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Income Tax Appellate Tribunal, ‘C’ BENCH: CHENNAI
Before: SHRI SANJAY ARORA & SHRI GEORGE MATHAN
आदेश / O R D E R
PER GEORGE MATHAN, JUDICIAL MEMBER:
Order of Commissioner of Income Tax (Appeals)-10, Chennai, in dated 14.02.2017 for the AY 2011-12.
ITA No.737/Mds/2017 :- 2 -:
Mr.Shaji P. Jacob, Addl. CIT represented on behalf of the Revenue and Mr.Avinash Wadhwani, Adv. represented on behalf of the assessee.
It was submitted by the Ld.AR that the assessee is an employee of M/s.Cognizant Technologies India Pvt. Ltd. It was a submission that the assessee had received the right to purchase share options in M/s.Cognizant, USA in 2005-2007. It was a submission that during 2011- 12, the assessee exercises his right to sell these share options in NASDAQ as postponement any further would deprive of him of his right in the scheme. The assessee had offered the profits generated from the sale of the share option as capital gains in the return submitted. It was a submission that the AO had treated the same as perquisite and taxed the same. It was a submission that the share options could not be considered as security as there is no employer and employee relationship between the assessee and M/s.Cognizant, USA. It was a submission that the gains were liable to be taxed only under the head capital gains.
In reply, the Ld.DR submitted that under identical circumstances, the Co-ordinate Bench of this Tribunal in the case of Soundarrajan Parthasarathy v. DCIT reported in (2016) 159 ITD 0021 (Chennai) has held that the stock appreciation rights received by the assessee to be considered as perquisites in the hands of the assessee company or benefits in lieu of salary for the services rendered. It was however fairly agreed by the Ld.DR that if the assessee has paid the tax on the stock
ITA No.737/Mds/2017 :- 3 -: appreciation rights received by the assessee in USA on the value of the very same stock appreciation rights, then he would be entitled to the benefit of such taxes paid in USA.
In reply, the Ld.AR submitted that this Tribunal in the case of Soundarrajan Parthasarathy v. DCIT reported in (2016) 159 ITD 0021 (Chennai) has not considered the fact that the stock appreciation rights was not in respect of the employer company but it was in respect of a completely unrelated foreign company.
We have considered the rival submissions. It is an undisputed fact that the assessee has received certain amounts on transfer of stock appreciation rights in M/s.Cognizant Techlonogy Solutions Corporation, USA. The amount has been received by the assessee though his employer M/s.Cognizant Technologies India Pvt. Ltd. This being so, as the assessee has received the payment from his employer on account of the scheme offered by his employer, we are of the view that the same is liable to be treated as benefit in lieu of salary for services rendered or perquisite.
Admittedly, the Ld.AR has also not been able to tell us as to what is the nature of the payment, and why the assessee’s employer has made the payment to the assessee on account of the scheme launched by it, deducting tax at source thereon regarding it as salary income? This being so, respectfully following the decision of the Co-ordinate Bench of this Tribunal in the case of Soundarrajan Parthasarathy referred to supra
ITA No.737/Mds/2017 :- 4 -: which is on identical facts and on account of the same scheme introduced by M/s.Cognizant Technologies India Pvt. Ltd., the findings of the Ld.CIT(A) on this issue stands confirmed.
In the result, the appeal filed by the assessee is dismissed.
Order pronounced in the Open Court on June 08, 2017, at Chennai.