Topic

tax deductibility

2 articlesLatest May 2026
ESOP Discount Is Revenue Expenditure Under Section 37(1) | ITAT Delhi Affirms Binding Precedent of Delhi HC in Lemon Tree & NDTV Cases
Case Law Analysis
|Income Tax Appellate Tribunal

ESOP Discount Is Revenue Expenditure Under Section 37(1) | ITAT Delhi Affirms Binding Precedent of Delhi HC in Lemon Tree & NDTV Cases

The ITAT Delhi has ruled that the discount on shares issued under Employee Stock Option Plans qualifies as a revenue expenditure deductible under Section 37(1) of the Income Tax Act, aligning with Delhi High Court precedents in Lemon Tree Hotels and NDTV. This clarifies that such accounting entries-though non-cash-are legitimate business costs tied to employee compensation, not capital infusions, impacting all companies offering ESOPs in India.

Section 37(1) IT Act | ESOP Expenditure Allowable as Revenue Expense : ITAT Bangalore Binds Lower Authorities to Karnataka HC Precedent
Case Law Analysis
|Income Tax Appellate Tribunal

Section 37(1) IT Act | ESOP Expenditure Allowable as Revenue Expense : ITAT Bangalore Binds Lower Authorities to Karnataka HC Precedent

ITAT Bangalore upholds ESOP expenditure as deductible under Section 37(1) of the Income Tax Act, reinforcing Karnataka High Court's binding precedent. The ruling clarifies that ESOP discounts constitute employee remuneration, not notional or capital expenditure, impacting tax assessments for corporations with ESOP schemes.

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