only such proportion of the ESOP perquisite as is relatable to the service rendered by the Employee in India is taxable in India.

Last updated: 22 January 2021

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This ruling clarifies that only the proportion of Employee Stock Option Plan (ESOP) benefits attributable to services rendered by an employee within India is subject to Indian income tax. The appeals concerned the taxability of ESOP benefits for assessment years 2013-14 and 2014-15, with the tribunal agreeing to apply the decision from one year to the other. The core issue was whether the entire ESOP perquisite should be taxed in India or only the portion related to Indian service.

Court :
ITAT Mumbai

Brief :
These two appeals pertain to the same assessee, involve a common issue regarding taxation of ESOP benefit and were heard together. All the relevant material facts are admittedly the same, except for a variation in the quantum of ESOP benefits brought to tax- while the the amount of ESOP benefit in question, in dispute, for the assessment year 2013-14 is Rs 72,77,320, the quantum of ESOP benefit for the assessment year 2014-15 is Rs 83,59, 125. We will take up the appeal of the assessee for the assessment year 2013-14 first, and whatever we decide in the said appeal, as learned representatives agree, will apply mutatis mutandis 2014-15 as well. The said appeal calls into question the correctness of the order dated 19th January 2018, passed by the learned C.I.T.

Citation :
ITA 1201/MUM/2018

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