Case Law Details
Dr. S. Muthian Vs ACIT (Madras High Court)
This appeal, filed by the appellant/assessee under Section 260A of the Income Tax Act, 1961 (“the Act” for brevity), is directed against the order passed by the Income Tax Appellate Tribunal Chennai, “D” Bench (“the Tribunal” for brevity), dated 16.12.2016 in I.T.A.No.1521/MDs/2015 for assessment year 2010-2011.
2. Facts of the case are as follows:
The assessee was employed in Google India Private Limited. The assessee’s gross taxable income for the assessment year 2010-11 was Rs.76,70,698/- comprising of Rs.76,17,979/- under the head salary and Rs.52,323/- under perks and other amenities, and other income of Rs.396/-(resulting in a Returned Income of Rs.75,70,698/-) as stated in the assessee’s Income Tax Return. In addition, because of the NOR (Not Ordinarily Resident) status of the assessee, for the said Assessment Year (as defined in Section 6(6) (a) of Income Tax Act), there was also an exempt income of Rs.1,19,49,709/- being the income arising outside India as stated in Section 5(1) (c) of Income Tax Act, viz., USA income on sale of stock options. The issue involved in the appeal is how the aforesaid amount of Rs.1,19,49,709/-(viz., the exempt income) has to be treated. There is an error in Form-16 issued by the assessee’s then employer Google India Private limited, as it erroneously included the exempt income of Rs.1,19,49,709/- as part of the taxable income. The said error in Form-16 issued by the then employer must be because of the fact that the employer could not go into the exact residential status of its employee, which involves complicated questions of law viz., interpretation of Section 6(6) (a) and 5(1) (c) of Income Tax Act and hence, as a measure of abundant caution, erroneously deducted income tax for the said exempt income of Rs.1,19,49,709/-. Thus, an excess income tax of Rs.36,92,460/- was erroneously deducted by Google India Private Limited and paid to the Indian Government. Hence, the assessee is entitled for refund of the said excess tax erroneously paid on behalf of the assessee.
3. Accordingly, in the assessee’s income tax return for the assessment year 2010-11, the assessee reported the aforesaid income of Rs.1,19,49,709/- under Exempt income because of his USA income and NOR status as per Section 5(1)(c) and Section 6(6)(a) of Income Tax Act and claimed a refund of Rs.36,92,337/-. Along with the assessee’s income tax return filed on 31.07.2010, the assessee enclosed a letter stating the rationale for the said refund claim, and subsequently, on 05.05.2011, after not hearing back from the Assessing Officer, the assessee suo motu sent detailed documents more clearly explaining the rationale behind the refund claim and proving his eligibility for the refund of income tax.
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ADMN Any UPDATE since Feb. 2021 ; if any, what was the final outcome ?!
ADMN. ref. February 25, 2021 at 2:29 pm
certain concluding material observations seem to have been omitted/truncated ; pl. check and add !
courtesy
To ADDon:
“4. It was contended that the return of income for the assessment year 2010-11 filed by the assessee on 30.07.2011 declaring a taxable income of Rs.75,70,698/- was processed under Section 143(1) of Income Tax Act, 1961, on 15.03.2012 determining the total income at Rs.1,95,20,410/- by ignoring/disallowing the exempt income of …..”
“7. The above Tax Case Appeal was admitted on the following substantial Questions of law:
(i) Whether THE GAIN ON SALE of stock options in USA that were given to the Indian employee by M/s.Google Inc., USA amounts to perquisites taxable under the Income Tax Act, 1961 or not?;
(ii) Whether the amounts shown in Form-16 as Tax Deducted at Source on SUCH PERQUISITES would be the exclusive gain made by the Assessee on such stock options issued by the Holding Company in USA IS SUFFICIENT TO HOLD THAT IT IS TAXABLE UNDER THE HEAD ‘SALARY’ AS ‘PERQUISITES’ with reference to the provisions under Section 5(1) (c) and 6(6) (a) read with Section 17?;
(iii) Whether such tax can be imposed by the Revenue under Section 143(1) of the Act AFTER ISSUANCE OF NOTICE under Section 143(2) of the Act?”
< FONT (supplied to focus)
Purport or import of Qn. (iii) unclear!
>>>
.
Q
(i) Whether the gain on sale of stock options in USA that were given to the Indian employee by M/s.Google Inc., USA amounts to perquisites taxable under the Income Tax Act, 1961 or not?;
(ii) Whether the amounts shown in Form-16 as Tax Deducted at Source on such perquisites would be the exclusive gain made by the Assessee on such stock options issued by the Holding Company in USA is sufficient to hold that it is taxable under the head ‘salary’ as ‘perquisites’ with reference to the provisions under Section 5(1) (c) and 6(6) (a) read with Section 17?; UQ
BEG your Pardon ! Is the point of dispute on taxation of ‘perq’. – the first stage ; or of CG – the second stage? If it be the latter, what is the relevance of FORM 16 (sorry, if me confused!) ?!?
courtesy