{"id":5217,"date":"2012-07-20T04:00:36","date_gmt":"2012-07-20T04:00:36","guid":{"rendered":"http:\/\/itatonline.org\/archives\/?p=5217"},"modified":"2012-07-20T04:00:36","modified_gmt":"2012-07-20T04:00:36","slug":"cit-vs-pvp-ventures-limited-madras-high-court-difference-between-market-price-option-price-of-esop-shares-deductible","status":"publish","type":"post","link":"https:\/\/itatonline.org\/archives\/cit-vs-pvp-ventures-limited-madras-high-court-difference-between-market-price-option-price-of-esop-shares-deductible\/","title":{"rendered":"CIT vs. PVP Ventures Limited (Madras High Court)"},"content":{"rendered":"\n\n
Click here to download the judgement (pvp_ventures_ESOP_shares_expenditure.pdf) <\/strong> <\/a><\/p><\/td>\n<\/tr>\n<\/table>\n


\nDifference between market price & option price of ESOP shares deductible
\n<\/strong><\/p>\n

The assessee allotted shares to its employees under an ESOP scheme. In accordance with the Employees Staff Option Plan and Employee Staff Purchase Scheme Guidelines, 1999 issued by SEBI, the difference between the market value of the shares and the value at which they were allotted to the employees was debited to the P&L A\/c<\/em>. This was claimed as a deduction<\/em> under the head “staff welfare expenditure”. The AO allowed the claim though the CIT revised the assessment u\/s 263 and held that the expenditure was notional and contingent<\/em> in nature and not allowable as a deduction. On appeal, the Tribunal (S.S.I Ltd vs. DCIT<\/a><\/strong> 85 TTJ 1049) held that as the SEBI regulations<\/em> required the difference between the market price of the shares and the price at which the option is exercised by the employees to be debited to the P&L A\/c as expenditure, it was an ascertained expenditure<\/em> and not contingent in nature. On appeal by the department to the High Court, HELD dismissing the appeal:<\/p>\n

As far as the Employees Stock Option Plan is concerned, as rightly pointed out by the Tribunal, the assessee had to follow SEBI direction<\/strong> and by following such directions, the assessee claimed the ascertained amount<\/strong> as liability for deduction<\/strong>. There is no error in the order of the Tribunal. <\/p><\/blockquote>\n

\nSee also Spray Engineering Devices<\/a><\/strong> (ITAT Chandigarh) & article<\/a> <\/strong>\n<\/div>\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

As far as the Employees Stock Option Plan is concerned, as rightly pointed out by the Tribunal, the assessee had to follow SEBI direction<\/strong> and by following such directions, the assessee claimed the ascertained amount<\/strong> as liability for deduction<\/strong>. There is no error in the order of the Tribunal<\/p>\n

Read more ›<\/a><\/div>\n

<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[4,5],"tags":[],"class_list":["post-5217","post","type-post","status-publish","format-standard","hentry","category-all-judgements","category-high-court"],"acf":[],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/itatonline.org\/archives\/wp-json\/wp\/v2\/posts\/5217","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/itatonline.org\/archives\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/itatonline.org\/archives\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/itatonline.org\/archives\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/itatonline.org\/archives\/wp-json\/wp\/v2\/comments?post=5217"}],"version-history":[{"count":0,"href":"https:\/\/itatonline.org\/archives\/wp-json\/wp\/v2\/posts\/5217\/revisions"}],"wp:attachment":[{"href":"https:\/\/itatonline.org\/archives\/wp-json\/wp\/v2\/media?parent=5217"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/itatonline.org\/archives\/wp-json\/wp\/v2\/categories?post=5217"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/itatonline.org\/archives\/wp-json\/wp\/v2\/tags?post=5217"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}