J. Sudhakar Reddy, Accountant Member - This is an appeal filed by the Revenue directed against the order of CIT(A)-XXX, New Delhi, dt. 30th June, 2011 pertaining to asst. yr. 2006-07 on the following grounds :

"On the facts and circumstances of the case and in law, the learned CIT(A) has erred in holding that the case of the assessee falls under Expln. 1 to cl. (d) or cl. (e) of section 2(42A) of the IT Act, 1961 as against the AO holding that the gain from sale of ESOP was chargeable as short-term capital gain ignoring the fact that as per ruling in the case of Girdhar Kirshna M. v. Asstt. CIT [2008] 117 TTJ (Bang.) 965 with regard to the capital gain, date of grant and vesting are irrelevant because they do not result in any share acquisition."

2. The facts of the case are as brought out in the AO's order as follows :

"In this case, assessee was given ESOP by Gillette Co. In his submissions and ESOP plan it has been observed that these ESOPs are cashless. Assessee has to pay nothing on exercise of ESOP. The assessee has been granted ESOP in earlier years without any cost. On the date of exercise the amount under ESOP to the assessee was deducted from the sale proceeds and the difference amount between sale proceed and exercise price amounting to Rs. 1,07,35,727 (less transfer expenses) has directly been credited on 7th March, 2006 in assessee's bank account. During his submissions also Authorised Representative submitted that date of exercise of employee stock option plan i.e. 27th Feb., 2006 was the similar date when they have been sold. It means, on the same date, the options were not only exercised but shares were also sold by the assessee which was obtained by the assessee on exercise of the option. Hence, the date of exercise of option was the same as the date of sale. The sale consideration received by the assessee by way of foreign reward remittance from the parent company but the assessee reckoned the time period from date of grant and not from date of exercise for calculating the capital gain purposes. Accordingly, the period from the date of grant exceeded 12 months, the assessee treated the same as long-term capital gain and claimed to be taxed the same @ 20 per cent.

The assessee was asked to submit bifurcation/clarification in respect of the income under the head capital gains. In response to this, the Authorised Representative vide his letter dt. 8th Oct., 2010 has stated :

The assessee has received total of Rs. 1,07,35,728 from the sale of employee stock option. These options were cashless. The assessee has paid taxes on these stock options as under :

On Rs. 19,16,656 taxes at the maximum tax rate @ 33.66 per cent has been paid by considering it as short-term capital gain.

On Rs. 8,81,907 taxes at the maximum tax rate @ 22.44 per cent has been paid by considering it as long-term capital gain."

3. The AO after giving an opportunity to the assessee concluded as follows :

"In the present case assessee is not transferring the rights, he is transferring the shares allotted by the company to him. The purchaser of these shares has not to exercise options. He has already got shares on point of sale by assessee. Accordingly, assessee cannot claim that he has transferred options and accordingly he cannot take the plea that for the purposes of calculating the time period for capital gain, the date on which the option were granted should be treated as initial point."

Further it is clarified in the Giridhar Krishna M. v. Asstt. CIT [2008] 117 TTJ (Bang.) 965 that with regard to the capital gains dates of grant and vesting are irrelevant because they do not result in any share acquisition. The relevant part of judgment reads as follows :

'Capital gains, short-term or long-term shares acquired under employees stock option scheme granting and resting period are merely indicators to the employer to honour the commitment in the employee exercising the option start allotment of the shares is when the assessee intimat