2. Facts in brief: The assessee is an employee of Zee Telefilms Ltd. M/s. Zee Telefilms Ltd., offered a scheme under an Employee Stock Option Plan (ESOP) on February 1, 1999. The company issued 3000 warrants held under trust to the assessee. These warrants can be converted into 3000 equity shares subject to certain terms and conditions. The warrants could be converted into equity shares at a conversion price of Rs. 212 per share which is, admittedly, below the market price. The assessee was entitled to convert the warrants into shares within three months from the announcement of the financial results of the company for the year ended March 31, 1999. The assessee was bestowed this right to exercise the option of conversion of warrants into shares upon full payment of the conversion price to Zee Network Employees' Welfare Trust (ZEWT).

3. During the year the assessee had filed the return of income on June 30, 2000 declaring income of Rs. 10,13,860. The same was processed under section 1