NDTV Media Ltd., New Delhi V. Addl. CIT, New Delhi

ITA 886/DEL/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 91374 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 4 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-07-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 09-07-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 22-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P DAM KANUNJNA
• Keywords: Capital receipt

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : E : NEW DELHI BEFORE SHRI R.S. SYAL, AM AND SHRI A.T. VARKEY, JM ITA NO.886/DEL/2012 ASSESSMENT YEAR : 2007-08 NDTV MEDIA LTD., 207, OKHLA INDUSTRIAL ESTATE, PHASE III, NEW DELHI. PAN: AABCN6516C VS. ADDL. CIT, RANGE-13, NEW DELHI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI TARANDEEP SINGH, CA DEPARTMENT BY : SHRI P. DAM KANUNJNA, SR. DR DATE OF HEARING : 09.07.2015 DATE OF PRONOUNCEMENT : 10.07.2015 ORDER PER R.S. SYAL, AM: THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE ORDE R PASSED BY THE CIT(A) ON 30.9.2011 IN RELATION TO THE ASSESSMENT Y EAR 2007-08. ITA NO.886/DEL/2012 2 2. THE ONLY ISSUE RAISED IN THIS APPEAL IS AGAIN ST THE CONFIRMATION OF DISALLOWANCE OF RS.3,04,04,500/- MADE BY THE AO ON ACCOUNT OF EMPLOYEE STOCK OPTION PLAN (ESOP) EXPENSES. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. AT THE OUTSET, WE FIND THAT SI MILAR ISSUE CAME UP FOR CONSIDERATION BEFORE THE SPECIAL BENCH OF THE TRIBU NAL IN BIOCON LTD. VS. DCIT (2013) 144 ITD 21 (BANG.) (SB). IN THIS CASE, THE TRIBUNAL HAS HELD THAT DISCOUNT ON ISSUE OF ESOP IS ALLOWABLE AS DEDUCTION IN COMPUTING INCOME UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION. SINCE IT IS ON ACCOUNT OF AN ASCERTAIN ED AND NOT CONTINGENT LIABILITY, IT CANNOT BE TREATED AS A SHORT CAPITAL RECEIPT. THEREAFTER, THE SPECIAL BENCH HAS LAID DOWN THE MECHANISM FOR DETER MINING AS TO WHEN AND HOW MUCH DEDUCTION SHOULD BE ALLOWED. IT HAS B EEN HELD THAT THE LIABILITY TO PAY THE DISCOUNTED PREMIUM IS INCURRED DURING THE VESTING PERIOD AND THE AMOUNT OF SUCH DEDUCTION IS TO BE FO UND OUT AS PER THE TERMS OF ESOP BY CONSIDERING THE PERIOD AND PERCENT AGE OF VESTING DURING SUCH PERIOD. DEDUCTION OF THE DISCOUNTED PR EMIUM DURING THE ITA NO.886/DEL/2012 3 YEARS OF VESTING SHOULD BE ALLOWED ON STRAIGHT LINE BASIS. THEN, DEALING WITH THE SUBSEQUENT ADJUSTMENT TO DISCOUNT, THE SPE CIAL BENCH LAID DOWN THAT ANY ADJUSTMENT TO INCOME IS CALLED FOR AT THE TIME OF EXERCISE OF OPTION BY THE AMOUNT OF DIFFERENCE IN THE AMOUNT OF DISCOUNT CALCULATED WITH REFERENCE TO THE MARKET PRICE AT THE TIME OF G RANT OF OPTION AND MARKET PRICE AT THE TIME OF EXERCISE OF OPTION. 4. BOTH THE SIDES ARE IN AGREEMENT THAT THE FAC TS AND CIRCUMSTANCES OF THE INSTANT ISSUE ARE SQUARELY COVERED BY THIS SPEC IAL BENCH DECISION. RESPECTFULLY FOLLOWING THE PRECEDENT, WE SET ASIDE THE IMPUGNED ORDER AND SEND THE MATTER TO THE FILE OF AO FOR DECIDING THE ISSUE IN CONFORMITY WITH THE DECISION TAKEN BY THE SPECIAL BENCH IN THE AFORENOTED CASE. 5. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATIST ICAL PURPOSES. THE ORDER PRONOUNCED IN THE OPEN COURT ON 10.07.201 5. SD/- SD/- [A.T. VARKEY] [R.S. SYAL] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED, 10 TH JULY, 2015. DK ITA NO.886/DEL/2012 4 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.