Asst.CIT,Cir-10(1), Hyderabad V. Sri Sanjay Goel, Secunderabad

ITA 1766/HYD/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 74604 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 2 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 07-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K HARITA
• Section: 54F

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO. 1766/HYD/2012 ASSESSMENT YEAR : 2009-10 ASST. COMMISSIONER OF INCOME- TAX, CIRCLE 10(1), HYDERABAD. SRI SANJAY GOEL, SECUNDERABAD. PAN ACKPG 9182 D (APPELLANT) (RESPONDENT) REVENUE BY SMT. K. HARITA ASSESSEE BY SHRI K.C. DEVDAS DATE OF HEARING 06-02-2014 DATE OF PRONOUNCEMENT 12-02-2014 O R D E R PER B. RAMAKOTAIAH, A.M.: THIS IS AN APPEAL BY REVENUE AGAINST THE ORDER OF C IT(A)-VI, DATED 14/09/2012. THE GROUNDS MATERIAL FOR THE APPE AL ARE AS UNDER: 2. THE CIT(A ERRED IN TREATING THE SALE PROCEEDS O F SHARES NOT LIABLE TO TAX AS PERQUISITES AND DIRECTED THE AO TO TREAT THE CAPITAL GAINS AS RETURNED BY THE ASSESSEE, AS HELD BY THE DECISION BY AUTHORITY FOR ADVANCED RULINGS IN MICRO SOFT, USA REPORTED IN 235 ITR 565 AND AS PER THE PROVISIONS O F SECTION 17(2) OF THE ACT INTRODUCED FROM AY 2000-01. 3. THE CIT(A) ALSO ERRED IN DIRECTING THE AO TO ALL OW INDEXATION AND DEDUCTION U/S 54F OF THE IT ACT. 2 ITA NO. 1766/HYD/2012 SANJAY GOEL 2. BRIEFLY STATED, ASSESSEE, AN EMPLOYEE OF M/S GEN PACT INDIA WAS GRANTED STOCK OPTIONS OF 1015 SHARES ON 26-07-0 5. ASSESSEE EXERCISED OPTION ON 11-01-2007 AND PAID AN AMOUNT O F USD 6,32,345 (1015 SHARES @USD 623) ON 03-02-2007. THE SHARES UN DERWENT A STOCK SPLIT ON 07-08-2007 LEADING TO ASSESSEE HAVIN G 1,83,614 SHARES. ASSESSEE SOLD 96,714 SHARES DURING THE PERI OD 23-04-2008 TO 30-05-2008 AND FILED INCOME ADMITTING CAPITAL GAIN AND CLAIMING BENEFIT U/S 54F OF RS. 83,56,760 AGAINST THE NET CA PITAL GAIN OF RS. 3,09,37,070/-. AO WAS OF THE OPINION THAT THE CAPIT AL GAIN HAS TO BE TREATED AS PERQUISITE OF ASSESSEE AND ACCORDINGLY, THE AMOUNT OF RS. 4,49,11,318/- HAS BEEN TREATED AS PART OF SALARY, T HEREBY DENYING THE BENEFIT U/S 54F. 3. LD. CIT(A) ON DETAILED SUBMISSIONS MADE BY ASSES SEE, ANALYSED THE HISTORY OF TAXATION OF ESOPS IN THE IT ACT AND AMENDMENTS MADE EFFECTIVE FROM 01-04-2008 TO HOLD T HAT ESOPS WERE SPECIFICALLY EXCLUDED FROM THE PURVIEW OF PERQ UISITES FOR AY 2009-10 U/S 17(2)(VI) R.W.S. 115WB(1)(D). LD. CIT(A ) HELD THAT AO WAS NOT JUSTIFIED IN BRINGING THE SALE PROCEEDS OF SHAR ES AS PERQUISITES. CONSEQUENTLY, BENEFIT U/S 54F WAS ALSO GRANTED AS A MOUNT HAS TO BE TAXED AS CAPITAL GAIN. 4. AFTER PERUSING THE RIVAL CONTENTIONS, WE DO NOT SEE ANY REASON TO INTERFERE WITH THE ORDERS OF LD. CIT(A). LD. CIT (A) ANALYSED THE PROVISIONS OF SECTION 17 AND SECTION 115WB(1)(D) TO ARRIVE AT THE CONCLUSION THAT THE ESOPS GRANTED CANNOT BE TAXED A S PERQUISITE IN THE IMPUGNED YEAR. THERE IS NO LEGAL SANCTION TO TH E ACTION OF AO IN TREATING THE CAPITAL GAIN EARNED AS PERQUISITE. THE REFORE, THE GROUNDS RAISED BY REVENUE HAVE NO MERIT. THE GROUND NO. 2 R AISED IS ALSO MISLEADING IN THE SENSE THAT THE DECISION RENDERED PRIOR TO AMENDMENT TO THE ACT HAS BEEN RELIED. THE GROUNDS R AISED ARE, ACCORDINGLY, DISMISSED. 3 ITA NO. 1766/HYD/2012 SANJAY GOEL 5. IN THE RESULT, APPEAL OF REVENUE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 12 TH FEBRUARY, 2014. SD/- SD/- (D. MANMOHAN) (B. RAMAKOTAIAH ) VICE PRESIDENT ACCO UNTANT MEMBER HYDERABAD, DATED: 12 TH FEBRUARY, 2014 BVS COPY TO:- 1) ACIT, CIRCLE 10(1), ROOM NO. 515, AC GUARDS, I T TOWERS, HYDERABAD 2) SRI SANJAY GOEL, 5-2-134, 2 ND FLOOR, C/O SUDHAKAR & CO., RP ROAD, SECUNDERABAD. 3) CIT(A)-VI, HYDERABAD. 4) CIT-V, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD.