Sponsored
    Follow Us:

Case Law Details

Case Name : ACIT Vs Pramod H. Lele (ITAT Mumbai)
Appeal Number : I.T.A Nos. 4699/ Mum/2004
Date of Judgement/Order : 10/08/2011
Related Assessment Year : 1998-99
Become a Premium member to Download. If you are already a Premium member, Login here to access.
Sponsored

ACIT Vs Pramod H. Lele (ITAT Mumbai)- The Stock Option Plan had granted only an ‘option to buy’ a specified number of shares in a specified time frame at a specified price, subject to the fulfilment of other conditions set out in the plan. There was no compulsion on the part of the assessee to acquire the shares. In other words, the Stock Option Plan only allowed the assessee to get benefit from the increase in the market price of the shares between the date of grant and the date of sale of shares. Therefore, where only stock options were issued and stood in the name of employees and no payment was made until the date of exercise, mere grant of an option does not result in a transfer of shares.

Further, the assessee had at no point in time, become owner of the shares. It was only entitled to the benefit of exercising the option under the plan, in receiving the gain on exercising the option by simultaneous purchase/sale of shares. Thus, the entries in the stock broker’s books were merely notional. The assessee did not own any capital asset in the form of shares, and therefore, the gains on sale of shares, in the present case based on simultaneous purchase/sale of shares would be short-term capital gains as the shares were held not even for a single day. The Tribunal thus reversed the order of the CIT(A) and held that the gain on exercise of stock options were taxable as short term capital gains.

Download Full Text of the Judgement-

ACIT vs. Pramod H. Lele (ITAT Mumbai)

Sponsored

Join Taxguru’s Network for Latest updates on Income Tax, GST, Company Law, Corporate Laws and other related subjects.

Leave a Comment

Your email address will not be published. Required fields are marked *

Sponsored
Sponsored
Ads Free tax News and Updates
Sponsored
Search Post by Date
December 2024
M T W T F S S
 1
2345678
9101112131415
16171819202122
23242526272829
3031