The Tax PublishersITA Nos. 1200 & 1201/Mum/2018
2021 TaxPub(DT) 0402 (Mum-Trib)INCOME TAX ACT, 1961
Section 17(2)(vi)
Options were granted to assessee in consideration of services rendered in India, way back in 2007, when assessee was a resident in India. Accrual or arising of an income could not be equated with receipt of an income. Viewed thus, income in respect of ESOP grant benefit accrued and had arisen at the point of time when ESOP rights were granted, even though taxability in respect of the same on account of specific legal provisions under section 17(2)(vi) had arisen in the concerned year. Therefore, action of bringing the said income to tax in the hands of assessee in the concerned assessment year, even though status of assessee in the concerned assessment year, was non-resident, could not be faulted.
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Income - Accrual - Employee Stock Option, whether perquisite under section 17 -
Assessee, an employee of HDFC Bank Limited, Mumbai, was on deputation to HDFC Bank Representative Office in Dubai. He was working in Dubai, U.A.E., since 1-10-2007. The status of assessee, so far as relevant assessment year was concerned, was of the non-resident. During relevant financial period, assessee exercised options granted to him by HDFC Bank Limited on 27-6-2007, which vested on 27-6-2008 (50%) and on 27-6-2009 (50%). Upon exercise of these options in respect of 18,500 shares. The grant price of these options was Rs. 219 per share, whereas market price, as on date on exercising the option, ranged from Rs. 507.40 to Rs. 659. The perquisite value of these options, being difference in market value of shares vis-a-vis grant price of shares, aggregated to Rs. 72,77,320. It was in this backdrop that HDFC Bank Limited deducted tax at source of Rs. 22,48,685 on said perquisite value in respect of exercise of options. Assessee contended that 'ESOP benefits were received by assessee on account of services rendered in connection with employment with Dubai representative office of HDFC Bank in U.A.E. over the years from financial year 2007-08 to financial year 2009-10. So, ESOP perquisites were received for employment services rendered in UAE., and, therefore, could not be said to have accrued or arisen in India. Held: Options were granted to assessee in consideration of services rendered in India, way back in 2007, when assessee was a resident in India. Accrual or arising of an income could not be equated with receipt of an income. Viewed thus, income in respect of ESOP grant benefit accrued and had arisen at the point of time when ESOP rights were granted, even though taxability in respect of the same on account of specific legal provisions under section 17(2)(vi), had arisen in the concerned year. Therefore, action of bringing the said income to tax in the hands of assessee in the concerned assessment year, even though status of assessee in the concerned assessment year, was non-resident, could not be faulted.
Supported by:ED Sassoon & Co Ltd. v. CIT (1954) 26 ITR 27 (SC) : 1954 TaxPub(DT) 103 (SC).
REFERRED :
FAVOUR : Against the assessee.
A.Y. : 2013-14
IN THE ITAT, MUMBAI BENCH
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