Manjeet Singh Chawla Vs Deputy Commissioner of TDS (Karnataka High Court)
Most people might have binge watched new web series on ‘TRUST is RARE’ — I binged a 180-pager tax case this week. Same drama with fewer commercial breaks. But beyond the sheer length, the Manjeet Singh Chawla ruling by the Karnataka High Court provides crucial clarity on the taxability of compensation paid for diminution in value of stock option.
1. Background and Facts of the Case:
- The Petitioner, Manjeet Singh Chawla, an Indian citizen and employee of Flipkart Internet Private Limited (FIPL), approached the Court seeking to quash the rejection of his application for a Nil Tax Deduction Certificate (NTDC) under Section 197 of the Income-tax Act, 1961 for FY 2023-24.
- Corporate Structure:
- FIPL is an Indian subsidiary of Flipkart Marketplace Private Limited (FMPL), Singapore, itself a wholly-owned subsidiary of Flipkart Private Limited, Singapore (FPS).
- FPS also had subsidiaries such as PhonePe, with PhonePe India Private Limited operating in India.
Flipkart Stock Option Plan (FSOP):
In the year 2012, the Petitioner was granted 2232 stock options with a vesting period of 4 years. Amongst which 955 stock options were vested, 249 were cancelled and the unvested were 1028, resulting in total stock options held by him being 1983.
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