The ITO, Wrd-8(3),, Baroda v. Shri Dhirendrakumar Bajpai, Baroda

ITA 1645/AHD/2006 | 2002-2003
Pronouncement Date: 18-01-2010 | Result: Dismissed

Appeal Details

RSA Number 164520514 RSA 2006
Assessee PAN SINCE1993A
Bench Ahmedabad
Appeal Number ITA 1645/AHD/2006
Duration Of Justice 3 year(s) 6 month(s) 18 day(s)
Appellant The ITO, Wrd-8(3),, Baroda
Respondent Shri Dhirendrakumar Bajpai, Baroda
Appeal Type Income Tax Appeal
Pronouncement Date 18-01-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted D
Tribunal Order Date 18-01-2010
Date Of Final Hearing 07-01-2010
Next Hearing Date 07-01-2010
Assessment Year 2002-2003
Appeal Filed On 30-06-2006
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD AHMEDABAD DBENCH BEFORE DR. O.K. NARAYANAN VICE-PRESIDENT (AZ) AND SHRI MAHAVIR SINGH JUDICIAL MEMBER ITA NO.1645/AHD/2006 [ASSTT.YEAR:2002-03] INCOME TAX OFFICER VS. SHRI D HIRENDRAKUMAR BAJPAI WARD-8(3) BARODA 38 M INAXI SOCIETY RACE COURSE ROAD BARODA PAN NO.ABMPB7379J REVENUE BY: SHRI C.K. MISH RA SR. DR ASSESSEE BY: SHRI SAURABH N SOPARKAR AR DATE OF ORDER RESERVED: 07/01/10 O R D E R PER MAHAVIR SINGH JUDICIAL MEMBER:- THIS APPEAL BY THE REVENUE IS ARISING OUT OF THE O RDER OF COMMISSIONER OF INCOME-TAX (APPEALS)-VI BARODA IN APPEAL NO.CAB/VI -161/04-05 DATED 22-11-2005. THE ASSESSMENT WAS FRAMED BY THE ACIT CIRCLE-8 BA RODA U/S. 143(3) OF THE INCOME-TAX ACT 1961 (HEREINAFTER REFERRED TO AS T HE ACT) VIDE HIS ORDER DATED 24-12- 2004 FOR THE ASSESSMENT YEAR 2002-03. 2. THE ONLY ISSUE IN THIS APPEAL OF THE REVENUE IS AGAINST THE ORDER OF CIT(A) IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF ISSUE OF ACQUISITION OF STOCK AND GAIN ARISING OUT OF SUCH S ALE TREATED AS SHORT TERM CAPITAL GAINS BY HOLDING THAT MERE GRANTING OF OPTION BY T HE COMPANY DOES NOT VEST ANY ITA NO.1645/AHD/2006 A.Y. 2002-03 ITO WD-8(3) BARODA V. DHIRENDRAKUMAR BAJPAI PAGE 2 PROPERTY WITH THE ASSESSEE UNTIL AND UNLESS HE EXER CISES THE RIGHT FOR TRANSFER OF PROPERTY. FOR THIS THE REVENUE HAS RAISED THE FOL LOWING GROUND NO.1 :- (1) ON THE FACTS AND UNDER THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED- (I) IN DELETING RS.20 33 916/- BY NOT RELYING ON T HE FACTS ON THE ISSUE OF ACQUISITION OF THE STOCK AND THE GAIN SO ARISING OU T OF SUCH SALE WHICH HAS BEEN RIGHTLY TREATED AS SHORT TERM CAPITAL GAIN BY THE ASSESSING OFFICER AS MERE GRANT F OPTION BY THE COMPANY DOES NOT VEST AN Y PROPERTY WITH THE ASSESSEE UNLESS AND UNTIL HE EXERCISES THE RIGHTS F OR TRANSFER OF PROPERTY. THE A.O HAS RELIED UPON THE DECISION IN THE CASE OF CIT VS. R. DALMIA (163 ITR 517 DELHI) CIT VS. J.P. DALMIA (149 ITR-215 DELHI) RUSTOMJI KAVASJI COOPER VS. C.W.T. (76 ITR-471 476 S.C). 3. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THR OUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE HAVE ALSO PERUSED THE CASE RECORDS INCLUDING THE ASSESSMENT ORDER AS WELL AS ORDER OF CIT(A) AND THE ASSESSEES PAPER BOOK CONSISTING OF PAGE NO.1 TO 55. THE BRIEF FACTS ARE THAT THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS NOTICED FROM THE COMPUTA TION OF INCOME THAT HE HAS INCLUDED INCOME FROM CAPITAL GAINS IN THE RETURN OF INCOME ON ACCOUNT OF GE STOCK OPTION. THE ASSESSING OFFICER NOTICED THAT THE ASSE SSEE HAS SHOWN NET CAPITAL GAIN OF RS.16 82 002/- AGAINST WHICH EXEMPTION OF RS.10 LAKH HAS BEEN CLAIMED. THE MAJOR COMPONENT OF LONG TERM CAPITAL GAIN IS STATED TO BE ON ACCOUNT OF GE STOCK OPTION. THE ASSESSEE SOLD 1000 SHARES OF GE ACQUIR ED THROUGH GE STOCK OPTION SCHEME FOR TOTAL CONSIDERATION OF RS.24 21 279/- AN D THE STOCK OPTIONS WERE RECEIVED BY HIM AS PER TERMS OF EMPLOYMENT WHILE HE WAS EMPLOYED WIDTH GE PLASTIC UNDER GE EMPLOYEES STOCK OPTION PLAN (ESOP ) DURING FINANCIAL YEAR 1993- 94. BEFORE THE AO IT WAS STATED THAT THE STOCK OPTI ON WAS GRANTED TO HIM BY HIS ERSTWHILE EMPLOYER GE ON 07-12-1993 WHICH GAVE HI M A RIGHT TO SELL THESE OPTIONS PARTLY AFTER SEPTEMBER 1996 AND PARTLY AFTER SEPTE MBER 1998. THE OPTIONS WERE EXERCISED DURING FINANCIAL YEAR 2001-02 I.E. DURING THE PREVIOUS YEAR. THE ASSESSEE WAS PAID THE DIFFERENCE OF MARKET VALUE AND COST OF THIS OPTION ON EXERCISE OF HIS OPTION. IT IS STATED THAT THE DATE OF ACQUISITION O F THE OPTIONS IS 07-12-1993 BEING DATE OF GRANT OF OPTIONS AND SINCE THERE WERE SOLD IN FI NANCIAL YEAR 2001-02 I.E. AFTER THIRTY SIX MONTHS IT RESULTED IN LONG TERM CAPITAL GAIN AN D THE AO WAS NOT CONVINCED BY THE REPLY OF THE ASSESSEE AND ADDED THAT IT IS AN UNDIS PUTED FACT THAT THE OPTION WAS ITA NO.1645/AHD/2006 A.Y. 2002-03 ITO WD-8(3) BARODA V. DHIRENDRAKUMAR BAJPAI PAGE 3 EXERCISED ONLY DURING FINANCIAL YEAR 2001-02. AS A RESULT SHARES WERE ACQUIRED AT RS.3 87 363/- AND SOLD AT RS.24 21 279/- BOTH TRANS ACTION TAKING PLACE DURING FINANCIAL YEAR 2001-02. THIS RESULTED IN SHORT TERM CAPITAL GAIN OF RS.20 33 916/- AND NOT ANY LONG TERM CAPITAL GAINS. IT IS MENTIONED TH AT ALTERNATIVELY GRANT OF SHARES AT OPTION PRICE LESS THAN MARKET PRICE CAN BE CONSIDER ED AS PERQUISITE IN TERM OF SECTION 17(2)(III) BECAUSE THE PROVISO TO THAT CLAUSE EXCLU DES SHARES ALLOTTED UNDER STOCK OPTION SCHEME ONLY IF SUCH SCHEME IS IN ACCORDANCE WITH THE GUIDELINES ISSUED BY THE CENTRAL GOVT. THE ASSESSEE COULD NOT ESTABLISH THAT STOCK OPTION SCHEME OF GE WAS IN ACCORDANCE WITH SUCH GUIDELINES. THUS THE A MOUNT OF RS.20 33 916/- WAS TAXED AS SHORT TERM CAPITAL GAIN OR ALTERNATIVELY AS PERQUISITE IN THE HANDS OF THE ASSESSEE. 4. AGGRIEVED THE ASSESSEE PREFERRED APPEAL BEFORE CIT(A) AND CIT(A) AFTER DISCUSSING THE ISSUE ALLOWED THE CLAIM OF THE ASSES SEE VIDE PARA-3.4 TO 3.7 OF HIS APPELLATE ORDER:- 3.4 I HAVE GONE THROUGH THE CONTENTIONS OF THE APP ELLANT THE ASSESSMENT ORDER THE REMAND REPORT AND THE COMMENTS OF THE AP PELLANT THEREON. THE APPELLANT WAS EMPLOYED WITH M/S. GE PLASTICS COMPAN Y AND RECEIVED 250 OPTIONS FROM THE PARENT COMPANY GENERAL ELECTRIC CO MPANY UNDER THE GE LONG TERM INCENTIVE PLAN ON 7 TH DECEMBER 1993. ON 27 TH APRIL 1994 BY VIRTUE OF TWO FOR ONE SPLIT OF GE COMMON STOCK THE NUMBER OF OPTIONS BECAME 500. SUBSEQUENTLY BY WAY OF TWO FOR ONE STOCK SPLIT IN 1997 THE APPELLANTS ACCOUNT WAS REVISED TO 1000 OPTIONS. HALF OF THESE OPTIONS MATU9RES IN SEPTEMBER 1997 AND THE BALANCE IN SEPTEMBER 1998. THE APPELLANT RECEIVED 1000 SHARES IN LIEU OF THIS 1000 OPTIONS I N MAY 2001 AND SOLD THIS 1000 SHARES IN MAY 2001 FOR RS.24 21 279/- AND AFT ER INDEXATION OF THE OPTION PRICE THE LONG TERM CAPITAL GAIN WAS COMPUTE D AT RS.17 44 981. THE APPELLANT HAD INVESTED RS.10 00 000/- UNDER SECTION 54EC FOR INVESTMENT IN RURAL ELECTRIFICATION BONDS AND THE NET LONG TERM C APITAL GAIN WAS OFFERED FOR TAXATION. THE ASSESSING OFFICER WAS OF THE VIEW THA T THE OPTIONS WERE EXERCISED ONLY DURING FINANCIAL YEAR 20001-02 AND A S A RESULT THE SHARES WERE ACQUIRED IN FINANCIAL YEAR 2001-02 AND AS THE SAME WERE SOLD IN FINANCIAL YEAR 2001-02 IT RESULTED IN SHORT TERM CAPITAL GAIN. ALT ERNATIVELY IT WAS INDICATED BY THE ASSESSING OFFICER THAT THE GAIN ON SHARE AT OPT ION PRICE LESS THAN MARKET PRICE COULD BE TREATED AS PERQUISITE IN TERMS OF SE CTION 17(2)(III) AS THE PROVISO TO THAT CLAUSE EXCLUDES THE PERQUISITE VALUE IN RES PECT OF SHARES ALLOTTED UNDER STOCK OPTION SCHEME ONLY IF SUCH SCHEME IS IN ACCOR DANCE WITH THE GUIDELINES ISSUED BY CENTRAL GOVERNMENT AND AS THE ASSESSEE HA D NOT ESTABLISHED THAT THE STOCK OPTION SCHEME WAS IN ACCORDANCE WITH SUCH GUIDELINES THE GAIN COULD BE TREATED AS TAXABLE PERQUISITE FORMING PART OF SALARY. ITA NO.1645/AHD/2006 A.Y. 2002-03 ITO WD-8(3) BARODA V. DHIRENDRAKUMAR BAJPAI PAGE 4 3.3.1 THE APPELLANT ON THE OTHER HAND CONTENDED THA T AS PER CLAUSE 2(H) OF THE SECURITIES CONTRACT REGULATION ACT SECURITIES INCLUDE RIGHT AND INTEREST IN SECURITIES AND ON THE DATE OF GRANTING OF OPTION IN DECEMBER 1993 THE APPELLANT RECEIVED RIGHT IN THE SHARES AS PER SECTI ON 2(14) OF THE INCOME-TAX ACT. THIS RIGHTS CONSTITUTES PROPERTY. THE WORDS PR OPERTY OF ANY KIND USED IN SEC. 2(14) ARE OF THE WIDEST AMPLITUDE BUT INCLUDE NOT ONLY TANGIBLE RIGHTS BUT ALSO INTANGIBLE RIGHTS. THE ASSESSEE WAS HOLDING RI GHTS SINCE 1993 AND IN LIEU OF THE SAID RIGHTS THE OPTIONS WERE EXERCISED IN 20 01 I.E AFTER 36 MONTHS SO THE GAIN REALIZED WERE LONG TERM CAPITAL GAIN. THE APPELLANT HEAVILY RELIED ON THE DECISION IN THE CASE OF BHARAT V. PATEL VS. ADDL. CIT (S.R.1) BARODA IN ITA NO.2241/AHD/2002 DATED 27.6.2003 OF HONBLE ITAT AHMEDABAD WHEREIN ON IDENTICAL SETS OF FACTS THE GAIN FROM SA LE OF STOCK OPTIONS WAS NOT HELD AS PERQUISITE UNDER SECTION 17(2)(III) AND WAS TERMED AS LONG TERM CAPITAL GAIN BY HONBLE ITAT AHMEDABAD. 3.4.2 SECTION 17(2)(IIIA) WAS INTRODUCED BY FINANCE ACT 1999 WITH EFFECT FROM 1.4.2000 SPECIFICALLY PROVIDING FOR ASSESSMENT OF S TOCK OPTIONS AS PERQUISITES. THE SAID SECTION 17(2)(IIIA) WAS DELETED FROM STATU TE BOOK BY FINANCE ACT 2000 AND A PROVISO WAS IS INTRODUCED TO SECTION 172 (2)(III) WITH EFFECT FROM 1.4.2001 TO MAKE IT CLEAR THAT SUCH STOCK OPTION WI LL NOT CONSTITUTE PERQUISITE IF IT IS IN ACCORDANCE WITH GUIDELINES ISSUED BY CENTR AL GOVERNMENT. THE SECTION READS AS UNDER; (2) PERQUISITE INCLUDES- (I) . . . . (II) (III) .. BY ANY EMPLOYER (INCLUDING A COMPANY) TO AN EMPLO YEE TO WHOM THE PROVISIONS OF PARAGRAPHS (A) AND (B) OF THIS SUB-CL AUSE DO NOT APPLY AND WHOSE INCOME UNDER THE HEAD SALARIES (WHETHER DUE FROM A OR PAID OR ALLOWED BY ONE OR MORE EMPLOYERS) EXCLUSIVE OF TH E VALUE OF ALL BENEFITS OR AMENITIES NOT PROVIDED FOR BY WAY OF MONETARY PAYME NT EXCEEDS FIFTY THOUSAND RUPEES; PROVIDED THAT NOTHING CONTAINED IN THIS SUB-CLAUSE SHALL APPLY TO THE VALUE OF ANY BENEFIT PROVIDED BY A COMPANY FREE OF COST OR A T A CONCESSIONAL RATE TO ITS EMPLOYEES BY WAY OF ALLOTMENT OF SHARES DEBENTURES OR WARRANTS DIRECTLY OR INDIRECTLY UNDER ANY EMPLOYEES STOCK OPTION PLAN O R SCHEME OF THE COMPANY OFFERED TO SUCH EMPLOYEES IN ACCORDANCE WI TH THE GUIDELINES ISSUED IN THIS BEHALF BY THE CENTRAL GOVERNMENT. 3.4.3 THE PROVISO HAS TWO LIMBS. ONE IS CLARIFYING AND THE OTHER ONE IS QUALIFYING. THERE WERE NO SUCH GUIDELINES IN 1993 W HEN THE STOCK OPTIONS WERE ALLOWED TO THE APPELLANT BY WAY OF LONG TERM I NCENTIVE SCHEME. THE ITA NO.1645/AHD/2006 A.Y. 2002-03 ITO WD-8(3) BARODA V. DHIRENDRAKUMAR BAJPAI PAGE 5 QUALIFICATIONS CONTAINED IN THE PROVISO THEREFORE M AY HAVE ONLY PROSPECTIVE EFFECT. IT CANNOT BE SAID THAT THE STOCK OPTIONS WE RE ALWAYS TO BE CONSIDERED AS PERQUISITE BY VIRTUE OF SECTION 17(2)(III) AS I N THAT CASE THERE WAS NO NEED TO ENACT SECTION 17(2)(IIIA) IN THE FIRST PLACE. AT MOST THE CLARIFICATION CONTAINED IN THE PROVISO IS APPLICABLE ONLY IN RESPECT OF SCH EMES OF STOCK OPTIONS FRAMED AFTER 1.4.2001. IN THIS CASE THE SCHEME WAS FRAMED MUCH EARLIER SO THE CLARIFICATION TO THIS PROVISO IN MY VIEW WILL NOT A PPLY. 3.3.4 THE HONBLE ITAT AHMEDABAD IN THE CASE OF BH ARAT V. PATEL HAD EXAMINED THE ISSUE IN GREAT DETAILS AND AFTER DISCU SSING THE ARGUMENTS OF THE DEPARTMENT AS WELL AS THE APPELLANT AND ALSO DRAWIN G UPON JUDGEMENTS OF HIGHER COURTS CONCLUDED THAT THE STOCK OPTIONS DID NOT GRANT ANY PERQUISITE IN TERM OF SECTION 17(2)(III) IN VIEW OF THE FOLLOWING ; I. UNLESS THE BENEFIT IS SPECIFICALLY MADE TAXABLE IT CANNOT BE REGARDED AS INCOME II. THE GAINS FROM STOCK OPTIONS WERE PROSPECTIVE O N CONDITIONS OF FUTURE ALLOTMENT OF SHARES WITHOUT ANY CONDITION OR ENCUMBRANCE. THE BENEFIT WHICH IS PROSPECTIVE IN NA TURE CANNOT BE TAXED AS INCOME (SHRI KIKABHAI PREMCHAND VS. CIT - 24 ITR 506 (SC) AND CIT VS. SNPIPE CONSTRUCTION CO. LTD. - 55 ITR 68 (GUJARAT) III. IF SECTION 1(2) WAS ALL PERVASIVE THERE SHOUL D HAVE BEEN NO OCCASION FOR THE SUPREME COURT IN THE CASE OF SALGO CAR AND BROS.-243 ITR 383 (SC) TO HOLD THAT INTEREST SUBSID Y IS NOT CHARGEABLE TO TAX AS A PERQUISITE. THUS ARTIFICIAL ENLARGEMENT OF WORD INCLUDE IS TO BE CONSTRUED IN A VERY STRICT MANNER. ON THE SAME ANALOGY THE GAINS UNDER THE STOCK OPTION PLAN WILL NOT AMOUNT TO PERQUISITE PRIOR TO 1.4.2000 AND AFTER 1. 42001. IV. THE GAIN UNDER THE STOCK OPTION PLAN WITH EFFEC T FROM 1.4.2001 IS TAXABLE UNDER THE HEAD CAPITAL GAIN PROVIDED IT FUL FILLS THE GUIDELINES LAID DOWN BY CENTRAL GOVERNMENT AND THAT THIS PROVISION IS NOT RETROSPECTIVE IN NATURE AS IT CONF ERS SUBSTANTIAL POWERS FOR THE FIRST TIME W.E.F. 1.4.2001. V. WHAT IS TO BE TAXED IS REAL INCOME AND NOT HYPOT HETICALLY CREATED NOTIONAL INCOME. THE BENEFIT SHOULD BE CAPABLE OF B EING ENJOYED BY THE EMPLOYEE WITHOUT ANY LET OR LATCHES OR ANY H INDRANCE TO BE TAXED AS INCOME. VI. TILL THE LOCK IN PERIOD THERE IS NO OPEN MARKET FOR THE STOCK OPTION OR IN OTHER WORDS NO MARKET VALUE CAN BE ASS IGNED TO SUCH SHARES. VII. THAT SECTION 17(2)(IIIA) WAS ADDED BY FINANCE ACT 1999 FOR THE TAXATION OF BENEFIT ARISING OUT OF STOCK OPTION PLA N. THIS SECTION WAS DELETED BY FINANCE ACT 2000 AND THE DIFFERENCE OF SALE ITA NO.1645/AHD/2006 A.Y. 2002-03 ITO WD-8(3) BARODA V. DHIRENDRAKUMAR BAJPAI PAGE 6 PRICE AND COST OF SHARES ACQUIRED WAS MADE TAXABLE AS CAPITAL GAIN AT THE TIME OF SALE. THE PROVISO WAS INSERTED UNDER SECTION 17(2)(IIIA) TO CLARIFY THE ISSUE. 3.4.5 IN THE CASE BEFORE HONBLE ITAT PERTAINING TO A.Y. 1998-99 THE APPELLANT SHRI BHARAT V PATEL WAS AN EMPLOYEE OF PR OCTOR AND GAMBLE (INDIA) LTD. AND WAS GRANTED STOCK APPRECIATION RIGHT (SARS ) DURING 1991-1996. THESE SARS WERE REDEEMED ON 15.12.1997. THE ASSESSI NG OFFICER TAXED THIS GAIN AS PERQUISITE WHEREAS THE ASSESSEE PRAYED FOR LEVY OF LONG TERM CAPITAL GAIN TAX AND CLAIMED CONSEQUENT EXEMPTION UNDER SEC TION 54EA OF THE INCOME-TAX ACT. THE HONBLE ITAT DIRECTED THAT THE GAIN CANNOT BE TREATED AS PERQUISITE AND THE ASSESSING OFFICER WAS DIRECTED T O VERIFY THE CLAIM UNDER SECTION 54EA THEREBY ACCEPTING THAT THE GAIN WAS LO NG TERM CAPITAL GAIN. 3.4.6 THE FACTS OF THE PRESENT CASE ARE IDENTICAL T O THOSE IN THE CASE OF BHARAT V PATEL AND FOR REASONS ENUMERATED IN THE ORDER OF HONBLE ITAT THE GAINS REALIZED BY THE APPELLANT CANNOT BE TREATED AS PERQ UISITE. 3.4.7 THE SECOND ISSUE IS WHETHER THE GAIN CAN BE T REATED AS SHORT TERM CAPITAL GAIN OR LONG TERM CAPITAL GAIN. HERE THE AP PELLANT AGREED TO PARTICIPATE IN THE STOCK OPTION PLAN IN 1993 AND WAS THUS GRANT ED THESE RIGHTS IN DECEMBER 1993. THE RIGHTS WERE LEGALLY ENFORCEABL E RIGHTS AND WERE SIMILAR TO THE RIGHTS IN RESPECT OF PROPERTY. THE APPELLANT HAD TO EXERCISE THE OPTION IN SEPTEMBER 1996 AND SEPTEMBER 1998. THE MATURATION PERIOD OR THE LOCK IN PERIOD IS AKIN TO RESTRICTIONS PLACED ON TRANSFERAB ILITY OF SUCH A RIGHT BUT THAT DOES NOT CHANGE THE DATE OF ACQUISITION OF SUCH RIG HT. THE CONTENTION OF THE ASSESSING OFFICER THAT THE APPELLANT GOT THE RIGHT TO SHARES ONLY IN 2001-02 DOES NOT SEEM TO BE CORRECT AS THE APPELLANT RECEIV ED STOCK SPLITS ON THE BASIS OF THE ORIGINAL RIGHT OF 1993 AND IN FACT THE ORIGINAL 250 OPTIONS INCREASED TO 1000 OPTIONS PRIOR TO EXERCISING OF THE OPTION. THE ACQUISITIONS OF THE OPTIONS WERE NOT WITHOUT CONSIDERATION. IT INCLUDED IMPLIEDLY PROMISE TO PAY FOR THE SHARES WHICH WAS EVIDENT FROM THE ULTIMATE TRAN SACTION WHEREIN THE APPELLANT COULD GET THE NET DIFFERENT OF MARKET PRI CE AND OPTION PRICE. THE INITIAL OPTION PRICE AND THE FINAL OPTION PRICE STO OD MODIFIED BY THE STOCK SPLITS BUT FIRMED DUP IN 1997. THUS IN MY VIEW THE CAPITAL GAIN ARRIVED OUT OF THE SALE TRANSACTION IN THE INSTANT CASE IS LONG TERM CAPITA L GAIN. FURTHER SUPPORT IS DRAWN FROM THE DECISION IN THE CASE OF BHARAT V. PA TEL BY HONBLE ITAT AHMEDABAD WERE ON IDENTICAL SET OF FACTS IT WAS HEL D THAT STOCK OPTIONS ARE CAPITAL SETS AND ASSETS ACQUIRED FOR CONSIDERATION AND GAINS THEREFROM ARE LIABLE TO CAPITAL GAIN TAX AND IN THE CASE BEFORE I TAT ASSESSING OFFICER WAS DIRECTED TO VERIFY THE RECORDS AND ALLOW BENEFITS U NDER SECTION 54EA AGAINST THE LONG TERM CAPITAL GAIN. 5. WE FIND THAT THE CIT(A) HAS RELIED ON THE TRIBUN ALS DECISION IN THE CASE OF BHARAT V PATEL (SUPRA) WHEREIN ON IDENTICAL SET OF FACTS THE CAPI TAL GAIN FOR SALE OF OPTION WAS ASSESSED AS LONG TERM CAPITAL GAIN. WE F IND THAT THE CIT(A) HAS HELD THAT ITA NO.1645/AHD/2006 A.Y. 2002-03 ITO WD-8(3) BARODA V. DHIRENDRAKUMAR BAJPAI PAGE 7 INITIAL OPTION AND FINAL OPTION PRICE STOOD MODIFIE D BY STOCK SPLITS FIRMED UP ONLY IN 1997 AND THEREBY HELD THE SAME AS LONG TERM CAPITAL ASSET GIVING CAPITAL GAINS. THEREFORE TAKING A CONSISTENT VIEW AND RESPECTFULLY FOLLOWING THE TRIBUNALS DECISION WE UPHOLDING THE ORDER OF CIT(A) AND THIS ISSUE OF THE REVENUES APPEAL IS DISMISSED. 4. IN THE RESULT REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED ON THIS DAY OF 18 TH JANUARY 2010 SD/- SD/- (DR.O.K.NARAYANAN) (MAHAVIR SINGH) (VICE PRESIDENT) (JUDICIAL MEMBER) AHMEDABAD DATED : 18/01/2010 *DKP COPY OF THE ORDER FORWARDED TO :- 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(APPEALS)-VI BARODA 4. THE CIT CONCERNS. 5. THE DR ITAT AHMEDABAD 6. GUARD FILE. BY ORDER /TRUE COPY/ DEPUTY / ASSTT.REGISTRAR ITAT AHMEDABAD