Per Bench - These appeals by an assessee is arising out of the common order of the CIT(A)-IV Bangalore dated 12-9-2000 against an order passed under section 201(1) and section 201(1A). Since common issues are involved therein all these three appeals are disposed by a consolidated order.

2. Though the assessee has raised as many as 20 grounds and various sub-grounds within the grounds, the only issue to be decided in this appeal is whether the assessee is liable to be treated as an assessee in default under section 201 of the Income-tax Act (hereinafter called Act) for failure to deduct tax as required under section 192 of the Act in respect of benefit, if any, accruing to its employees in respect of issue of shares under its Employees Stock Option Plan (ESOP) and consequently whether assessee is liable for payment of interest under section 201(1A) of the Act.

3. Infosys Technologies Ltd. is a public limited company in the Information Technology Industry. It has formulated an Employees Stock Option Plan (ESOP). A trust was set up by the Infosys Technologies Ltd. The Trust was allotted warrants of Re. 1 each, each warrant entitling the holder thereby to apply for and be allotted one equity share of face value of Rs. 10 each for a total consideration of Rs. 100. The Trust is to hold the warrant and transfer the same to the employees of the company under the terms and conditions of the scheme governing the ESOP. During the years under consideration viz. the assessment years 1997-98, 1998-99 and 1999-2000, warrants were offered to the employees. These warrants were offered to the employees at Re. 1 each by the Infosys Technologies Ltd. Employees Welfare Trust (Trust). The salient features of the ESOP are as under :

(i)The Trust was allotted 7,50,000 warrants of Rupees one each, each warrant entitling the holder thereof to apply for and be allotted one equity share of Rs. 10 (face value) for a total consideration to be determined by the Board of Directors of Infosys. The consideration recommended by the Board of Directors of Infosys in the present rate is Rupees one hundred per share.

(ii)The Trust is to transfer the warrants to the eligible employees at a consideration of Re. one per warrant.

(iii)The warrants held by the employees are not transferable except to the Trust during the life of the warrant. During this period. The said warrants cannot be pledged/ hypothecated/ charged/ mortgaged/ assigned or in any other manner alienated or disposed of. The physical custody of the warrants is kept with the Trust under the scheme.

(iv)The employee who is the registered holder of the warrants is entitled to apply for and be allotted one equity share of Rupees ten each (face value) for a total consideration to be determined by the Board of Directors of Infosys. The Board of Directors have determined the consideration to be Rupees one hundred. This right of application is available during a two-month period every year within a five-year period from the date of transfer of warrants to the employee subject to a cooling period of 12 months from the date of grant of warrants. However, in case the employee does not exercise the warrants within the five-year period, the warrant will, upon the expiry of this period, lapse.

(v)The right of exercise is available at the defined times subject to the employee being in the service of the Company during the said period of five years. In case the employee were to leave the services of the Company or be removed from service for whatever reason, his rights under the warrants would lapse and he would be obliged to transfer the warrant back to the Trust for the same consideration of Rupees one per warrant as paid by him originally.

(vi)In case the employee was to exercise his right on the warrants and apply for the equity shares, the equity shares so allotted will be subject to a lock-in-period for the balance period of the five years from the date of transfer of the said warrants to the employee. During this p