2014 (1) TMI 647

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....r.Robert Aruther Keltz. Mr.Robert Aruther Keltz was an employee of M/s UTIO, USA and was on deputation to the Indian liaison office (hereinafter referred to as ILO of UTIO) w.e.f. 1st April, 2006. He was a Resident and Not Ordinarily Resident during the subject Assessment Year. The employee filed its return of income on 31st July,2007 under Section 139(1) for the Assessment Year 2007-08, declaring income from salary of Rs.1,51,07,902/-. Tax of Rs.50,29,219/- was deducted at source by the employer UTIO. The case was selected for scrutiny. As the employee had already left India, the notice remained unserved. The Assessing Officer completed the assessment ex parte under Section 144 of the Income Tax Act, 1961 on 22nd December, 2009 determining....

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....er brought to tax the entire amount i.e. the difference between the fair market value of the stocks, on the date when the stock option rights were exercised and the cost recovered from the employee, by treating the same as a perquisite on account of stock options. In other words the whole perquisite amount on account of stock options amounting to Rs.32,09,756/- was taxed in India. The assessee carried the matter in appeal. Before the First Appellate Authority the assessee contended that the shares in question were allotted to Mr.Robert Aruther Keltz outside India and hence receipt of income, arising out of allotment of such shares was also outside India. It was contended that since the shares were allotted to the employee outside India, the....

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..... Ground no.2 : The brief background of the case is as under (relevant excerpts from submission dt. 22.12.2010). The subject employee is a tax equalized employee. Tax equalization is one of the methods widely used by multinational corporation to ensure that the employee who accepts international assignment do not suffer combined taxes on income (in home and host country) in excess of what they would have paid had they continued to reside in the home country. This arrangement is quite prevalent to ensure that the employee neither suffers a financial hardship nor realize a financial windfall from the tax consequences of international assignment. Under tax equalization policy, employer calculates the hypothetical tax (hypo tax) and excludes ....

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....Income Tax Act, 1961 and on the erroneous under standing that the income has already accrued to the employee, hence, hypo tax forms part of the employee's taxable salary." 7. The Commissioner of Income Tax (Appeals) applied the decision of the Hon'ble Delhi High Court in the case of CIT vs. Dr.Percy Batlivala (2010) 2010-TIOL- 175-HC-DEL-IT and allowed the case of the assessee. 8. Ground no.5 is stated as consequential to ground no.4. 9. We have heard Ms.Priscilla Singeit, Ld.Sr.D.R. on behalf of the Revenue and Sh. Nageshwar Rao, Ld.Counsel on behalf of the assessee. 10. On a careful consideration of the facts and circumstances of the case and on a perusal of the papers on record as well as the orders of the authorities below and case ....

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....ispute as the assessee himself has offered the same to tax while filing his return of income. The only issue is the amount that can be brought to tax in India. The Commissioner of Income Tax (Appeals) has applied the decision of the Jurisdictional 'G' Bench of the Delhi Tribunal in the case of DCIT, Circle 42(1), New Delhi vs. M/s Eric Morquxer and Ghorayeb Emile in ITA no.1174/Del/2005 and 1175/Del/05 order dt. 15.2.2008-TIOL-145-ITAT and held as follows. "3.2. The appellant in its submission against remand report submitted that the facts of the decision of Giridhar Krishna M Vs. ACIT was not applicable in the instant case as the decision was on taxability of Stock Appreciation Rights ('SAR') and not on ESOP. Further, the decision itself ....

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.... evidence regarding the nature of services rendered in France and South Asia. There can be no inference that the employees while they were in France and South Asia rendered services in respect of their operations in India. Therefore it cannot be said that their period of employment in France and South Asia should also be considered as services rendered in India. The decision in the case of ex parte employees of Air France clearly supports the stand of the assessee. With regard to the Explanation to S.9(1)(ii) of the Act, the Amendment w.e.f. 1.4.2000 only brings to tax the salary for the rest period or leave period, which is preceded and succeeded by services rendered in India. In the facts of the present case we find that the issue is not ....