Question And Answer
Subject: ESOP
Querist: Sneha
Answered by:
Tags: ,
Date: June 27, 2022
Query asked by Sneha

Suppose, SAR issued by Parent entity to employees of subsidiary with no reimbursement from Subsidiary.

Subsidiary claim it as expenses. Is it allowed? If yes, do we have any Case law supporting this?

File Uploaded: Not Available

The subsidiary has neither incurred the expense or paid to the Parent company. Where the same would have been cross charged to the subsidiary, it would be allowed as an expense. The Hon’ble ITAT in the case of Caterpillar India (P.) Ltd. v. DCIT [2017] 80 325 (Chennai – Trib.) Where holding company allotted shares under ESOP scheme to its employees working on deputation with assessee-company, since difference in price i.e. market price of shares on date of exercise of option and price at which options were exercised by deputed employees was cross charged from assessee, same was to be allowed as deduction under section 37(1) of the Act.

Disclaimer: This article is only for general information and is not intended to provide legal advice. Readers desiring legal advice should consult with an experienced professional to understand the current law and how it may apply to the facts of their case. Neither the author nor and its affiliates accepts any liabilities for any loss or damage of any kind arising out of any inaccurate or incomplete information in this article nor for any actions taken in reliance thereon. No part of this document should be distributed or copied (except for personal, non-commercial use) without express written permission of

Leave a Reply

Your email address will not be published. Required fields are marked *