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The Tax Publishers Rajendra Pathak v. Asstt. DIT [ITA No. 53/JP/2012, dt. 11-8-2015] : 2015 TaxPub(DT) 3610 (Jp-Trib) Shares sold outside India taxability in India, clubbing provisions in the hands of a non-resident in the hands of his wife a resident in India *Facts:* Assessee was a non-resident. He was allotted some shares arising out of an ESOP scheme from Vedanta Resources Plc where the assessee was employed in a senior position. Post allotment he had requested that the shares be registered in the name of his wife a resident in India with no gift deed. Share certificate was thus in wifes name. Subsequently the assessee sold the shares outside India in London and remitted the proceeds to the joint bank a/c with his wife in India. Lower authorities treated the capital gain on the sale as income in his hands since owned by his wife who was a resident clubbing provisions were applied under section 64. On appeal to ITAT Held in favour of the assessee that no clubbing is warranted. The assessee produced enough evidences to establish the fact that the shares were allotted to him outside India as a non-resident and they were purchased from his salary account. The shares were also de facto owned by him no matter the name being in his wife upon his request. When they were sold outside India the transfer was also outside India. Since assessee was a non-resident transfer of shares outside India would not be taxed in India as it fell outside the scope of taxable income as per section 4/5. Consequentially once capital gains was exempt no clubbing also could be read into. The remittance to the joint bank account was only after the transfer of shares and thus was only a remittance of an exempt capital gains. Thus held the ITAT.

The Tax Publishers

Rajendra Pathak v. Asstt. DIT [ITA No. 53/JP/2012, dt. 11-8-2015] : 2015 TaxPub(DT) 3610 (Jp-Trib)

Shares sold outside India taxability in India, clubbing provisions in the hands of a non-resident in the hands of his wife a resident in India

Facts:

Assessee was a non-resident. He was allotted some shares arising out of an ESOP scheme from Vedanta Resources Plc where the assessee was employed in a senior position. Post allotment he had requested that the shares be registered in the name of his wife a resident in India with no gift deed. Share certificate was thus in wifes name. Subsequently the assessee sold the shares outside India in London and remitted the proceeds to the joint bank a/c with his wife in India. Lower authorities treated the capital gain on the sale as income in his hands since owned by his wife who was a resident clubbing provisions were applied under section 64. On appeal to ITAT

Held in favour of the assessee that no clubbing is warranted.

The assessee produced enough evidences to establish the fact that the shares were allotted to him outside India as a non-resident and they were purchased from his salary account. The shares were also de facto owned by him no matter the name being in his wife upon his request. When they were sold outside India the transfer was also outside India. Since assessee was a non-resident transfer of shares outside India would not be taxed in India as it fell outside the scope of taxable income as per section 4/5. Consequentially once capital gains was exempt no clubbing also could be read into. The remittance to the joint bank account was only after the transfer of shares and thus was only a remittance of an exempt capital gains. Thus held the ITAT.