TaxTMI 
TaxTMI 
2016 (5) TMI 819
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....ly. When the former has filed appeal for the assessment year 2011-12, the latter has filed appeals for assessment years 2011-12 and 2012-13. Since common issue arises for consideration in all these appeals, we heard these appeals together and disposing of the same by this common order. 2. Shri N.V. Balaji, the Ld.counsel for the assessees, submitted that the assessees are employees of M/s Cognizant Technologies India Pvt. Ltd. During the years under consideration, M/s Cognizant Technology Solutions Corporation, a Delaware Corporation, USA, the parent company of the assessees, promoted an incentive plan for the employees of M/s Cognizant Technologies India Pvt. Ltd. known as "1999 Incentive Compensation Plan". As per this Plan promoted by....
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....Stock Appreciation Rights is nothing but capital gain. The Ld.counsel further submitted that since no security was offered or allotted to the assessees, the Stock Appreciation Rights cannot be construed as perquisite in the hands of the assessees. According to the Ld. counsel, Stock Appreciation Rights was granted to the assessees under "1999 Incentive Compensation Plan" during the years 2000 and 2002. According to the Ld. counsel, Stock Appreciation Rights was given to the assessees for the service rendered to M/s Cognizant Technologies India Pvt. Ltd. in India during the vesting period. When the right was vested on the assessees, the assessees were non-resident Indians rendering service outside India. Therefore, the value of Stock Appreci....
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....ing to the Ld. D.R., what was paid to the assessees was in lieu of salary, therefore, it is a perquisite in the hands of the assessees. Referring to Section 17(2) of the Income-tax Act, 1961 (in short 'the Act'), the Ld. D.R. submitted that the value of any specified security or sweat equity shares allotted or transferred directly or indirectly by the employer at free of cost or at concessional rate to its employees should be taxed as perquisite in the hands of the employees. In this case, the assessees claim that the option was given by the parent company to the employees of Indian subsidiary company. 5. Referring to Section 17(2)(vi) of the Act, the Ld. D.R. submitted that when the value of specified security or sweat equity sh....
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....erused the relevant material available on record. Admittedly, the assessees are employees of M/s Cognizant Technologies India Pvt. Ltd., which is a subsidiary company of M/s Cognizant Technology Solutions Corporation, a Delaware Corporation, USA. It is not in dispute that the assessees were given Stock Appreciation Rights. As per the scheme promoted by M/s Cognizant Technology Solutions Corporation, a Delaware Corporation, USA, Stock Appreciation Rights is nothing but payment in cash to the excess of fair market value of common stock or other specified valuation of specified number of shares of common stock on the date the Stock Appreciation Rights was exercised over the fair market value of the common stock or other specified valuation. Th....
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....correct. The parent company, who is interested in the business of the M/s Cognizant Technologies India Pvt. Ltd., in order to promote their business and for commercial expediency, the scheme was promoted and offered to the assessees an option. The assessees being employees of M/s Cognizant Technologies India Pvt. Ltd., accepted the offer and benefited and enriched themselves. This payment is in addition to salary for the service rendered to M/s Cognizant Technologies India Pvt. Ltd. Therefore, this Tribunal is of the considered opinion that what was received by the assessee is a perquisite in the hands of the assessee-company or benefit in lieu of salary for the services rendered. Hence, the same has to be construed as income in the hands o....
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....e non-residents and rendered service outside India, therefore, not taxable in India, this Tribunal is of the considered opinion that the benefit was conferred on the assessees in the form of Stock Appreciation Rights for the services rendered to the subsidiary company, M/s Cognizant Technologies India Pvt. Ltd. Therefore, merely because the assessees were nonresidents and rendered service outside India during the vesting period that cannot be a reason for claiming that the same was not taxable in India. Admittedly, when the assessees exercised option for Stock Appreciation Rights, they were residents in India. Therefore, when the Stock Appreciation Rights was vested irrespective of the residency, the same is liable for taxation in India. ....