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2015 (12) TMI 1026 - ITAT CHENNAI

2015 (12) TMI 1026 - ITAT CHENNAI - TMI - Taxation of Employees Stock Option Plan under fringe benefit tax - Held that:- When the CBDT clarified that with a view to bring stock options within the purview of fringe benefit tax, Finance Act, 2007 has inserted a new clause (d) in sub-section (1) of sec. 115WB of the Act, this Tribunal is of the considered opinion that the Employees Stock Option Plan cannot be brought under any other sub clauses before introduction of clause(d) to sec. 115WB(1) by F .....

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on the footing that sec.115WB(1)(d) is applicable in respect of Employees Stock Option allotted or transferred on or after 1.4.2007. Therefore, this Tribunal is of the considered opinion that the date of actual allotment or transfer of Employees Stock Option is crucial for determination of the issue arises for consideration. In the absence of any material, this Tribunal is of the considered opinion that the actual date of allotment or transfer needs to be verified by the Assessing Officer. Accor .....

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. Mohan Alankamony, AM For the Appellant : Shri K R Vasudevan, Adv. For the Respondent : Dr. Milind Madhukar Bhusari, CIT ORDER Per N R S Ganesan, Judicial Member This appeal of the assessee is directed against the order of the Commissioner of Income-tax (Appeals), Large Taxpayer Unit, Chennai, dated 3.1.2014 and pertains to assessment year 2007-08. 2. There is a delay of 35 days in filing the appeal. The assessee filed an application for condonation of delay. After hearing both sides, we find t .....

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sideration, the Employees Stock Option Plan cannot be subjected to taxation. Referring to sec. 115WB(1)(a) of the Act, the ld. Counsel submitted that if the Employees Stock Option Plan falls in sec. 115WB(1)(a), then it is chargeable to fringe benefit tax for the year under consideration. However, Employees Stock Option Plan will not fall in sec. 115WB(1)(a) of the Act. According to the ld. Counsel, Employees Stock Option Plan is not a privilege, service, facility etc. The ld. Counsel submitted .....

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s after 1.4.2007. Therefore, fringe benefit tax, if any, has to be taxed on the Employees Stock Option Plan for the assessment year 2008-09 and not for the assessment year 2007-08. 4. We heard Dr.Milink Madhukar Bhusari, Ld. Departmental Representative also. The ld. DR submitted that sec.115WB(1)(d) of the Act was introduced by Finance Act, 2007. The CBDT Circular No.9/2007 dated 20.12.2007 clarified that the new provisions of sec. 115WB(1)(d) shall apply in cases where the allotment or transfer .....

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the Act. The CIT(A) found that Sec. 115WB(1)(d) introduced by Finance Act, 2007 was applicable for the assessment year 2008-09. However, the Employees Stock Option Plan is a benefit/privilege conferred on the employees directly by the employer, therefore, before assessment year 2008-09 it would fall u/s 115WB(1)(a) of the Act. Hence, the Employees Stock Option Plan, according to the ld. DR, is liable for fringe benefit tax u/s Sec. 115WB(1)(a) of the Act for the assessment year 2007-08. 6. We ha .....

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With a view to bring grant of stock options by employers to employees within the purview of FBT, Finance Act, 2007 has inserted a new clause (d) in sub-section (1) of section 115WB. The salient features of this provision are:- (i) FBT shall apply in all cases where any specified security or sweat equity shares has been allotted or transferred by the employer to his employees; (ii) FBT shall be payable in the previous year in which such allotment or transfer has taken place; (iii) the provisions .....

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the Circular, the provisions of new clause (d) to sec. 115WB(1) shall apply in cases where the allotment or transfer is made on or after 1st day of April 2007. The CBDT Circular further clarified that with a view to bring grant of stock options by employers to employees within the purview of fringe benefit tax, sub-section (d) was introduced in sec. 115WB(1) of the Act by Finance Act, 2007. Therefore, the intention of the Parliament is to bring stock option within the purview of fringe benefit t .....

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