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TMI Blog2015 (2) TMI 70X X X X Extracts X X X X X X X X Extracts X X X X ..... ent upon exercise of the said options as perquisite value as during the lock-in period there was no cash inflow to employees to foresee future market value of shares and the benefit if any which arose on date when option stood exercised was only a notional benefit whose value was unascertainable. In view of the above, the questions raised for consideration in the present appeals are answered in favour of the assessee and against the revenue. The Tribunal was correct in treating the amount received on redemption of Stock Appreciation Rights as capital gain as against treated as perquisite under Sec.17(2)(iii) of the I.T. Act and in treating the amount received on exercising the opinion of Employee's Stock Option Plan (EOSP) as long te ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting the sum of ₹ 6,80,40,724/- being the amount received on redemption of Stock Appreciation Rights (SARs) as capital gain as against treated as perquisite under Sec.17(2)(iii) of the I.T. Act or under Sec. 28(iv) of the Act purportedly on the ground that the employer - employee relationship did exist between the assessee and Procter Gamble Co., U.S.A. (PG - USA). Tax Appeal No. 6 of 2004 Whether in the facts and on the circumstances of the case, the ITAT was right in law in holding that capital gain arose to the appellant on redemption of Stock Appreciation Rights which were having no cost of acquisition? Tax Appeal No. 1295 of 2010 Whether the Appellate Tribunal is right in law and on facts in treating the sum of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as held as under. 7. During the assessment years 1997-98, 1998-99 and 1999- 2000 there was no provision in the said 1961 Act which made the benefit by way of ESOP taxable as income specifically. It became specifically taxable only with effect from 1.4.2000 when Section 17(2)(iiia) stood inserted. 9. The question for consideration is whether perquisite could be said to accrue at the time when warrants were granted or at the time when the option vested in the employee or at the time when the options stood exercised or at the time when the lock-in conditions were removed or at the time when the shares were to be sold in the share market. According to the AO, the perquisite value was the difference between the total amount paid by the em ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ption was not ascertainable. In our view, clause (iiia) is not clarificatory. Moreover, the meaning of the words specified securities in section (iiia) was defined or explained for the first time vide Finance Act, 1999 w.e.f. 1.4.2000. Moreover, the words allotted or transferred in clause (iiia) made things clear only after 1.4.2000. Lastly, it may be pointed out that even clause (iiia) has been subsequently deleted w.e.f. 1.4.2001. For the aforestated reasons, we are of the view the clause (iiia) cannot be read as retrospective. 3.1 Thus, in the aforesaid decision the Hon'ble Supreme Court has held that in the absence of legislative mandate a potential benefit could not be considered as 'income' of the employee(s) chargeabl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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