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The HC allowed the petitioner's writ petition seeking a Nil Tax Deduction Certificate under Section 197 for compensation received due to diminution in value of Flipkart Stock Options Plan (FSOP). The petitioner, an employee of an Indian subsidiary, received one-time compensatory payment without exercising stock options or receiving share allotment. The Court held that FSOPs become taxable only when options are exercised (as perquisites under Section 17(2)(vi)) or when allotted shares are sold (as capital gains under Section 45). Since neither event occurred, the voluntary compensatory payment constituted a capital receipt not chargeable under any income head. Following precedent in similar Flipkart employee cases, the Court quashed the rejection order and directed respondents to issue the Nil Tax Deduction Certificate within six weeks.
The HC allowed the petitioner's writ petition seeking a Nil Tax Deduction Certificate under Section 197 for compensation received due to diminution in value of Flipkart Stock Options Plan (FSOP). The petitioner, an employee of an Indian subsidiary, received one-time compensatory payment without exercising stock options or receiving share allotment. The Court held that FSOPs become taxable only when options are exercised (as perquisites under Section 17(2)(vi)) or when allotted shares are sold (as capital gains under Section 45). Since neither event occurred, the voluntary compensatory payment constituted a capital receipt not chargeable under any income head. Following precedent in similar Flipkart employee cases, the Court quashed the rejection order and directed respondents to issue the Nil Tax Deduction Certificate within six weeks.
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