« Top Headlines » Open DEMAT Account in 24 hrs  ITR Filing: 6 Ways to Get Exemption on Income Tax  Income Tax Return Filing: 10 Mistakes To Avoid When Filing ITR For AY 2024-25  Old vs New Tax Regime: Who should move to the New Tax Regime from the old one?  Income Tax Calculator FY 2023-24: How To Know Your Tax Liability Online On IT Dept's Portal?  BackBack Income Tax Act amendment on cards on tax treatment of MSME dues  ITR-1, ITR-2, ITR-4 forms for FY 2023-24 available for e-filing. Check details here  Income tax slabs FY 2024-25: Experts share these 8 benefits for taxpayers in new income tax regime  How To File ITR Online - Step by Step Guide to Efile Income Tax Return, FY 2023-24 (AY 2024-25)  Old or new tax regime for TDS on salary? This post-election 2024 event will impact your tax planning  What Are 5 Heads Of Income Tax?  Income Tax Dept releases interim action plan for FY25 on tax collection, refund approvals «  Indian industry seeks corporate tax cut in budget... Taxmen may source defence min supplies for adding to... » TDS on Esop: SC quashes case against Infosys January, 10th 2008 The Supreme Court has dismissed an income-tax case against Infosys Technologies regarding failure to deduct TDS on earnings of its staff from an employees stock option scheme offer (Esop). A bench of Justices SH Kapadia and BS Reddy said, Estimation of TDS under Section 192 (Income-Tax Act) in the absence of clear provisions on valuation of perquisite in this case would not justify the department in treating the respondent (Infosys) as assessee in default. To implement its ESop programme, the Bangalore-based IT company had created a trust, Technologies Employees Welfare Trust, and allotted 7,50,000 warrants at Re 1 each to the trust. Each warrant entitled the holder to apply for and be allotted one equity share of the face value of Rs 10 each for a total consideration of Rs 100. The trust was to hold the warrant and transfer the same to employees under the terms and conditions of the Esop scheme. During the assessment years 1997-98, 1998-99 and 1999-2000, warrants were offered to the eligible employees at Re 1 each by the trust. Under the Esop, every warrant had to be retained for a minimum period of one year. At the end of that period, employees were entitled to obtain shares allotted to them on payment of the balance Rs 99. The option could be exercised at any time after 12 months but before expiry of 5 years. The allotted shares were subject to a lock in period during which their custody remained with the trust. The assessing officer for the assessment year 1999-2000 held that the total amount paid by the employees consequent to the exercise of option was Rs 6.64 crore whereas the market value of those shares was Rs 171 crore. Therefore, the department treated Rs 165 crore as perquisite value on which TDS was charged. It was held that the assessee company was defaulter for not deducting TDS under section 192 of the Income Tax Act. Similar orders were also passed for assessment years of 1997-98 and 1998-99. On the plea of Infosys, the Income-Tax Appellate Tribunal ruled that the right granted to the employees for participating in the scheme was not a perquisite under Section 17(2) (iii) of the IT Act. It was confirmed by the Karnataka high court. Then, the income-tax department filed an appeal at the apex court.