ESOP Allowance by AO Not Erroneous, CSR Deduction u/s 80G not Subject to PCIT Revision: ITAT rules in Favour of Booking.com [Read Order]
The tribunal found that in the present case, due to the plethora of decisions on the issue of ESOP expenditure, the AO had taken the most plausible view, and it cannot be said that the view taken by the AO was erroneous
The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) held that the ESOP allowance by the AO is not erroneous and the CSR deduction under Section 80G is beyond the revisionary powers of the PCIT.
The assessee, Booking.com, filed its return of income on 21/03/2021, declaring total income at Rs. 13,69,51,720/-. The return was selected for scrutiny assessment through CASS, and accordingly, statutory notices were issued and served upon the assessee. Queries were raised, which were duly replied to by the assessee with supporting evidence. The returned income was assessed as such at Rs. 13,69,51,720/-.
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Assuming power conferred by the provisions of Section 263 of the Act, the ld. PCIT issued a show-cause notice to the assessee. The assessee responded to the notice. The AO was satisfied with the assessee's reply. The PCIT was of the firm view that the AO had not made any further enquiry, thereby making the assessment order erroneous as it was prejudicial to the interest of the revenue.
The tribunal observed that there's no merit in the PCIT's observation. Firstly, the PCIT had not invoked provisions of Section 263 of the Act, but was compelled by the audit objections, which means that without applying his own mind, the PCIT was simply carried away with the audit objections raised by the audit party.
The tribunal further observed that the AO raised a specific query on the issue of the claim of ESOP expenditure, to which the assessee not only furnished a detailed reply but also supported its claim by quoting various judicial decisions in favour of the assessee.
The tribunal found that in the present case, due to the plethora of decisions on the issue of ESOP expenditure, the AO had taken the most plausible view, and it cannot be said that the view taken by the AO was erroneous. The tribunal opined that merely because the decision of the Hon’ble Karnataka High Court in the case of CIT vs. Biocon Ltd is sub-judice before the Hon’ble Supreme Court would not make the assessment order erroneous simply because the AO has followed the decision of the Hon’ble Karnataka High Court.
The second issue relating to the claim of CSR expenditure as deduction u/s 80G of the Act, no specific enquiry was made by the AO during the course of the scrutiny assessment proceedings but the deduction u/s 80G of the Act has been allowed by the Co-ordinate Benches consistently in favour of the assessee in the case of Motilal Oswal Securities Ltd and Allegis Services India Pvt. Ltd
The two-member Bench of Sandeep Singh Karhail (Judicial Member) and Narendra Kumar Billaiya (Accountant Member) held that the above-mentioned binding observations of the Jurisdictional High Court are sufficient for not sending the matter back to the file of the AO for verification, as it would be a futile exercise, as the issue has already been decided in several judicial decisions by the Co-ordinate Benches in favour of the assessee and against the revenue.
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