2016 (12) TMI 1840 - AT - Income Tax

Status of assessee - period of stay in India - Not Ordinarily Resident in India - adjustments u/s. 143(1) - error in Form-16 - perquisites taxable under the Income-tax Act - stock options income accrued and received outside India - assessee was employed in USA during the period August 2000 to October 2008 - exemption claimed by the assessee towards receipt said to be sale of stock options granted in the U.S.A while he was working in Google Inc. USA.- HELD THAT - If any incorrect claim, if such incorrect claim is apparent from any information in the return, he should correct the same while processing the return u/s.143(1) of the Act. In the instant case, the assessee claimed exemption of substantial amount which was in the form of sale of stock option in USA. The Form No.16 annexed to the return of income issued by the present employee of the assessee shows that the stock option received by the assessee was liable for tax and it was subject to TDS by Google India Pvt Ltd., Bangalore and they have deducted the TDS on the same. This is being so, the AO while processing the return u/s. 143(1) of the Act included the income from sale of stock option as income of the assessee. Now the assessee claimed that it could not have been done by the AO at the stage of prima facie adjustments u/s. 143(1) of the Act. In our opinion, when the information is available on record by way of Form No.16 annexed to the return of income the AO cannot keep quiet without making corrections while processing return u/s.143(1) of the Act. In our opinion, the AO is within his jurisdiction in considering the income from sale of stock options as income of assessee which is evident from the Form No.16 attached with the return of income. Being so, we do not find any infirmity in the order of lower authorities. CIT(A) failed to adjudicate certain issue relating to the status of the assessee and also relating to the taxability of the stock option - These are debatable issue cannot be dealt u/s.143(1) of the Act and what cannot be done directly, the same thing cannot be done indirectly. Further, the reading of the whole order of the CIT(A) gives the impression that the CIT(A) has considered the entire facts and circumstances of the case on the basis of the written submissions filed before him, though the assessee was non-cooperative. It is to be mentioned herein that the order of the lower authorities has not to be scrutinised sentence by sentence merely to find out whether all facts have been set out in detail by CIT(A) or whether some incidental fact has not been noticed by the CIT(A) in his order. If the Tribunal on a fair reading of the Order of the CIT(A), finds that it has taken into account all relevant material and has not taken into account any irrelevant material in basing his conclusions, the decision of the CIT(A) is not liable to be interfered with, unless, of course, the conclusions reached at by the CIT(A) are perverse. - Appeal of assessee dismissed.

Summary

Issues:
1. Taxability of stock options income received outside India by a Not Ordinarily Resident.
2. Jurisdiction of Assessing Officer to include stock options income in assessment u/s. 143(1).
3. Adjudication by CIT(A) on debatable issues.
4. Compliance with Form No. 16 for TDS on stock options income.

Analysis:

Issue 1: Taxability of stock options income
The assessee, a Not Ordinarily Resident, claimed stock options income received outside India should not be taxed in India. The contention was based on the assessee's residential status and the source of income. The CIT(A) upheld the taxability of stock options in India, relying on a Tribunal decision. The assessee argued citing legal precedents that income earned outside India by a Not Ordinarily Resident is not taxable in India. However, the Tribunal dismissed the appeal, emphasizing the tax liability based on the income source rather than residential status.

Issue 2: Jurisdiction of Assessing Officer
The Assessing Officer processed the return u/s. 143(1) including stock options income based on Form No. 16 provided by the employer showing TDS deduction. The assessee contended that such adjustments should not have been made at the prima facie stage. The Tribunal held that when information is available, the AO is justified in making corrections during processing u/s. 143(1). The Tribunal found no error in the AO's decision to include stock options income in the assessment.

Issue 3: Adjudication by CIT(A)
The assessee raised concerns about the CIT(A) not fully adjudicating on the status and taxability of stock options. The Tribunal held that debatable issues cannot be resolved u/s. 143(1) and CIT(A) considered all relevant facts despite the assessee's non-cooperation. The Tribunal affirmed the CIT(A)'s decision, stating that as long as the order considers all relevant material and avoids irrelevant aspects, interference is unwarranted unless the decision is perverse.

Issue 4: Compliance with Form No. 16
The assessee argued discrepancies between the income offered in the return and Form No. 16 led to the tax demand. The Tribunal noted that the AO's decision was based on the information provided in Form No. 16 regarding the TDS on stock options income. The Tribunal upheld the AO's jurisdiction to consider such income during processing u/s. 143(1) based on available information.

In conclusion, the Tribunal dismissed the appeal, affirming the taxability of stock options income in India, the AO's jurisdiction to adjust income based on available information, and the CIT(A)'s consideration of relevant facts despite debatable issues raised by the assessee.