Facts:
a) The assessee was a wholly owned subsidiary of NNAS. As per the plan developed by NNAS, its
employees and employees of its affiliates
were entitled to purchase its shares at a price, lesser than the market
price
b) In pursuance of aforesaid plan, assessee framed ESOP, as per which, the difference between fair
market value of shares of parent company and price at which those shares were
issued by assessee to its employees was reimbursed to its parent company;
c) The sum so reimbursed was claimed as
expenditure by assessee as an employee cost. The AO rejected the claim of the
assessee on ground that it resulted in capital building of the parent company.
d) The CIT(A) confirmed the order of the AO. The aggrieved-assessee
filed the instant appeal.
The
Tribunal held in favour of assessee as under:
1) The shares were acquired by the assessee from
the parent company and there was an actual outflow of cash from the assessee to
the foreign parent company. The price at which shares were issued to the
employees was paid by the employee to the assessee who in turn paid it to the
parent company;
2) The difference between the fair market value of
the shares and the price at which shares were issued to the employees was met
by the assessee. This factual position was not disputed at any stage by the
revenue;
3) Thus, there was no basis on which it could be
said that the expenditure in question was a capital expenditure of the foreign
parent company;
4) The impugned expenditure was wholly and
exclusively for the purpose of the business of the assessee and the fact that
the parent company was also benefited by reason of a motivated work force would
be no ground to deny the claim of the assessee for deduction, which otherwise
satisfies all the conditions referred to in section 37(1);
5) Thus, the appeal of the assessee was to be
allowed. - Novo Nordisk India (P.) Ltd. v. Dy.CIT [2014] 42 taxmann.com 168 (Bangalore - Trib.)
No comments:
Post a Comment