Cittazhi Gokuldas Mukundan, CHENNAI V. CIT(A), CHENNAI

ITA 737/CHNY/2017

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 4346 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-06-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 08-06-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 24-03-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: AVINASH WADHWANI

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: CHENNAI , ' , & ' BEFORE SHRI SANJAY ARORA, ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, JUDICIAL MEMBER ./ ITA NO.737/MDS/2017 &' ' /ASSESSMENT YEAR: 2011-12 SHRI CHITTAZHI GOKULDAS MUKUNDAN, PLOT NO.37, 38, HRIDYAM, SASIVARADHAN NAGAR MAIN ROAD, C.T.O. COLONY, WEST TAMBARAM, CHENNAI-600 063. VS. THE INCOME TAX SALARY WARD I(3), THE INCOME TAX OFFICE, 130-B, MUDICHUR ROAD, TAMBARAM, CHENNAI. [PAN: ABTPG 4640 G ] ( ) /APPELLANT) ( *+) /RESPONDENT) ) , / APPELLANT BY : MR.AVINASH WADHWANI, ADV. *+) , /RESPONDENT BY : MR.SHAJI P. JACOB, ADDL. CIT , /DATE OF HEARING : 08.06.2017 , /DATE OF PRONOUNCEMENT : 08.06.2017 / O R D E R PER GEORGE MATHAN , JUDICIAL MEMBER : ITA NO.737/MDS/2017 IS AN APPEAL FILED BY THE ASSE SSEE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-10, C HENNAI, IN ITA NO.111/14-15/CIT(A)-10 DATED 14.02.2017 FOR THE AY 2011-12. ITA NO.737/MDS/2017 :- 2 -: 2. MR.SHAJI P. JACOB, ADDL. CIT REPRESENTED ON BEHA LF OF THE REVENUE AND MR.AVINASH WADHWANI, ADV. REPRESENTED ON BEHALF OF THE ASSESSEE. 3. IT WAS SUBMITTED BY THE LD.AR THAT THE ASSESSEE IS AN EMPLOYEE OF M/S.COGNIZANT TECHNOLOGIES INDIA PVT. LTD. IT WAS A SUBMISSION THAT THE ASSESSEE HAD RECEIVED THE RIGHT TO PURCHASE SHARE O PTIONS IN M/S.COGNIZANT, USA IN 2005-2007. IT WAS A SUBMISSIO N THAT DURING 2011- 12, THE ASSESSEE EXERCISES HIS RIGHT TO SELL THESE SHARE OPTIONS IN NASDAQ AS POSTPONEMENT ANY FURTHER WOULD DEPRIVE OF HIM OF HIS RIGHT IN THE SCHEME. THE ASSESSEE HAD OFFERED THE PROFITS GENER ATED FROM THE SALE OF THE SHARE OPTION AS CAPITAL GAINS IN THE RETURN SUB MITTED. IT WAS A SUBMISSION THAT THE AO HAD TREATED THE SAME AS PERQ UISITE AND TAXED THE SAME. IT WAS A SUBMISSION THAT THE SHARE OPTIONS C OULD NOT BE CONSIDERED AS SECURITY AS THERE IS NO EMPLOYER AND EMPLOYEE RE LATIONSHIP BETWEEN THE ASSESSEE AND M/S.COGNIZANT, USA. IT WAS A SUBMI SSION THAT THE GAINS WERE LIABLE TO BE TAXED ONLY UNDER THE HEAD CAPITAL GAINS. 4. IN REPLY, THE LD.DR SUBMITTED THAT UNDER IDENTIC AL CIRCUMSTANCES, THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF SOUNDARRAJAN PARTHASARATHY V. DCIT REPORTED IN (2016) 159 ITD 00 21 (CHENNAI) HAS HELD THAT THE STOCK APPRECIATION RIGHTS RECEIVED BY THE ASSESSEE TO BE CONSIDERED AS PERQUISITES IN THE HANDS OF THE ASSES SEE COMPANY OR BENEFITS IN LIEU OF SALARY FOR THE SERVICES RENDERE D. IT WAS HOWEVER FAIRLY AGREED BY THE LD.DR THAT IF THE ASSESSEE HAS PAID T HE TAX ON THE STOCK ITA NO.737/MDS/2017 :- 3 -: APPRECIATION RIGHTS RECEIVED BY THE ASSESSEE IN USA ON THE VALUE OF THE VERY SAME STOCK APPRECIATION RIGHTS, THEN HE WOULD BE ENTITLED TO THE BENEFIT OF SUCH TAXES PAID IN USA. 5. IN REPLY, THE LD.AR SUBMITTED THAT THIS TRIBUNAL IN THE CASE OF SOUNDARRAJAN PARTHASARATHY V. DCIT REPORTED IN (2 016) 159 ITD 0021 (CHENNAI) HAS NOT CONSIDERED THE FACT THAT THE STOC K APPRECIATION RIGHTS WAS NOT IN RESPECT OF THE EMPLOYER COMPANY BUT IT W AS IN RESPECT OF A COMPLETELY UNRELATED FOREIGN COMPANY. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. IT IS AN UNDISPUTED FACT THAT THE ASSESSEE HAS RECEIVED CERTAIN AMOUNTS ON T RANSFER OF STOCK APPRECIATION RIGHTS IN M/S.COGNIZANT TECHLONOGY SOL UTIONS CORPORATION, USA. THE AMOUNT HAS BEEN RECEIVED BY THE ASSESSEE THOUGH HIS EMPLOYER M/S.COGNIZANT TECHNOLOGIES INDIA PVT. LTD. THIS BE ING SO, AS THE ASSESSEE HAS RECEIVED THE PAYMENT FROM HIS EMPLOYER ON ACCOU NT OF THE SCHEME OFFERED BY HIS EMPLOYER, WE ARE OF THE VIEW THAT T HE SAME IS LIABLE TO BE TREATED AS BENEFIT IN LIEU OF SALARY FOR SERVICES R ENDERED OR PERQUISITE. ADMITTEDLY, THE LD.AR HAS ALSO NOT BEEN ABLE TO TEL L US AS TO WHAT IS THE NATURE OF THE PAYMENT, AND WHY THE ASSESSEES EMPLO YER HAS MADE THE PAYMENT TO THE ASSESSEE ON ACCOUNT OF THE SCHEME LA UNCHED BY IT, DEDUCTING TAX AT SOURCE THEREON REGARDING IT AS SAL ARY INCOME? THIS BEING SO, RESPECTFULLY FOLLOWING THE DECISION OF THE CO-O RDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF SOUNDARRAJAN PARTHASARATHY REFERRED TO SUPRA ITA NO.737/MDS/2017 :- 4 -: WHICH IS ON IDENTICAL FACTS AND ON ACCOUNT OF THE S AME SCHEME INTRODUCED BY M/S.COGNIZANT TECHNOLOGIES INDIA PVT. LTD., THE FINDINGS OF THE LD.CIT(A) ON THIS ISSUE STANDS CONFIRMED. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON JUNE 08, 201 7, AT CHENNAI. SD/- SD/- ( ) ( SANJAY ARORA ) /ACCOUNTANT MEMBER ( ' ) (GEORGE MATHAN) & /JUDICIAL MEMBER /CHENNAI, 2 /DATED: JUNE 08, 2017. TLN , *&34 54 /COPY TO: 1. ) /APPELLANT 4. 6 /CIT 2. *+) /RESPONDENT 5. 4 *&& /DR 3. 6 ( ) /CIT(A) 6. ' /GF