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February, 26th 2013
%                                      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.




        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.

ITA 81/2013                                                            Page 1 of 4
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.

ITA 81/2013                                                      Page 2 of 4
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
        learned CIT(A)."

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

ITA 81/2013                                                        Page 3 of 4
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

                                                         R.V.EASWAR, J
FEBRUARY 08, 2013

ITA 81/2013                                                       Page 4 of 4
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