2011 (3) TMI 611 - AT - Income Tax

Assessee's Appeal Partially Allowed: Interest Deletion, Tax Adjustment Upheld

The Tribunal partly allowed the assessee's appeal, directing the deletion of interest under Section 234B and upholding the CIT(A)'s directions for ... Perquisite value of ESOP - lock-in-period - Section 17(2)(iiia) - whether an order of AO in pursuance of and direction of High Court in remand matter is appealable - Held that:- In view of decision in the matter of Caltex Oil Refining (India) Ltd. (1992 -TMI - 20955 - BOMBAY High Court), an order giving effect to the directions of the appellate authorities is an appealable order and in such appeal the levy of interest can be challenged. - in view of the earlier decision (2008 -TMI - 65483 - ITAT DELHI-G) since the assessee exercised option in respect of allotment of shares, though without payment of requisite sum but which was accepted by the employer waiving the amount payable for allotment of shares, the perquisite arose in terms of s. 17(2)(iiia) - Entire transaction is taxable as against 2/3 exemption claimed by the assessee.Interest u/s 234B where employer failed to deduct TDS - Held that:- interest u/s 234B was not chargeable on assessee in these facts and circumstances and the same should be deleted.Tax was paid during the previous year - income made taxable during the next year - department propose to deny the credit of tax paid in the earlier year on the same income - Held that:- it is unjust for the revenue to deny the credit of the taxes paid qua the very same transactions albeit under a bona fide belief in different year. Issues Involved:1. Taxability of ESOP perquisites in the assessment year 2000-01.2. Adjustment of taxes paid in earlier and subsequent years.3. Levy of interest under Section 234B of the Income Tax Act.4. Jurisdiction of CIT(A) in admitting the appeal.Detailed Analysis:1. Taxability of ESOP Perquisites in the Assessment Year 2000-01:The core issue in the assessee's appeal was whether the perquisite value of ESOPs should be assessed in the year 2000-01. The assessee argued that the proportionate amount of two-thirds of the total value of ESOPs was not liable for assessment in the year under consideration as it was under a lock-in period and did not carry any market value. However, the Tribunal had previously determined that the perquisite value should be taxed in the assessment year 2000-01, following the specific provision of section 17(2)(iiia). The Tribunal held that the date of the Board's approval (30.04.1999) was the relevant date for computing the perquisite value, thus rejecting the assessee's contention.2. Adjustment of Taxes Paid in Earlier and Subsequent Years:The assessee contended that taxes paid in the assessment year 1999-2000 should be adjusted against the tax liability for the assessment year 2000-01. The CIT(A) accepted this argument, noting that taxing the same transaction and income twice is not permissible by law. The CIT(A) directed the AO to adjust the taxes paid in the earlier year against the demand for the assessment year 2000-01. Similarly, for the assessment years 2001-02 and 2002-03, the CIT(A) directed the AO to adjust the excess taxes paid on capital gains, considering the revised cost of acquisition as determined by the Tribunal.3. Levy of Interest under Section 234B:The assessee argued that interest under Section 234B should not be levied as the perquisite value of ESOPs was subject to tax deduction at source (TDS) by the employer. The CIT(A) partly upheld this contention, noting that since the tax had already been paid in the assessment year 1999-2000, the revenue was not deprived of its dues. The CIT(A) directed that the interest under Section 234B should be computed considering the date of payment of tax by the assessee. The Tribunal further supported this view, citing the Delhi High Court's decision in the case of DIT v. Jacabs Civil Incorporated, which held that interest under Section 234B is not chargeable when the income is subject to TDS.4. Jurisdiction of CIT(A) in Admitting the Appeal:The Revenue argued that the CIT(A) should not have admitted the assessee's appeal as the AO's order giving effect to the Tribunal's directions was in a non-appealable ITNS 150 form. However, the Tribunal rejected this argument, citing the Bombay High Court's decision in Caltex Oil Refining (India) Ltd. v. CIT, which established that an order giving effect to appellate directions is an appealable order. The Tribunal affirmed that the CIT(A) had jurisdiction to entertain the appeal and that the assessee's appeal was maintainable.Conclusion:The Tribunal concluded by partly allowing the assessee's appeal, directing the deletion of interest under Section 234B, and upholding the CIT(A)'s directions for adjusting taxes paid in earlier and subsequent years. The Revenue's appeal was dismissed, affirming the CIT(A)'s order.