Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, “E” BENCH, MUMBAI
Before: SHRI PRASHANT MAHARISHI, AM & SHRI RAHUL CHAUDHARY, JM
This is the set of 6 appeals filed by The Deputy Commissioner Of Income Tax, (OSD) (TDS) – 2 (3) Mumbai (The Learned AO) for A Y 2013 – 14 to 2019 – 20 against appellate orders passed by the National Faceless Appeal Centre, Delhi (The Learned CIT – A ) dated 14/11/2022. All these appeals involve the common issues and therefore they are disposed of by this common order.
All these six appeals have following identical grounds and issues. i. Whether tax is deductible on ESOP provisions as soon as it is granted and provided for in the books of account or at the time of allotment of shares to the employees when it becomes chargeable to tax in their hands as perquisites u/s 17 (2) (vi) of The Act
Issues and its quantification in all these six appeals are as under :- Y Grounds of appeal
a b C 127/M/2023 2013 – 14 as failure to failure to failure to per appellate deduct tax at deduct tax at deduct tax at order dated source on source on source on year 14/11/2022 employee discount on end provisions and modified share best debates of ₹ of ₹ under section payments of ₹ 399,200,000 13,30,43,607/– 154 of the 16,632,320/– on which TDS on which TDS income tax on which TDS default under default under act by order default under section 201 section 201 (1) dated section 201 (1) is of ₹ is determined 31/12/2019 (1) of ₹ 39,920,000/– at ₹ 4,989,696/– and interest 1,23,93,752 on interest under section and interest under section 201 (1A) of ₹ under section 201 (1A was 37,125,600 201 (1A) of ₹ bracket is of ₹ 10,162,877/– 4,640,417 128/M/2023 2014 –
15. Failure to Failure to Failure to against deduct tax at deduct tax on deduct tax at appellate source on discounts and source on year order dated ESOP of ₹ rebates of ₹ end provisions 14/11/2022 4,398,291 457,600,000 of ₹ and interest having a TDS 210,311,767 on thereon under default under which TDS section 201 section 201 default under (1A) of ₹ (1) of ₹ section 201 (1) 3,562,616 45,760,000 of ₹ and interest 1,97,79,204 of ₹ and interest of 37,065,600 ₹ 16,218,947 129/M/2023 2015 –
16. Failure to Failure to Failure to against deduct tax at deduct tax at deduct tax at appellate source on source on source on here order dated employee discounts and and provision of 14/11/2022 share best rebates of ₹ ₹ 215,648,240 payment of ₹ 533,500,000 on which TDS a) On the facts and in the circumstances of the case and in law, the learned CIT (A) has erred in relying on the honourable ITAT decision deleting addition made by AO in respect of tax not deducted at source on account of ESOP without appreciating the fact that the T D S provision will come in picture, the moment is provided to employees to exercise the option. b) On the facts and circumstances of the case and in law, the learned CIT (A) has erred in relying on the Supreme Court decision in holding that rebates and discounts offered by the assessee company to distributors, dealers, customers are not covered under section 194H, without appreciating the fact that all these discounts
Brief facts of the case shows that assessee deals in business segment like lubricants for automotive and industrial applications, liquefied petroleum gas for domestic and commercial applications, other products and special fluids. As there was a significant decrease in the tax deduction at source in case of a company compared to earlier years, verification was conducted by The Deputy Commissioner Of Income Tax (OSD) (TDS), 2 (3), Mumbai at the business premises of the assessee. 08. During the course of verification it was found that:- a. Assessee has incurred expenses on employee share-based payment debited to profit and loss account of ₹ 1.66 crores. Assessee did not deduct any tax at source on the above sum. The reason for non- deduction of the tax was that the employee share-based payments during the financial year 2012 – 13 a sum of Rs 1 66,32,320 has been paid on account of incentive plans to its employees in the nature of performance shares of TOTAL SA France. This performance shares is awarded become final after the specified three-year vesting period subject to a presence condition and performance condition based on the return on equity. The claim of the assessee was that assessee has made a provision of the above sum on account of employee share- based payments which represents grant of performance shares. The provision of performance share is made over the vesting period of 2 – 3 years on the basis of guidance note 18 on accounting for employee share-based payments issued by the Institute of chartered accountants a) With respect to the tax deduction at source on account of employee share-based payment amounting to ₹ 1,66,32,320/– the learned CIT – A following the decision of the coordinate
Accordingly ground number (a) and (b) of the appeal of the learned assessing officer is dismissed and ground number (C) is partly allowed. With respect to non deduction of tax on year end provision ld AO is directed to compute interest u/s 201 (1A) of the Act to the extent and period of TDS to be deducted by the assessee and taxes paid by the payees.
Accordingly, as the grounds are similar, all other five appeals are also decided on similar reasons giving similar results. 19. Thus all these six Appeals are partly allowed.
Order pronounced in the open court on 16.08. 2023.