Assessee-company issued Employee’s Stock Option Plan (ESOP) and claimed difference between market price and exercise price as deduction under section 37(1), spread equally over vesting period of four years, on basis of SEBI Guidelines and accounting principles . Assessing Officer disallowed same, holding it as a contingent liability or a short receipt of share premium . On appeal the Tribunal held that \u00a0where liability in respect of ESOP is incurred at end of each year, which is quantified at end of vesting period when employees become entitled to exercise options, discount on ESOP is an ascertained liability and not a contingent liability \u00a0accordingly the\u00a0 discount on ESOP being a general expense, is an allowable deduction under section 37(1) during years of vesting on basis of percentage of vesting during such period, subject to upward or downward adjustment at time of exercise of option . On appeal by the revenue \u00a0dismissing the appeal of the revenue the Court held that discount on\u00a0 issue\u00a0 of ESOP is an allowable deduction in computing the income under the head profits and gains of the business. ( ITA No. 653 of 2013 dt 11 -11-2020 ) (AY. \u00a02003 -04\u00a0 to 2007 -08) \u00a0\u00a0\u00a0)<\/p>\n
\u00a0<\/p>\n
Editorial :<\/strong> \u00a0Bicon Ltd v. Dy CIT\u00a0 (2013)\u00a0 35 taxmann.com 335 \/ 144 ITD 21 \/ 155 TTJ 649\/\u00a0 90 DTR 289 \/ 25 ITR 602\u00a0 (SB)(Bang)\u00a0 Trib.)<\/p>\n \u00a0<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":" S. 37(1) : Business expenditure \u2013 Discount in issue of ESOP is an allowable deduction – Contingent liability .[S.4, 143(3) 145, Companies Act , 1956 , S. 2(15A) ] <\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","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":""},"categories":[21],"tags":[],"class_list":["post-15139","post","type-post","status-publish","format-standard","hentry","category-income-tax-act"],"acf":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p9S2Rw-3Wb","jetpack-related-posts":[],"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/15139","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/comments?post=15139"}],"version-history":[{"count":1,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/15139\/revisions"}],"predecessor-version":[{"id":15140,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/15139\/revisions\/15140"}],"wp:attachment":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/media?parent=15139"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/categories?post=15139"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/tags?post=15139"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}