9911796707
TMI Blog2018 (11) TMI 1112X X X X Extracts X X X X X X X X Extracts X X X X ..... term or long term as the case may be. 3. The brief facts of the case are that the assessee is an individual earning income from salary, filed his return of income for the assessment year 2011-12 on 30.07.2011. The Ld.AO in his order has further observed as follows:- "The assessee had admitted total income of Rs. 4,18,23,600/-. The same was processed u/s.143(1) of the Income Tax Act, 1961 determining total income at Rs. 4,18,23,600/-. The case was re-opened u/s.147 and notice u/s.148 was issued to the assessee, which is duly served to the assessee., 2. The notice u/s.143(2) and u/s.142(1) of the IT Act 1961 alongwith the questionnaire was issued and subsequently on various dates. In response to the notices, Shri Muthian Sivathanu, assesssee, attended and submitted various details as called for. The same were scrutinized. 3. The assessee has claimed Short Term Capital Gain of Rs. 1,45,19,170/- and offered an amount of Rs. 1,45,19,170/-. The claim of the assessee cannot be accepted because the employer has treated an amount of Rs. 1,45,19,170/- as perquisite and the same comes under the head salary. 4 During the said financial year the assessee received perquisite of Rs. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ck option is offered not by the Indian Company but by its parent company. If the 'salary' is paid for or on behalf of the employer that will also have to be included in the 'salary' income by virtue of sub-clause (b) of section 15. In this case stock option was offered to the employees of the Indian Company. If and when the option is exercised by the employee, share will be allotted and thereafter sold. The resultant profit will be taxable in the hand of the employee. The amount that the employee will receive will come to him in addition to the salary which the employee will get from the Indian Company. It is something more than what is due to him under the contract of employment. Therefore, this additional amount will clearly come within section 15(b) of the Income Tax Act. Salary has been defined in s. 17(iv) to include perquisites or profits in lieu of or in addition to any salary or wages. The employees, who accept the offer of ESOPS, are going to receive something in addition to their salary and wages. The stock option scheme will enable them to get something in addition to their remuneration. This addition will clearly come within the definition of the expression "salary". ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he holding company and the subsidiary were to be treated as one and the same because the subsidiary was created to generate and supply energy and power to the holding company in order to enable it to maintain its production commitments to the state and therefore generation of power was considered for the purposes of excise to be the holding company's own source of supply and not supply from a separate company". 6.6 In the instant case, the American company has floated an Indian subsidiary. It has devised a scheme to give encouragement and pecuniary incentive to the employees of the Indian company by offering to them an option to purchase its own shares at a predetermined price. This sort of transaction is not possible unless the parent company treats its own business and the business of the Indian company as one. Perquisite or any other profit of employment will clearly come within the ambit of the definition of the expression 'salary' given in section 17(1). Moreover, 'perquisite' has also been broadly defined in section 17(2) and will include the value of any benefit or amenity provided at a concessional rate. 6.7 From the above discussion it is clear that the Employer has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le proceeds cannot be treated as the perquisite in the hands of the assessee during the relevant assessment year, as the stock option was exercised by the assessee in the earlier assessment year when he was a non-resident and therefore only the capital gain accrued to the assessee during the relevant assessment year when he is a resident but NOR can be brought to tax during the relevant assessment year. On the other hand the Ld.DR argued in support of the orders of the Ld.Revenue Authorities. 6. We have heard the rival submissions and carefully perused the materials on record. From the facts of the case it appears that the entire stock option was exercised by the assessee when he was a nonresident during the earlier assessment years when he was nonresident. If that is so, the value of the shares allotted cannot be treated as the income of the assessee during the relevant assessment year or in the earlier relevant assessment year because it is the income accrued to the assessee outside India and for services rendered outside India when he was a non-resident. It further appears that subsequently the assessee took up employment in the subsidiary company in India and was a resident bu ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
