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TMI Blog2013 (11) TMI 566X X X X Extracts X X X X X X X X Extracts X X X X ..... Gains” as the holding period is more than 4 years - Decided against Revenue. - ITA No. 4477/Del/2011 - - - Dated:- 13-4-2012 - Shri Rajpal Yadav And Shri T. S. Kapoor,JJ. For the Petitioner : Shri Pradeep Kumar, CIT(DR) For the Respondent : Shri Deepak Kumar, Adv. ORDER Per Rajpal Yadav: Judicial Member The revenue is in appeal before us against the order of Learned CIT(Appeals) dated 17.06.2011 passed for assessment year 2007-08. The solitary grievance of the revenue is that Learned CIT(Appeals) has erred in deleting the addition of Rs.3,31,27,703 which was added by the Assessing Officer by treating the long term capital gain disclosed by the assessee as short term capital gain and denying the benefit of exemption ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 54F and claimed the exemption. Learned Assessing Officer has denied the exemption to the assessee by assigning the following reasons: However, for the reasons mentioned below the claim of the assessee cannot be accepted that it is a long term capital gain: 1. The right confirmed by the option had no value; 2. The rights were not absolute. Rather they were contingent and conditional upon continued employment and good behavior; 3. The rights were not transferable; 4. The assessee did not have any active role in the process of acquisition of the rights. He merely concluded that he had a right but not the obligation to exercise the option by accepting the offer. 5. If the option to exercise is considered the point of acquisition w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... option and is allotted the specified number of share. Thus, the ratio of this judicial pronouncement is squarely applicable in the instant case (emphasis laid). Furthermore since no STT has been paid on such transaction, it is liable to be taxed at normal rate of tax. 4. On appeal, Learned First Appellate Authority has accepted the claim of assessee that it is a long term capital gain and he is entitled to exemption under sec. 54F of the Income-tax Act, 1961. 5. The learned counsel for the assessee at the very outset submitted that the issue in dispute is squarely covered in favour of the assessee by the various decisions of the ITAT. He relied upon the order of the ACIT vs. Dr. Dhurjati Gupta reported in 127 TTJ 356. He also placed on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for professional misconduct and retirement. Options not exercised during the granting period would become null and void with no possibility of deferment, option can be exercised by the option holders only if he is in employment of the company and option holder would not have to advance the exercise price and he would directly receive the difference between the proceeds of sales i.e. net of transaction fee and the exercise price. The ITAT in the case of Ambhiram Seth has considered almost similar option plan and observed that apparent benefit to the assessee out of ESOP Scheme was that it had not to pay the purchase price immediately at the time of allotment but the same was to be deducted at the time of sale or reduction of shares. The dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... through trustee and there were certain RBI guidelines about nonpayment of price of shares and the option being exercised by assessee on the date of sale of shares. There was no trustee whereas in assessee s case there was a fixed price of allotment of right to fixed quantity of shares and the indistinctive shares were held by a trust on behalf of assessee. Non-allotment of distinctive number of shares by trust cannot be detrimental to the proposition that assessee s valuable right of claiming shares was held in trust and stood sold by Pepsico. Therefore, there was a definite, valuable and transferable right which can be termed as a capital asset in favour of the assessee. 7.1. In our view, the assessee s claim of taxability of gains on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is of four years whereas in the case of Abhiram Seth, it is three years. There is no disparity on facts. The issue is whether the date of acquisition of shares is to be taken the date when option was given to the assessee. The ITAT has accepted this submission of the assessee in the findings extracted supra. The ITAT has put reliance on the order of Dr. Dhurupiti Gupta reported in 127 TTJ 356. Respectfully, following the orders of Co-Ordinate Bench, we are of the view that the Learned First Appellate Authority has rightly accepted the claim of the assessee in respect of long term capital gain and exemption under sec. 54F of the Income-tax Act, 1961. The appeal of the revenue is de void of any merit. Accordingly, it is dismissed. Decision ..... X X X X Extracts X X X X X X X X Extracts X X X X
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