Supreme Court upholds Infosys stand on ESOPS against income tax department
08 Jan 2008
The Supreme Court has ruled that tax cannot be claimed on ESOPs granted before 2000, in a ruling on a petition filed before it by IT major Infosys Technologies.
The Bangalore I-T Department had held Infosys liable for failing to deduct tax at source for income earned by its employees through an ESOP scheme created in the financial year 1998.
Under the scheme, Infosys had transferred 7.5 lakh warrants at Re1 each to an employee trust. These warrants carried a five-year lock in period before employees could use them to buy shares.
The Supreme Court said that a warrant is a right without obligation to buy. Therefore, perquisite cannot be said to accrue at the time when the warrants were granted.