TaxTMI 
TaxTMI 
2013 (11) TMI 566
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.... term capital gain and denying the benefit of exemption under sec. 54F of the Income-tax Act, 1961. 2. The brief facts of the case are that assessee is an individual. He was employed with Seagram India Pvt. Ltd. (now Pernod Ricard India Pvt. Ltd.). He has filed his return of income on 31st July 2007 declaring total income of Rs.3,53,54,500. The case of the assessee was selected for scrutiny assessment and a notice under sec. 143(2) was issued and served upon the assessee. On scrutiny of the accounts, it revealed to the Assessing Officer that assessee had held shares under the Employees Stock Option Scheme in the parent company of the employees. The stock options were granted to the assessee on 11.2.2002 with an exercise period between Febr....
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....rcise is considered the point of acquisition what would happen when the employee never exercises the option. In the event it would result is an absurd situation because the employee shall acquire the shares even though he never exercises the option. It is clear that in cases of cashless sale of stock options and even in other cases where the difference between the date of exercise of the option and the date of sale of the shares is less than the prescribed period of one year, the capital gains from such sale should be considered short term capital gains. However, assessment proceedings and investigations have revealed several attempts by the assessees to represent such transactions as long term capital gains by taking the date of grant or ....
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.... reported in 127 TTJ 356. He also placed on record copy of the order passed by the ITAT, Delhi in ITA No.2302/Del/2010 in the case of Abhiram Seth Vs. JCIT. According to the learned counsel for the assessee, the date from which acquisition of shares is to be counted is the date when option was given to an assessee and not the date when assessee has exercised such option. The option was given to the assessee on 11.2.2002. It can be exercised by the assessee between February 12, 2006 to February 22, 2011 meaning thereby this option was available with the assessee for a period more than three years. On the other hand, Learned DR relied upon the order of the Assessing Officer. 6. We have duly considered the rival contentions and gone through t....
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....me of sale or reduction of shares. The discussion made by the ITAT read as under: "7. We have heard rival submissions and gone through the entire material available on record. The facts have been narrated in details above. A perusal of the clauses of allotment clearly reveals that the particular numbers of shares were allotted to assessee in different years at different prices; only distinctive numbers were not allotted which has not been disputed by department. The apparent benefit to assessee out of ESOPs scheme was that it had not to pay the purchase price immediately at the time of allotment but the same was to be deducted at the time of sale or redemption of shares. Since there was an apparent fixed consideration of ESOPs shares, the ....
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....see's claim of taxability of gains on the transfer of such rights under the head "long term capital gains" is justified and deserves to be accepted. If we accept AO's stand, then there will be no capital gain; if the date of allotment of share and sale thereof is the same, the price of purchase of shares cannot be the price paid for right which is not held as purchase, which becomes unascertainable. According to AO, the earlier right of allotment does not constitute a purchase of shares and thus leads to a presumptive situation. In that case, as rightly observed by the ITAT in the case of Bomi S. Billimoria (supra), the purchase price will be unascertainable. If we apply the case of Dhurjati Gupta (supra), then allotment constitutes new rig....