ESOP Query

[Bhumin]

Dear All,

I have query on ESOP.

If Mr x who has granted ESOP option from ABC Ltd. in FY 2010-11
But before excercising the same, he dies in Fy 2011-12 and now legal heir of Mr X is exercising the option in FY 2012-13 & purchase shares at discounted price.

Now Issue is about taxability of ESOP option.

Whether Taxable to Legal heir??

Capital gain on sale in future is any way taxable to them whenever they sold the same shares.

So whether it is taxable  as ESOP as it is taxable when option is exercised as per CBDT's guideline but at that time there is no Employer -Employee relationship existing so not chargeble as per charging section 15.

Require your opinion as soon as possible.

Thanks in advance.
Regards,
Bhumin A Mehta

[camanojgupta]

Section 17(2)(vi) provides that value of any specified security or sweat equity shares allotted or transferred directly or indirectly by the employer or former employer, free of cost or at concessional rate to the assessee shall be taxed perquisite in the hands of the employee.
In this case since no employer-employee relationship exist hence the charging provision under section 15 fails.
No taxability would arise.
CA MANOJ GUPTA
JODHPUR
09828510543