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 taxmann.com 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.