED THE SAID ORDER OF THE ITO DATED MARCH 25, 1970, HOLDING THAT THE AMOUNT IN QUESTION COULD NOT BE TREATED AS EXPENDITURE AND THAT GRANTING 1/14 TH OF THE SAID AMOUNT AS CAPITAL EXPE NDITURE U/S 35A WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE AND THUS SET ASIDE THE SAME. THEREAFTER, THE APPELLATE ASSISTANT COMMISSIONER DISMISSED THE APPEAL AND DIRECTED THAT 1/14 TH AMOUNT BE ADDED BACK AS INCOME OF THE ASSESSEE. AGAINST BOTH THE ORDERS, THE APPELLANT FILED APPEALS BEFORE THE ITAT. THE TRIBUNAL ON DECEMBER 12, 1975, ALLOWED THE APPEALS OF THE APPELLANT TAKING THE VIEW THAT THE SAID AMOUNT WAS REVENUE EXPENDITURE OF THE JYOTI STRUCTURES LTD. ITA NO. 5367/MUM/2015 7 APPELLANT. ON A REFERENCE, THE HIGH COURT HELD THAT T HE COMMISSIONER OF INCOME TAX HAD JURISDICTION TO PASS THE ORDER IN REVISION AND THAT THE SUM PAID BY THE ASSESSEE - COMPANY TO THE FOREIGN COLLABORATOR DID NOT CONSTITUTE REVENUE EXPENDITURE. ON APPEAL BY THE ASSESSEE, THE HONBLE SUPREME COURT HELD THAT TH E COMMISSIONER OF INCOME TAX COULD INTERFERE, ACTING U/S 263 OF THE ACT, WITH THE ORDER OF THE ITO ON A POINT WHICH WAS DIRECTLY IN APPEAL BEFORE THE APPELLATE ASSISTANT COMMISSIONER. IN THE INSTANT CASE, THE ESOS EXPENDITURE WAS CALCULATED AND DEBITED TO THE PROFIT & LOSS ACCOUNT AS PER SEBI GUIDELINES. THE ISSUE HERE IS WHETHER THE DISCOUNT ON SHARE ALLOTTED BY THE ASSESSEE TO ITS EMPLOYESS UNDER ESOP SCHEME OUT OF ITS SHARE CAPITAL IS AN ALLOWABLE EXPENDITURE U/S 37 OF THE ACT. THUS THE CASE OF THE ASSE SSEE IN THE INSTANT APPEAL IS DISTINGUISHABLE FROM THE ABOVE DECISION RELIED ON BY THE LD. COUNSEL. 7. 1 IN THE CASE OF BIOCON LTD. (SUPRA), RELIED ON BY THE LD. COUNSEL AND DISTINGUISHED BY THE LD. DR, THE ASSESSEE IS ENGAGED IN THE MANUFACTURE OF ENZYMES AND PHARMACEUTICAL INGREDIENTS. IT FORMULATED THE EMPLOYEES STOCK OPTION PLAN (ESOP) 2000. A TRUST WAS SET UP UNDER THE NAME AND STYLE OF BIOCON INDIA LIMITED EMPLOYEES WELFARE TRUST FOR GIVING EFFECT TO THE ESOP 2000 AND ANOTHER ESOP 2004 WHICH WAS LAUNCHED SUBSEQUENTLY BUT DURING ONE OF THE YEARS UNDER CONSIDERATION. THE ASSESSEE CLAIMED DEDUCTION OF RS.3,38,63,779/ - AS EMPLOYEE COMPENSATION COST U/S 37 OF THE ACT, REPRESENTING DISCOUNT UNDER ESOP 2000. IN THE ASSESSMENT COMPLETED U/S 143(3) , THE AO DISALLOWED THE JYOTI STRUCTURES LTD. ITA NO. 5367/MUM/2015 8 SAID CLAIM ON THE GROUND THAT THERE WAS NO SPECIFIC PROVISION ENTITLING THE ASSESSEE TO DEDUCTION U/S 37(1). HE FURTHER HELD THAT THE SECURITIES AND EXCHANGE BOARD OF INDIA (EMPLOYEE STOCK OPTION SCHEME & EMPLOYEE STOCK PURCHASE SCHEME) GUIDELINES, 1999 (HEREINAFTER CALLED THE SEBI GUIDELINES) ON WHICH THE ASSESSEE HAD PLACED RELIANCE IN SUPPORT OF THE DEDUCTION, WOULD NOT APPLY AS THESE CANNOT SUPERSEDE THE TAXING PRINCIPLES. THE AO DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE OF THE SUPREMACY OF THE ACCOUNTING PRINCIPLES AND SEBI GUIDELINES FOR THE PURPOSES OF COMPUTATION OF TOTAL INCOME ON THE GROUND THAT IT WAS A CONTINGENT LIABILITY. ON REFERENCE TO THE SPECIAL BENCH BY THE DIVISION BENCH, ON QUESTION ALLOWABILITY OF DISCOUNT ON ISSUE OF STOCK OPTION AS AN EXPENDITURE U/S 37(1), THE TRIBUNAL HELD THAT: IN THE PRESENT CASE, THE ASSESSEE - COMPANY WAS CLOSELY HELD COMPANY IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 2003 - 04 AND SUCH THERE WAS NO QUESTION OF LISTING OF ITS SHARES AND HAVING SOME MARKET PRICE AT THE TIME OF GRANT OF OPTIONS. ORDINARILY , THE AMOUNT OF DISCOUNT ON PREMIUM WHICH IS WRITTEN OFF OVER THE VESTING PERIOD REPRESENTS THE MARKET PRICE OF THE SHARES LISTED ON THE STOCK EXCHANGE ON THE DATE OF GRANT OF OPTION AS REDUCED BY THE PRICE AT WHICH OPTION IS GIVEN TO THE EMPLOYEES. HOWEVE R, SINCE THERE WAS NO AVAILABILITY OF ANY MARKET PRICE OF SUCH SHARES ON THE DATE OF GRANT OF OPTION AS THE COMPANY CAME TO BE LISTED ON A STOCK EXCHANGE IN A SUBSEQUENT YEAR, THE ASSESSEE - COMPANY TOOK THE MARKET PRICE OF THE SHARE ON THE DATE OF GRANT OF OPTION AT RS.919. NO MATERIAL WORTH THE NAME WAS PLACED ON RECORD TO INDICATE AS TO HOW A SHARE WITH FACE VALUE OF RS.10 HAD BEEN VALUED AT RS.919 FOR CLAIMING DEDUCTION TOWARDS DISCOUNT AT RS.909 PER SHARE. THIS ASPECT OF JYOTI STRUCTURES LTD. ITA NO. 5367/MUM/2015 9 VALUATION OF SHARES AT RS.919 PER SHARE NEEDS TO BE EXAMINED BY THE ASSESSING OFFICER. THE SPECIAL BENCH FURTHER HELD THAT WHERE LIABILITY IN RESPECT OF ESOP IS INCURRED AT END OF EACH YEAR, WHICH IS QUANTIFIED AT THE END OF VESTING PERIOD WHEN EMPLOYEES BECOME ENTITLED TO EXERCISE OPTIONS, DISCOUNT ON ESOP IS AN ASCERTAINED LIABILITY AND NOT A CONTINGENT LIABILITY . FURTHER, IT HELD THAT DISCOUNT ON ESOP BEING A GENERAL EXPENSE, IS AN ALLOWABLE DEDUCTION U/S 37(1) DURING YEARS OF VESTING ON BASIS OF PERCENTAGE OF VESTING DURING SUCH PERIOD, SUBJECT TO UPWARD OR DOWNWARD ADJUSTMENT AT TIME OF EXERCISE OF OPTION. WHILE DECIDING THE ALLOWABILITY OF COST OF ESOP, THE SPECIAL BENCH IN THE ABOVE CASE HAS DISTINGUISHED THE DECISION IN RANBAXY LABORATORIES LTD. (SUPRA). 7. 2 ALSO IN THE CASE OF M/S PVP VENTURES LTD. (SUPRA), THE HONBLE MADRAS HIGH COURT AT PARA 29 HELD: 29 AS FAR AS THE EMPLOYEES STOCK OPTION PLAN IS CONCERNED, AS RIGHTLY POINTED OUT BY THE TRIBUNAL, THE ASSESSEE HAD TO FOLLOW SEBI DIRECTION AND BY FOLLOWIN G SUCH DIRECTION, THE ASSESSEE CLAIMED THE ASCERTAINED AMOUNT AS LIABILITY FOR DEDUCTION. WE DO NOT FIND THAT THEIR EXISTS ANY ERROR TO DISTURB THE ORDER OF THE TRIBUNAL AND IN TURN THE ASSESSING AUTHORITY. 7. 3 IN THE CASE OF LEMON TREE HOTEL LTD . (SUPRA ), THE HONBLE DELHI HIGH COURT FOLLOWING THE DECISION IN PVP VENTURES LTD. (SUPRA) HELD THAT COST OF ESOP COULD BE DEBITED TO THE PROFIT AND LOSS ACCOUNT. JYOTI STRUCTURES LTD. ITA NO. 5367/MUM/2015 10 7.4 FACTS BEING IDENTICAL, WE FOLLOW THE RATIO LAID DOWN IN THE ABOVE DECISIONS AND DIRECT THE AO TO ALLOW THE CLAIM OF ESOP OF RS.1,62,49,300/ - AFTER EXAMINING THE VALUATION OF SHARES AS POINTED OUT IN BIOCON LTD. (SUPRA) . WE DIRECT THE ASSESSEE TO FILE THE RELEVANT DOCUMENTS/EVIDENCE REGARDING VALUATION OF SHARES BEFORE THE AO. 8. IN THE RESULT, THE AP PEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 08/08/2018. SD/ - SD/ - ( JOGINDER SINGH) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED: 08/08/2018 RAHUL SHARMA, SR. P.S. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE . BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI