DCIT (OSD)(TDS)-2(3), MUMBAI vs. TOTAL ENERGIES MARKETING INDIA PVT LTD, MUMBAI

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

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.