A special bench of the Bangalore Income-tax appellate tribunal (ITAT) has ruled that discounts under the employee stock option plans (ESOP) are an employee cost and should be allowed as a deduction, over the vesting period, in the hands of the issuingfirm. The special bench held that when a company undertakes to issue ESOPs at a discounted price, the primary objective is not to raise share capital but to retain its key employees. It brushed off the contention of the tax authorities that such discount was a capital expenditure or that it was a contingent liability. The ITAT special bench was set upto determine the deductibility of ESOP discount, as many firms, including Biocon, had filed appeals on this issue
Posted on: Sat, 20 Jul 2013 13:46:37 +0000
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