2009 (1) TMI 398

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....st the order dated July 31, 2002, passed by the Income-tax Appellate Tribunal, Bangalore Bench, in Appeal I. T. A. No. 296/Bang/2001 for the assessment year 1999-2000. 4. The appeal has been admitted on the following substantial questions of law : "(a) Whether the Tribunal was correct in holding that the assessee company was not liable to deduct TDS under section 192 of the Act over the issue of its shares under a stock option plan to its employees at a concessional rate as it cannot be treated as a perquisite (salary) and, therefore, the assessee cannot be treated as a defaulter under section 201(1) of the Act and consequently no interest under section 201(1A) of the Act can be levied ? (b) Whether the Tribunal was correct in hold....

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....nance Act, 1999, to say that this new mechanism would operate retrospectively. Further, a mechanism which explains 'cost' in the manner indicated above cannot be read retrospectively unless the Legislature expressly says so. It was not capable of being implemented retrospectively. Till April 1, 2000, in the absence of the definition of the word 'cost', the value of the option was not ascertainable. In our view, sub-clause (iiia) is not clarificatory. Moreover, the meaning of the words 'specified securities' in sub-clause (iiia) was defined or explained for the first time, vide the Finance Act, 1999, with effect from April 1, 2000. Moreover, the words "allotted or transferred" in sub-clause (iiia) made things clear only after April 1, 2000. ....

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....d his option then there was no cash inflow to the employee. It was not possible for the employee to know the future value of the shares allotted to him on the day he exercised his option. Even the cost of acquisition as 'nil' came to be introduced in the 1961 Act by the Finance Act, 1999, only with effect from April1, 2000. In fact, the later deletion of sub-clause (iiia) is an indicator of the ineffective charge. 17. For the aforestated reasons, we are of the view that the Department had erred in treating Rs165 cores as the perquisite value for the assessment years 1997-98, 1998-99 and 1999-2000. During those years, the fifth anniversary had not taken place and, therefore, it was not possible for the assessee-company to estimate the val....