Flipkart India (P.) Ltd. v. ACIT (2023) 200 ITD 670 (Bang) (Trib.)

S.37(1): Business expenditure-Employee stock option scheme (ESOP)-Cross charge expenses would be eligible for deduction-Discount-Purchasing goods and selling them to retailers at low cost, profits foregone by assessee by offering discounts to retailers could not be held to be expenditure incurred in creating intangible assets or goodwill.

Assessee is a wholesale dealer of books, mobiles, computers and related accessories. It had claimed deduction of employee stock option scheme (ESOP) cross charge payments made to its holding company based in Singapore. Tribunal held that expenditure incurred by assessee towards ESOP would be eligible for deduction. Purchasing goods and selling them to retailers at low cost, profits foregone by assessee by offering discounts to retailers could not be held to be expenditure incurred in creating intangible assets or goodwill. (AY. 2017-18)