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10-05-2019, QlikTech India, Section 250, 37, 234B, Tribunal Bangalore
This appeal is filed by the assessee and the same is directed against the order of ld. CIT (A)-5, Bangalore dated 18.01.2018 for Assessment Year 2013-14.
2. The grounds raised by the assessee are as under.
“1. That the order passed by the Ld. CIT(A) under section 250 of the Act is based on incorrect interpretation of law and facts of the case and therefore bad in law.
2. That on the facts and in circumstances of the case and in law, the Ld. CIT(A) has erred in disallowing the Employee Stock Options (ESOPs) expenditure amounting to Rs. 15,864,756 incurred by the Appellant during the AY 2013-14.
3. That on the facts and in circumstances of the case and in law, the Ld. CIT(A) has erred in holding that ESOPs expenditure are capital in nature and accordingly not allowable under section 37 of the Act, ignoring the fact that said expense is a part of remuneration of employees and incurred with the purpose of securing the consistent and concentrated efforts of the employees and was thus, incurred wholly and exclusively for the purpose of the business of the Appellant.
4. That the Ld. CIT(A) has erred in not appreciating the principles laid down by the Hon'ble Bangalore ITAT in the case of Novo Nordisk India (P.) Ltd.  63 SOT 242 and Biocon Ltd. [20131 25 ITR (T) 602 (SB) which are squarely applicable to the case of the Appellant.
5. That the Ld. CIT(A) has erred in concluding that the case laws relied upon by the Appellant are not relevant to the Appellant's case without providing for any specific reason for the same.
6. That on the facts and in circumstances of the case and in law, the Ld. CIT(A) has erred in not accepting the claim of the Appellant that the ESOPs expenditure amounting to Rs. 3,125,700 (included in Rs. 15,864,756 above) was not a prior period expenditure, since such expense crystallized only during the Financial Year 2012-13 relevant to the AY 2013-14.
7. Without prejudice to the above, on the facts and in circumstances of the case and in law, the Ld. CIT(A) has erred in not accepting that the aforesaid prior period expenses shall be allowed as expenditure in the previous financial year i.e. FY 2011-12.
8. The Ld. CIT(A) has erred in law and in facts, by levying interest under section 2348 of the Act.
9. The Ld. CIT(A) has erred in initiating penalty proceedings under section 271(1)(c) of the Act.
The above grounds of appeal are independent and without prejudice to one another. That the Appellan craves leave to add, alter, amend and/ or modify any ground of appeal before or during the hearing of this appeal.”
3. It was submitted by ld. AR of assessee regarding ground nos. 1 to 5 that the issue involved in these grounds is covered in favour of the assessee by the Tribunal order rendered in the case of Novo Nordisk India Pvt. Ltd. Vs. DCIT as reported in (2014) 63 SOT 242 in which the Tribunal has followed the decision of special bench of the Tribunal rendered in the case of Biocon Limited Vs. DCIT as reported in (2013) 25 ITR (T) 602. He submitted that copy of the Tribunal rendered in the case of Novo Nordisk India Pvt. Ltd. Vs. DCIT (supra) is available on pages 155 to 164 of the paper book and the order of the special bench rendered in the case of Biocon Limited Vs. DCIT (supra) is available on pages 132 to 154 of paper book. He submitted that ld. CIT(A) has held that these judgments are not applicable without giving any valid reason for holding so and hence, this issue should be decided in favour of the assessee by following these two Tribunal orders.
4. Regarding ground no. 6 of assessee’s appeal regarding disallowance of Rs. 31,25,700/- on this basis that this is prior period expenditure, it was submitted that the amount has crystallized in the present year and therefore, it should be allowed in the present year and in this regard, our attention was drawn to paper book pages 91 and 92. Regarding the objection of the AO in this regard, he submitted that in bottom para on page no. 7 of the assessment order, it is stated by AO that this amount of Rs. 31,25,700/- included in the total amount of Rs. 1,58,64,756/- is disallowable for this reason also that it is prior period expenditure as qualified by the auditor in the financial statements. In this regard, our attention was drawn to page no. 51 of the paper book where it is stated that this amount of Employee stock option scheme of Rs. 1,58,64,756/- includes prior period expenditure of Rs. 31,25,700/-. He submitted that this issue was decided by CIT(A) as per Para 6 of his order on this basis hat the main grounds are decided in favour of the revenue and following the same principle, all these grounds are rejected. Therefore, it is clear that this aspect has not been examined and decided by CIT (A) as to whether the expenses has crystallized in the present year or not.
5. As against this, the ld. DR of revenue supported the orders of authorities below. Our a tention was drawn to note no. 22 in the audited accounts of the assessee company available on page no. 54 of the paper book and it was pointed out that in this note, it is stated that the parent company Qlik Technologies Inc., USA has issued employee stock options (ESOP) to certain employees of the Company and has been cross charged for the year ended March 31, 2013 Rs. 1,58,64,756/- (March 31, 2012: Rs. Nil) towards the administrative charges and this has been charged in the statement of profit and loss under the head employee benefit expenses. It was submitted that these are administrative charges of that company and then how, the same can be allowed as expenses in the present case. The ld. DR of revenue submitted that 2010 Omnibus Equity Incentive Plan was not available before the AO/CIT(A). The copy of this plan was brought on