Buy-back payment to Mauritian parent, not dividend; Allows deduction for ESOP-expenses recharge

Mumbai ITAT holds that amount remitted by assessee (Indian subsidiary) to its 100% Mauritian holding company during AY 2011-12 under share buy-back scheme, not taxable in India, Sec 195 TDS not applicable; Completely relies on co-ordinate bench ruling in assessee’s own case for earlier year (which in turn relied on co-ordinate bench ruling in Goldman Sachs (India) Securities Pvt Ltd. and Bombay HC ruling in Capgemini) to reject Revenue’s stand that buy-back scheme was a colourable device to avoid payment of dividend distribution tax (‘DDT’) u/s 115O; Noting that buy-back was in accordance with the buy-back scheme u/s 77A of the Companies Act, 1956, co-ordinate bench had held it a legitimate transaction; Separately, ITAT allows deduction for recoupment of ESOP expenses to assessee for difference between the market price and allotment price of ESOPs granted by holding company to assessee’s employees; Relies on co-ordinate bench ruling in assessee’s own case for earlier year (which in turn relied on Bangalore ITAT ruling in Novo Nordisk India Pvt. Ltd.) to hold that “once a stock option is granted to and exercised by the employee of the assessee, then liability in that option was ascertained and the cost is allowable in the year in which stock options were granted”:ITAT