COMMISSIONER OF INCOME TAX Vs. JASWINDER SINGH AHUJA
February, 26th 2013
THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment delivered on: 08.02.2013
+ ITA 81/2013
COMMISSIONER OF INCOME TAX ..... Appellant
JASWINDER SINGH AHUJA ..... Respondent
Advocates who appeared in this case:
For the Appellant : Ms Suruchi Aggarwal, Sr. Standing Counsel with Mr
Manish Kumar, Advocate.
For the Respondent : None.
HON'BLE MR JUSTICE BADAR DURREZ AHMED
HON'BLE MR JUSTICE R.V.EASWAR
BADAR DURREZ AHMED, J (ORAL)
This appeal under section 260A of the Income Tax Act, 1961
(hereinafter referred to as ,,the said Act) has been preferred by the
revenue being aggrieved by the order dated 25.06.2012 passed by the
Income Tax Appellate Tribunal in ITA No.3417/Del/2009 pertaining to
the assessment year 2002-03. The present proceedings arose out of the
penalty order passed by the assessing officer under section 271(1)(c) of
the said Act on 24.06.2010.
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2. The facts are that the respondent/ assessee was employed with M/s
Cadence Design Systems India Pvt. Ltd. and as a part of his employment
he received stock options by virtue of an agreement dated 17.09.1992
with Cadence Designs System, USA. During the year in question the
assessee sold the stock options and received `1,05,19,631/-. The same
was declared by the respondent/ assessee in his return as long term capital
gains. However, the assessing officer took a different view and assessed
the same as short term capital gains and also directed initiation of penalty
proceedings under section 271(1)(c) of the said Act.
3. In the quantum proceedings the Commissioner of Income Tax
(Appeals) deleted the addition made by the assessing officer on account
of the change in treatment from long term capital gains to short term
gains. The revenue went up in appeal before the Tribunal and the
Tribunal allowed the appeals and upheld the view taken by the assessing
officer. In other words the Tribunal settled the issue with regard to the
manner in which the gains from the sale of stock options were to be
considered. The Tribunal reversed the view taken by the Commissioner
of Income Tax (Appeals) and held that the said gains were short term
capital gains as held by the assessing officer.
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4. In the penalty proceedings the assessing officer imposed a penalty
of `15,69,445/-. The Commissioner of Income Tax (Appeals) deleted the
said penalty on the ground that the issue was debatable at the time when
the assessee filed his return and, therefore, he could not have been held to
have furnished inaccurate particulars or to have concealed his income.
This view has been upheld by the Tribunal by virtue of the order dated
25.06.2012. The Tribunal held as under: -
"5. In the assessees case, evidently, there is no furnishing
of any inaccurate particulars. It is not the case of the
Revenue that the assessee has either concealed any fact or
has submitted any wrong or incorrect fact. It is only the
question of opinion whether the income from sale of stock
option is assessable as short term capital gain or as long term
capital gain. In view of the above, respectfully following the
above decision of Honble Apex Court in the case of
Reliance Petro Product Pvt. Ltd., we uphold the order of
3. We are of the view that the Commissioner of Income Tax
(Appeals) as also the Tribunal have approached the issue correctly. The
question whether the sale of the stock options would result in long term
capital gains or short term gains was not very clear at the time when the
respondent/ assessee filed his return for the assessment year 2002-03. In
fact the view taken by the assessing officer in the quantum proceedings
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had been reversed by the Commissioner of Income Tax (Appeals) in the
appeal filed by the assessee. The view taken by the Commissioner of
Income Tax (Appeals) was ultimately reversed by the Tribunal and the
view of the assessing officer was upheld in the quantum proceedings.
This, in itself, is indicative of the fact that the issue was not very clear-
cut. That being the position, we cannot bring the case of the respondent/
assessee within the provisions of section 271(1)(c) of the said Act. The
reliance placed by the Tribunal on CIT vs. Reliance Petroproducts Pvt.
Ltd.: 322 ITR 158 (SC) is also apposite.
4. For the foregoing reasons we do not find any substantial question
of law in this appeal. Consequently, the appeal is dismissed. There shall
be no order as to costs.
BADAR DURREZ AHMED, J
FEBRUARY 08, 2013
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