Capital gain shall arise under section 47 (iii), in case of shares, debentures or warrants which have been transferred by way of gift or an irrevocable trust, received by the employees under the scheme of ESOP under accordance with the guidelines issued by the central government.

However, if the shares, debentures or warrants received by the employees under ESOP is not in accordance with the guidelines issued by the central government in this behalf, the same shall be considered as perquisite under 17 (2) and no capital gain tax arise in case of gift of such shares, debentures or warrants.

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