There was no law on taxation of Esop shares for A.Y. 1999-2000. Only CBDT Circular no. 710 was there clause (iv) of the same provided that where shares have been offered only to the employees, the value of perquisite will be the difference between the market price of the shares on the date of acceptance of the offer by the employee and the price at which the shares have been offered. In this regard, assessee’s contention is that offer & acceptance of shares took place on 1.2.1999. Assessee in its bonafide belief that the same was taxable in the assessment year 1999-2000 has offered the same for taxation. In assessment year 1999-2000, he already paid taxes also on the same. On different interpretation of law Assessing Officer has considered the assessibility of the income for A.Y. 2000-01. As such, theperquisites value has also been enhanced, which was totally dependent on the market value of the shares at the stock exchange on the date of exercising of option. Assessing Officer ‘s action has beenrejected by the Ld. Commissioner of Income Tax (Appeals) but confirmed by the ITAT that the same is to be taxed in assessment year 2000-01. However, this would not lead to a conclusion that assessee has made any concealment or the explanation given by the assesseeis not bonafide. Thus, we find that issue was controversial and existence of two opinions cannot be ruled out, at the relevant time.
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