2012 (12) TMI 668 - HC - Income Tax

Non deduction of TDS - perquisite value of stock options allotted to its employees covered under the employees Stock Option scheme - Held that - Decision of a Division Bench of this Court, dated 23.12.2011, in a batch of cases confirming the orders passed by a single judge of this Court directing the refund of the amounts paid by the assessees, as tax, with the interest payable thereon, as per the provisions of the Income Tax Act, 1961. Set aside the impugned order of the first respondent, dated 19.1.2007. Consequently, the second and the third respondents are directed to refund the tax amount to the petitioner, within a period of eight weeks from the date of receipt of a copy of this order - in favour of assessee.

Summary

Issues:
1. Refund of tax deducted from salary along with interest accrued.
2. Challenge of demand raised by Deputy Commissioner Income Tax.
3. Orders passed by various authorities and courts regarding the refund.

Analysis:
1. The petitioner, an Accounts Executive at Infosys, filed an original income tax return for the assessment year 1999-2000. The employer had deducted tax at source from the petitioner's salary, which was remitted to the department. A demand was raised for failure to deduct tax at source for stock options allotted to employees under the Stock Option scheme. The necessary tax was paid under Section 201(1) of the Income Tax Act, and the amount was deposited in the department account.

2. The demand raised by the Deputy Commissioner Income Tax was challenged before the Commissioner of Income Tax (Appeals) and later before the Income Tax Appellate Tribunal, which held that allotting shares to employees did not constitute a perquisite, absolving the petitioner of any liability to deduct tax at source. The department's challenge in higher courts was unsuccessful, confirming the petitioner's entitlement to a refund of the deducted tax amount along with accrued interest.

3. The petitioner's counsel referred to previous court orders directing the department to refund tax amounts with interest. The court noted the lack of refutation by the respondent's counsel and set aside the impugned order, directing the refund of Rs. 1,68,546 to the petitioner within eight weeks. The petitioner was also allowed to apply for interest accrued on the refunded amount, with the authority instructed to consider and decide on the application promptly in accordance with relevant provisions of the Income Tax Act, including Section 244(A) (2). The writ petition was ordered accordingly, with no costs involved.