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2018 (12) TMI 1255 - AT - Income TaxDeduction claimed u/s 54EC denied - Treatment by the authorities of LTCG on transfer of ESOP options as STCG - Held that:- If ESOP options had been exercised, and the shares allotted thereby would have been sold after their allotment, then undisputedly the gains arising therefrom would have to be treated as STCG. In the case on hand, however, the 3750 options have been transferred as such, without any exercise of options. In the absence of exercise of options, no shares were allotted to the assessee. It is a case of buy back of ESOP options by Infosys Technologies Ltd., with Infosys BPO Ltd., the assessee’s employer, as a confirming party. It is not in dispute that ESOP options provided valuable right to the assessee to exercise and have allotment of shares. They were thus ‘capital asset’ held by the assessee from the date of grant i.e., 28.02.2003 and 02.02.2004 for which a consideration was paid to the assessee under the option Transfer Agreement. The contention that the assessee cannot exercise option in the absence of vesting is not relevant as the options were transferred without any exercise in the case on hand. The capital gain arising from the transfer of 3750 options should be considered as LTCG. AO is accordingly directed. Consequently, grounds 1.2 to 1.6 are allowed. Deduction u/s 54EC - There is no dispute in the matter that the deduction claimed u/s 54EC is to be allowed to the assessee as the AO in the original order of assessment for Assessment Year 2007-08 passed u/s 143(3) of the Act vide order dated 31.12.2009 on page 2 at para 5 thereof has recorded that the Assessee’s claim for deduction u/s 54EC is to be allowed. Charging of Interest u/s 234B and 234D - Held that:- The assessee denies itself liable to be charged interest u/s 234B and 234D of the Act. The charging of interest is consequential and mandatory and the AO has no discretion in the matter. This proposition has been upheld in the case of Anjum H. Ghaswala ([2001 (10) TMI 4 - SUPREME COURT) and therefore uphold the AO’s action in charging the same. The AO is however directed to re-compute the interest chargeable u/s 234B and 234D of the Act, if any, while giving effect to this order.
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