Nishithkumar Mukeshkumar Mehta Vs DCIT (Madras High Court)
Madras High Court held that compensation paid to ESOP holders qualifies as perquisite and hence taxable under the head ‘salary’. The same cannot be treated as capital receipt.
Facts- The petitioner is an employee of Flipkart Internet Private Limited (FIPL), which is a company incorporated in India and a wholly owned subsidiary of Flipkart Marketplace Private Limited (FMPL). FMPL is a company incorporated under the laws of Singapore and is a wholly owned subsidiary of Flipkart Private Limited Singapore (FPS).
On 21.04.2023, FPS announced compensation of US Dollar (USD)43.67 per ESOP in view of the divestment of its stake in the PhonePe business, and described such payment as being made although there is no legal or contractual right thereto under the FSOP 2012. Such compensation was payable to all option grantees as on 23.12.2022 (the record date), whether current or former stakeholders, in respect of vested options, whereas in respect of options that had not vested, compensation was payable only to current stakeholders. As on 23.12.2022, out of the above mentioned ESOPs, 2137 had vested in the petitioner as per the terms of the FSOP 2012 and 3787 had not vested, thereby aggregating to 5924 ESOPs of FPS under the FSOP 2012. The petitioner had not exercised the option in respect of the vested ESOPs.
