Itat/286/2023 Ia No: Ga/1/2023, Ga/2/2023 Principal Commissioner Of Income Tax 2 Kolkata v. Bandhan Bank Ltd

OD - 1 IN THE HIGH COURT AT CALCUTTASPECIAL JURISDICTION (INCOME TAX)ORIGINAL SIDE ITAT/286/2023IA NO: GA/1/2023, GA/2/2023PRINCIPAL COMMISSIONER OF INCOMETAX 2 KOLKATAVSBANDHAN BANK LTD BEFORE :THE HON’BLE THE CHIEF JUSTICE T.S. SIVAGNANAM ANDTHE HON’BLE JUSTICE SUPRATIM BHATTACHARYADATE : 7 February, 2024. Appearance :Ms. Smita Das De, Adv.Mr. Prithu Dudhoria, Adv...for appellant Ms. Swapna Das, Adv.Mr. Siddhertha Das, Adv.…for respondent. The Court :- We have heard learned Counsel on either side.It appears that there is a delay of 117 days in filing the appeal. We have perused the affidavit filed in support of the application forcondonation of delay and we are satisfied with the explanation offered for notpreferring the appeal within the period of limitation and, therefore, the delay infiling the appeal is condoned. The application is allowed. This appeal by the revenue filed under Section 260A of the Income TaxAct, 1961 (the Act) is directed against the order dated March 27, 2023 passedby the Income Tax Appellate Tribunal “A” Bench, Kolkata (the Tribunal) inI.T.A. No. 370/Kol/2022 for the assessment year 2017-2018. The revenue hasraised the following substantial question of law for consideration : “(a) WHETHER on the facts and in the circumstances of the case theLearned Income Tax Appellate Tribunal was erred in law in sustainingthe order of CIT(A) wherein addition made on account of the disallowanceof expenses incurred in relation to ESOP cost was deleted withoutappreciating the fact that ESOP expense is notional and that too ofcapital nature ?” We have elaborately heard the learned Advocates for the parties andcarefully perused the materials on record. The legal issue involved in this appeal is squarely covered by the decisionof three High Courts in favour of the assessee. The first of which is in the caseof CIT v.PVP Ventures Ltd. [2012] 23 taxmann.com 286 and followed by thedecision in CIT-v.-Lemon Tree Hotels Ltd., [2019] ITA No. 107 of 2015 dated18.08.2015, High Court of Delhi which was followed in CIT LTU-v.-Biocon Ltd.,[2020] 121 taxmann.com 351(Karnataka). In all the decisions it has been held that ESOPs was allowable as adeduction under Section 37(1) of the Act as primary object was not to wastecapital but to earn profits by securing consistent service to the employees. Thethree decisions which were relied on by the assessee were taken note of by thelearned Tribunal and the appeal filed by the revenue was dismissed. All thethree decisions which were referred above have attained finality as it appearsthat the revenue has not preferred any appeal against those decisions. Thus wefind that Tribunal was well justified in dismissing the appeal filed by therevenue and we find no ground to interfere with the order passed by thelearned Tribunal. Accordingly, the appeal is dismissed and substantial question of law isanswered against the revenue. . (T.S. SIVAGNANAM)CHIEF JUSTICE pkd/GH. (SUPRATIM BHATTACHARYA,J.)