Commissioner Of Income Tax, Bangalore vs Infosys Technologies Ltd

The Supreme Court ruled that the right granted to employees under the Employees Stock Option Scheme (ESOP) does not constitute a 'perquisite' under Section 17(2)(iii) of the Income Tax Act, 1961. The Court held that the tax deduction at source (TDS) under Section 192 was not applicable on the difference between the market value and the exercise price of the stock options, as the shares were subject to a lock-in period and non-transferable during that time. Consequently, the appeals by the Department against the Tribunal's decision were dismissed, affirming the Karnataka High Court's ruling.