| COURT: | ITAT Bangalore |
| CORAM: | Jason P. Boaz (AM) |
| SECTION(S): | 45, 48, Section 2(42A) |
| GENRE: | Domestic Tax |
| CATCH WORDS: | ESOP, long-term capital asset, Period of Holding - Long Term Capital Asset or Short Term Capital Asset |
| COUNSEL: | Sudheendra B. R |
| DATE: | October 31, 2018 (Date of pronouncement) |
| DATE: | November 24, 2018 (Date of publication) |
| AY: | 2007-08 |
| FILE: | Click here to view full post with file download link |
| CITATION: | |
| Gains on exercise of ESOP: ESOP options provide valuable right to the assessee to exercise and have allotment of shares. They are thus 'capital asset' held by the assessee from the date of grant. If the assessee transfers the option itself, the capital gains will have to be assessed as long-term capital gains if the options have been held for more than three years (All relevant judgements considered and followed/ distinguished) | |
It is not in dispute that ESOP options provided valuable right to the assessee to exercise and have allotment of shares. They were thus ‘capital asset’ held by the assessee from the date of grant i.e., 28.02.2003 and 02.02.2004 for which a consideration was paid to the assessee under the option Transfer Agreement. The contention that the assessee cannot exercise option in the absence of vesting is not relevant as the options were transferred without any exercise in the case on hand
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