Case Law Details
ACIT (TDS)-2(2) Vs Sula Vineyards Pvt. Ltd. (ITAT Mumbai)
ITAT Mumbai held that as per rule 3(8)(iii) fair market value of any equity shares on the date of exercising option by the employee shall be determined by a merchant banker. Accordingly, quantum of perquisite and TDS liability will be worked on the said basis.
Facts-
The issue raised in present appeal by the Revenue relates to short-deduction of tax on perquisites to Mr. Rajeev Samant, the then director of the assessee company. According to AO, the assessee company had allotted 40,000 warrants to Sh. Rajjeev Samant during the Board of Directors meetings held on 09/02/2010 at the option of conversion into shares at the rate of ₹155 per share. Out of the 40,000 warrants, 20,000 warrants were converted to shares in the month of June 2017 and balance 20,000 warrants were converted into shares in the month of February 2018. Mr Rajeev Sawant paid ₹ 62 lakh to the company for the 40,000 shares.
As per the section 17(2)(vi) of the Act the value of any specified security allotted or transferred, directly or indirectly by the employer, free of cost or at concessional rate, is to be treated as perquisites in the hands of the employee and the company is required to deduct tax at source on the same in terms of section 192 of the Act.
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