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Case Law Details

Case Name : Mr. Bomi S. Billimoria Vs. A.C, Mumbai (ITAT Mumbai)
Appeal Number : ITA No.2120/Mum/1998
Date of Judgement/Order :
Related Assessment Year :
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The Income-Tax Appellate Tribunal, Mumbai held that in case no payment has been made for acquiring shares under Employee Stock Option Plan, the gain on sale of said shares should not be liable to capital gains tax. As the date of exercise of options and date of sale is same and further, there is no difference between the sale price and the deemed cost of acquisition, in any case, it is not short term capital gains.

Facts of the case

• Mr. Bomi S. Billimoria (‘the employee’) was an employee of Johnson & Johnson, India, which was a subsidiary of Johnson & Johnson, USA.

• In 1989, the employee was granted certain options under an Employee Stock Option Plan (‘ESOP’) of Johnson & Johnson USA.

• The Reserve Bank of India (‘RBI’) had approved the ESOP on the condition that there should not be any payment by the employee (whether in India or abroad) for acquiring the shares under the ESOP.

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