2016 (6) TMI 1422 - HC - Income Tax

Refund of the TDS amount along with interest - failure to deduct tax at source in respect of perquisite value of stock options allotted to its employees who were covered by the Employees Stock Option, otherwise, known as ESOP scheme of the company - respective tax was recovered from the salary of the respondent by his employer and the respondent/assessee was also issued Form 16 by the employer on 25.4.2010 certifying the further deduction and remittance towards tax - HELD THAT - Writ Appeal is allowed. The appellants are directed to refund the amount to the assessee/respondent with interest payable as per the provisions of the Act within a period of four weeks from the date of receipt of a copy of this order. See S. THIGARAJAN U. RAMADAS KAMATH K. SURESH KAMATH VERSUS ASSISTANT CIT AND OTHERS 2009 (8) TMI 531 - KARNATAKA HIGH COURT

Summary

Issues:
1. Appeal against order passed in W.P. No. 20525 of 2010 by a learned single Judge.
2. Failure to deduct tax at source for perquisite value of stock options under ESOP scheme.
3. Request for refund of TDS amount and interest along with condonation of delay in filing returns.
4. Dismissal of Writ Appeals by a Division Bench following Karnataka High Court's decision.
5. Confirmation of the order of the Writ Court dated 15.9.2010 in W.P. No. 20525 of 2010.

Analysis:
1. The respondent, an employee of a company, failed to deduct tax at source for the perquisite value of stock options under the ESOP scheme, leading to a demand by the Assistant Commissioner of Income Tax. The employer paid the tax amount under section 201(1) of the Income Tax Act along with interest. The tax was later recovered from the employee's salary, who then filed a revised return and a petition for refunding the TDS amount and interest, which was rejected by the first respondent. The Writ Court allowed the petition, prompting the revenue to file the present Writ Appeal against the order.

2. The revenue presented a batch of Writ Appeals against similar circumstances, following a Karnataka High Court decision, which directed the refund of amounts to the assessees with interest. The Senior Standing Counsel acknowledged that the present Writ Appeal aligns with the previous decisions, indicating that it should be treated similarly. The Court, considering the facts and the previous decisions, declined to interfere with the order of the Writ Court dated 15.9.2010 in W.P. No. 20525 of 2010, confirming the decision and directing the appellants to refund the amount to the respondent with interest within four weeks.

3. The judgment emphasized that the Writ Appeal was allowed, and the appellants were instructed to refund the amount to the respondent as per the provisions of the Act within the specified time frame. No order was issued regarding costs, and the connected Miscellaneous Petition was closed, concluding the matter in favor of the respondent.