ITA NO. 5560/Del/2010
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH "H", NEW DELHI
BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER
AND
SHRI J.S. REDDY, ACCOUNTANT MEMBER
I.T.A. No. 5560/DEL/2010
A.Y. : 2004-05
ACIT, CIRCLE-47(1), SH. SANJEEV MATHUR,
NEW DELHI VS. C-2-301, UNIWORLD CITI
426, MAYUR BHAVAN, SOUTH CITY, SECTOR-30,
NEW DELHI GURGAON (HARYANA)
(PAN: AGBPM4921D)
(APPELLANT) (RESPONDENT)
Department by : Sh. J.P. CHANDRAKER, Sr. DR
Assessee by : Sh. R.S. SINGHVI, CA
ORDER
PER H.S. SIDHU : JM
This appeal by the Revenue is directed against the Order of
the Ld. Commissioner of Income Tax (Appeals)-XXX, New Delhi
dated 29.9.2010 pertaining to assessment year 2004-05 on the
following grounds:-
"On the facts and circumstances· of the case and in law, the
Ld.CIT(A) has erred in:-
(i) directing the Assessing Officer (AO) to accept the capital
gain arising from the sale of shares acquired under the stock
option plan of M/s Microsoft Corporation as long term capital
gain without considering the detailed and elaborate reasoning
given by the AO and the JCIT in treating the said capital gain as
short term;
(ii) holding that the AO had no further jurisdiction to decide
the issue afresh and that the only direction from the Tribunal
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was for verification of dates of acquisition of bonus shares
which is wrong on facts (a) as the AO made the assessment u/s
143(3)/254 solely as per the directions given by the Tribunal
i.e. to verify the correctness of the dates of allotment of shares
and to pass the consequential order, (b) date of allotment is
not the same as that of date of vesting:
(iii) erred in holding that only ground before the Tribunal was
in respect of furnishing of additional evidence whereas the
main ground of appeal before the Hon'ble ITAT, as taken by
the department, was against the order of Ld.CIT(A) holding the
capital gain as long term capital gain and within the same
ground of appeal, the fact of admission of additional evidence
by the Id.CIT(A) had been mentioned.
The appellant craves the right to alter, amend, add or
substitute the grounds of appeal."
2. The brief facts of the case are that the assessee filed his
return of income on 10.9.2004 admitting income of
Rs.1,46,44,703/-. The return was processed and subsequently
selected for scrutiny assessment. During the course of assessment
proceedings the AO noticed that the assessee has sold shares
purchased in `Stock Option Plan'. On examination of the details filed
by the Assesseee, the AO came to the conclusion that the same was
assessable as Short Term Capital Gain amounting to Rs. 94,12,649/-
Aggrieved by the same, assessee appealed before the CIT(A), who
vide impugned order dated 17.5.2007 has held that the assessee
placed on record all the necessary evidences in the form of original
agreement for allotment of stock option and accumulation of the
shares through bonus from time to time. All these shares were held
for more than one year and as such the transaction is to be treated
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as in the nature of long term capital gain which is covered by the
Delhi Tribunal decision in the case of Alok Kumar vs. JCIT 13 SOT
706. Aggrieved with the aforesaid order, Revenue filed an appeal
before the Tribunal and the Tribunal in its First round vide ITA No.
3557/Del/2007 (AY 2004-05) [wrongly mentioned as AY 2003-04
vide order dated 25.6.2008 has remitted the case to the file of the
AO for verification of dates stated by the assessee. The Tribunal
also observed that if dates of allotment of shares are found to be
correct, the AO is directed to accept the claim of the assessee
relating to long term capital gain with the direction to pass
consequential order.
2.1 Pursuant to the directions of the ITAT dated 25.6.2008, AO in
the second round computed the income at an assessed income of
Rs. 1,46,54,700/- vide his order dated 31.3.2009 u/s. 143(3)/254 of
the I.T. Act, 1961. Aggrieved with the above, Revenue again filed the
Appeal before the Ld. CIT(A), who vide impugned order dated
29.9.2010 has directed the AO to accept the Long Term Capital
Gain. Aggrieved with the Ld. CIT(A) order, the Revenue has come
before the Tribunal again and in the Second round the Tribunal in
ITA No. 5560/Del/2010 (A.Y. 2004-05) vide order dated 25.10.2011
has dismissed the order of the Revenue by confirming the action of
the Ld. CIT(A).
2.2 Against the order of the Tribunal dated 25.10.2011, Revenue
has filed the Appeal before the Hon'ble High Court of Delhi in ITA No.
417/2012 vide order dated 15.7.2013 has remanded the matter
back to the Tribunal for deciding whether the findings recorded by
the AO on the question of date of allotment are correct or not and
directed the parties to appear before the Tribunal on 12.8.2013.
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2.3 Against the impugned final judgment and order dated
15.7.2013 of the Hon'ble High Court of Delhi in ITA No. 417/2012,
the Assessee, Sh. Sanjeev Mathur has preferred a Petition for
Special Leave to Appeal (CC) No. 6145 of 2014 before the Hon'ble
Supreme Court of India and the Hon'ble Supreme Court of India vide
judgment dated 3.7.2014 has passed the following order:-
"Delay condoned.
We do not find any reason to entertain this petition.
The Special Leave Petition is, accordingly,
dismissed.
However, we clarify that while deciding the case,
the Tribunal shall not be influenced by the
observations made by the High Court in its
impugned order and it shall decide the matter on
the facts and merits of the case."
3. Pursuant to the judgment dated 3.7.2014 of the Hon'ble
Supreme Court of India, the case was heard before the Tribunal.
4. Ld. DR relied upon the order of the AO and reiterated the
contentions raised in the grounds of appeal. He submitted that the
Ld. CIT(A) was wrong in directing the AO to accept the capital gain
arising from the sale of shares acquired under the stock option plan
of M/s Microsoft Corporation as long term capital gain without
considering the detailed and elaborate reasoning given by the AO
and the JCIT in treating the said capital gain as short term. He
further submitted that Ld. CIT(A) was wrong in holding that the AO
had no further jurisdiction to decide the issue afresh and that the
only direction from the Tribunal was for verification of dates of
acquisition of bonus shares which is wrong on fact (a) as the AO
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ITA NO. 5560/Del/2010
made the assessment u/s. 143(3)/254 solely as per the directions
given by the Tribunal i.e. to verify the correctness of the dates of
allotment of shares and to pass the consequential order, (b) date of
allotment is not the same as that of date of vesting.
5. On the contrary, Ld. Counsel for the Assessee relied upon the
order of the Ld. CIT(A) and requested that the same may be upheld.
To support his contention, he relied upon the following judgments
from which his case is squarely covered.
a) Abhiram Seth vs. JCIT (2013) 79 DTR 63 (Delhi ITAT)
b) ACIT vs. Ambrish Jhamb (Delhi ITAT) ITA No.
4107/D/11 dated 5.10.2012.
c) Sh. Gopi G. Nambiar vs. JCIT (Delhi ITAT) ITA No.
1083/D/2010 dated 26.7.2013.
d) ACIT vs. Laxman Shankar (ITAT, Mumbai) ITA No.
8697/Mum/2011 dated 5.12.2014.
e) ACIT vs. Sh. Param Paul Uberoi (Delhi ITAT) ITA No.
4477/D/11 dated 13.4.2012.
f) ACIT vs. Dr. Dhurjati Gupta [2010] 127 TTJ 356 (ITAT
Hyd.)
6. We have heard both the parties and perused the relevant
records, especially the orders of the authorities below and the
submissions made by both the parties before us alongwith the order
/ judgment of the Hon'ble Delhi High Court and the Hon'ble Supreme
Court of India. Now we find that the AO in the first round while
completing the assessment u/s. 143(3) of the I.T. Act, 1961 vide
order dated 29.10.2006 has treated the shares purchased in 'Stock
Option Plan" as Short Term Capital Gain and Ld. CIT(A) vide his
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ITA NO. 5560/Del/2010
order dated 17.5.2007 has held that all the shares were held for
more than one year and as such the transaction is to be treated as
in the nature of long term capital gain which is covered by the Delhi
Tribunal decision in the case of Alok Kumar vs. JCIT 13 SOT 706.
Against the order of the Ld. CIT(A), Revenue came up before the
Tribunal and Tribunal vide its order dated 25.6.2008 in ITA No.
3557/Del/2007 vide para nos. 5 to 7 has held as under:-
"5. The Revenue is aggrieved. The only argument
advanced on behalf of the Revenue by the Ld. DR was
that the CIT(A) during the course of appellate
proceedings erroneously admitted additional evidence in
violation of Rule 46A(3) of I.T. Rules. Certain documents
not filed before the AO were taken into account and relief
allowed to assessee. No opportunity whatsoever was
provided to the AO to rebut the claim of the assessee.
The Ld. DR also placed on record letter dated 11/13th
June, 2008 written by the AO to the above effect to the
Ld. DR. The Ld. Counsel for the assessee strongly
contradicted above claim of the revenue. He stated that
no additional evidence was filed before the Ld. CIT(A). He
specifically contended that the detail of the bous shares
allotted to the assessee by the company were given on
page 9 which was filed before the AO. The date of
acquisition of bonus shares as per above document is as
under:-
"Vesting Scheduled
This grant is fully vested:
Quantity Description Date
1,328 Vested on 7.15.1997
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ITA NO. 5560/Del/2010
1,320 Vested on 1.15.1998
1,320 Vested on 7.15.1998
1,320 Vested on 1.15.1999
1,318 Vested on 7.15.1999
1,318 Vested on 1.15.2000
1,318 Vested on 7.15.2000
1,318 Vested on 1.15.2001"
6. All the aforesaid shares were sold on 18.6.03.
Thus, it is wrong on the part of the revenue to contend
that the assessee earned short term gain or that
additional evidence was filed before the Ld. CIT(A).
7. We have given careful thought to the rival
submissions of the parties. There is no dispute on the
amount of capital gain liable to be taxed in the hands of
the assessee. The dispute is whether capital gain of Rs.
94,12,649/- is short term or long term capital gain. The
assessee has given the dates of acquisition of bonus
shares which were sold and on which capital gain in
dispute accrued to the assessee. The dates are given on
page 9 of the paper book and have been reproduced
above. During the course of hearing, the Ld. DR
submitted that above dates are required to be verified by
the AO. Ld. Counsel for the assessee Shri Singhvi was
good enough to agree to the limited extent of
verification by the AO of the dates of allotment of bonus
shares. The matter for the above limited purpose may be
remitted back to the AO. No other claim was made
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ITA NO. 5560/Del/2010
before us. In the light of stand of the parties, we remit
the case to the file of the AO for verification of dates
stated by the assessee as noted above. If dates of
allotment of shares are found to be correct, the AO is
directed to accept the claim of the assessee relating to
long term capital gain. He should pass consequential
order."
6.1 Pursuant to the aforesaid directions of the ITAT vide order
dated 25.6.2008, AO in the second round computed the income at
an assessed income of Rs. 1,46,54,700/- vide his order dated
31.3.2009 u/s. 143(3)/254 of the I.T. Act, 1961 by holding as under:-
"7. Now considering overall facts of the case and
evidence furnished by the assessee i.e. in the form of
page 9 of the Paper Book and the above directions of the
JCIT, R-47, the consequential order is passed. The
assessee has intimated the date of exercise of option as
18.6.03 in the document produced. This date is taken as
the date of allotment of shares in question which were
vested with the assessee as per dates mentioned in para
3 above. These shares are also sold on 18.6.03 itself and
the sale proceeds received in the accounts of the
assessee on 25.6.03. This is clearly a case of STCG as
the shares are held for less than 12 months after the date
of allotment. As such claim of the assessee relating to
long term capital gain cannot be accepted."
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ITA NO. 5560/Del/2010
6.2 Aggrieved with the above, Revenue again filed the Appeal
before the Ld. CIT(A), who vide impugned order dated 29.9.2010 in
para no. 5 at pages 6 to 8 has held as under:-
"5. I have carefully considered the facts of the case,
submission of the appellant and various orders placed on
record. There is no dispute that only ground before
Tribunal was in respect of furnishing of additional
evidence and the matter was restored for limited purpose
of verification of dates referred to in annexure-9 which
has been extracted in the order of the Tribunal itself.
There has been no ground, submission or finding of the
Tribunal on the merits of the case and the matter was
restored by Hon'ble Tribunal for limited purpose of
verification to in annexure-9 of the paper book. The
finding of the Tribunal as recorded in para 5-7 clarify the
factual position to this effect. The only direction was for
verification of dates of acquisition of bonus shares and
there has been no finding or direction in relation to merits
of the claim.
In the consequential order, the AO has not disputed
the correctness of dates referred to in Annexure-9 and in
the context of same, the issue on merits stand concluded
and final as per order of the CIT(A) dated 17/5/07.
In fact, the Hon'ble Tribunal in the miscellaneous
application itself has also made observation that merely
because AO has allegedly misread the order of the
Tribunal, there could be no case of modification or
rectification of order of the Tribunal as direction of the
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ITA NO. 5560/Del/2010
Tribunal was specific and for limited purpose of
verification of dates.
After taking into consideration all the relevant facts,
I am of the considered opinion that once the verification
in respect of dates referred to in Annexure are carried out
and there is no dispute about correctness of same, the
AO has no further jurisdiction to decide the issue afresh
on merits. The order of the AO on merits is not in
conformity with the direction of the Tribunal as the
Tribunal has no where issued direction to re-examine the
merits of the claim and only direction was for
verification of dates of acquisition of bonus shares in
respect of which there is no dispute or controversy. On
the merits of the claim, the issue is final as per order of
the CIT(A) and accordingly AO is directed to accept the
long term capital gain."
6.3 Against the order of the Ld. CIT(A), the Revenue has come
before the Tribunal again and in the Second round the Tribunal in
ITA No. 5560/Del/2010 (A.Y. 2004-05) vide order dated 25.10.2011
has dismissed the order of the Revenue by confirming the action of
the Ld. CIT(A) by holding as under:-
"6. We have heard the parties and have perused the
material on record. The Tribunal remitted the matter by
making the following observations:-
"We have given careful thought to the rival
submissions of the parties. There is no dispute on
the amount of capital gain liable to be taxed in the
hands of the assessee. The dispute is whether
capital gain of Rs. 94,12,649/- is short term or long
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term capital gain. The assessee has given the
dates of acquisition of bonus shares which were
sold and on which capital gain in dispute accrued to
the assessee. The dates are given on page 9 of the
paper book and have been reproduced above.
During the course of hearing, the Ld. DR submitted
that above dates are required to be verified by the
AO. Ld. Counsel for the assessee Shri Singhvi was
good enough to agree to the limited extent of
verification by the AO of the dates of allotment of
bonus shares. The matter for the above limited
purpose may be remitted back to the AO. No other
claim was made before us. In the light of stand of
the parties, we remit the case to the file of the AO
for verification of dates stated by the assessee as
noted above. If dates of allotment of shares are
found to be correct, the AO is directed to accept the
claim of the assessee relating to long term capital
gain. He should pass consequential order."
7. From the above, it is evident that the directions
issued by the Tribunal were very specific and clear.
The same have also been reproduced, along with
para 4 of the Tribunal's order, at pages 5 & 6 of the
impugned order.
8. As correctly observed by the Ld. CIT(A), the matter
was restored only for the limited purpose of
verification of dates referred to in Annexure 9, as
reproduced in the Tribunal order. This is the vesting
Schedule. The Tribunal did not either make any
observation or record any finding apropos the
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ITA NO. 5560/Del/2010
merits of the case. The AO was only to carry out
the verification of the dates referred to at page 9 of
the Assessee's Paper Book as filed before the
Tribunal. The correctness of the dates were not
disputed in the order passed by the AO consequent
on the remand. This position has remained
unhinged. So far as regards the merits, they were
decided by the ld. CIT(A) vide his order dated
17.5.07. Even in the misc. application filed before
the Tribunal, the Tribunal observed that the
directions issued were specific, for the limited
purpose of verification of dates and that the AO had
misread the Tribunal order.
9. In the above facts and circumstances, we do not
find any error whatsoever in the order of the Ld.
CIT(A), which is hereby confirmed, rejecting the
grievance sought to be raised by the Department."
6.4 Against the order of the Tribunal dated 25.10.2011, Revenue
filed the Appeal before the Hon'ble High Court of Delhi vide ITA No.
417/2012. The Hon'ble High Court of Delhi vide order dated
15.7.2013 has remanded the matter back to the Tribunal for
deciding whether the findings recorded by the AO on the question of
date of allotment are correct or not and directed the parties to
appear before the Tribunal on 12.8.2013.
6.5 Against the judgment and order dated 15.7.2013 of the
Hon'ble High Court of Delhi in ITA No. 417/2012, the Assessee, has
preferred a Petition for Special Leave to Appeal (CC) No. 6145 of
2014 before the Hon'ble Supreme Court of India and the Hon'ble
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ITA NO. 5560/Del/2010
Supreme Court of India vide its judgment dated 3.7.2014 has
passed the following order:-
"Delay condoned.
We do not find any reason to entertain this petition.
The Special Leave Petition is, accordingly,
dismissed.
However, we clarify that while deciding the case,
the Tribunal shall not be influenced by the
observations made by the High Court in its
impugned order and it shall decide the matter on
the facts and merits of the case."
6.6 In compliance of the order dated 03.7.2014 passed by the
Hon'ble Supreme Court of India, the present appeal was heard at
length. After hearing both the parties and perusing the records
especially the orders of the revenue authorities, Tribunal, Hon'ble
High Court and the Hon'ble Supreme Court of India, we are of the
considered view that the issue in dispute in the present appeal is
whether the assessee has gained short term capital gain or long
term capital gain on the sale of shares under Stock Option Plan.
Assessee has filed his evidences before the revenue authorities for
substantiating his claim before them and the revenue authorities
has also gave their opinion which remained under appeal before the
Tribunal, Hon'ble High Court and the Hon'ble Supreme Court of
India. Finally, the Hon'ble Supreme Court of India has directed the
Tribunal to decide the matter on facts as well as on merit without
influence by the observations made by the Hon'ble High Court. We
have thoroughly examine the issue in dispute alongwith finding
given by the revenue authorities and we find that the issue in
dispute require detailed examination at the level of the Assessing
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ITA NO. 5560/Del/2010
Officer. Therefore, in the interest of justice, the issue in dispute is
remitted back to the file of the AO with the direction to examine the
issue in dispute de novo, after giving full opportunity to the assessee
of being heard.
7. In the result, the Appeal filed by the Revenue stands allowed
for statistical purposes.
Order pronounced in the Open Court on 21/7/2015.
Sd/- Sd/-
[J.S. REDDY] [H.S. SIDHU]
ACCOUNTANT MEMBER JUDICIAL MEMBER
Date 21/7/2015
"SRBHATNAGAR"
Copy forwarded to: -
1. Appellant -
2. Respondent -
3. CIT
4. CIT (A)
5. DR, ITAT
TRUE COPY
By Order,
Assistant Registrar,
ITAT, Delhi Benches
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