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2020 (10) TMI 1169 - HC - Income TaxCorrect head of income - gains arising on cashless exercise of stock options - taxable as income under the heads 'income from salaries' and 'short term capital gains' or 'long term capital gains' as claimed by the Appellant - Whether stock options did not constitute a 'capital asset' under Section 2(14) of the Act? - cashless exercise of stock options constitute transfer of a long term capital asset under Section 2(47) or not? - HELD THAT:- Assessee was an independent consultant to SiRF USA and was not an employee of SiRF USA at the relevant time. Thus, there was no relationship of employer and employee between the SiRF USA and the assessee and therefore, the finding recorded by the tribunal that the income from the exercise of stock option has to be treated as income from salaries is perverse as it is trite law that unless the relationship of employer and employee exists, the income cannot be treated as salary. [See: CIT VS. L.W.RUSSEL [1964 (4) TMI 4 - SUPREME COURT] Revenue in case of several other assessee's have accepted the fact that on cashless exercise of option, there arises a income in the nature of capital gains. However, in the case of the assessee the aforesaid stand was not taken. It is also pertinent to mention here that nothing was brought to our notice that the view taken by the tribunal in the following cases has been challenged by the revenue. See SHRI KAMLESH BAHEDIA C/O ABOBE SYSTEM INDIA PVT. LTD [2014 (8) TMI 843 - ITAT DELHI], N.R. RAVIKRISHNAN [2018 (12) TMI 1255 - ITAT BANGALORE] and DR. MUTHIAN SIVATHANU [2018 (11) TMI 1112 - ITAT CHENNAI] Thus in view of law laid down by the Supreme Court in Berger paints [2004 (2) TMI 4 - SUPREME COURT] it was not open for the revenue to take one stand in case of the assessee and to challenge the correctness of the same in case of other assessee. For this reason also, the revenue cannot be permitted to take a different view in this appeal. - Decided in favour of assessee.
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