This appeal by assessee arises out of order passed by CIT(A) on 5th Jan., 2004 in relation to asst. yr. 2001-02. only grievance raised through different grounds is against direction of learned CIT(A) of bringing to tax sum of Rs. 32,75,716 under head Salaries in respect of stock option exercised by assessee. Briefly stated facts of case are that assessee is employed at Indian Branch Headquarters of American Express Bank Ltd. (hereinafter referred to as "AEBL") in position of senior director. AEBL is wholly owned subsidiary of American Express International Banking Corporation, New York, which in turn is wholly owned subsidiary of American Express Company, New York (hereinafter called Amexco ). assessee showed total income in revised return at Rs. 66,65,177. reason for revising return was that h e had not shown capital gain of Rs. 2,35,310 in original return, which resulted from sale of 385 shares of Amexco. AO observed that assessee had not offered Rs. 32,75,716 for taxation, which represented sale of stock option received from Amexco. On being show caused, assessee stated that Amexco was parent company of his employer. He further contended that stock option was given by Amexco and not his employer AEBL. It was therefore, contended that employer-employee relationship was missing insofar as acquisition of shares is concerned. AO did not agree with submission advanced on behalf of assessee on ground that he was in employment of AEBL, which was wholly owned subsidiary of Amexco which had granted stock option in recognition of assessee s continuing contribution to long-term success and development of Amexco. He further held that though assessee was not directly in employment of Amexco but AEBL did not have any employee stock option plan of its own and as such common plan was formulated and implemented by Amexco and was allowed to employees of AEBL also. He further noted that all employees were not entitled to this plan but it was in discretion of management of AEBL that employees were selected for giving benefits under scheme. Since assessee was holding very high position in AEBL, stock option was granted to him also. It was further held that employer-employee relationship, in fact, existed. Accordingly, amount received by assessee from sale of stock option amounting to Rs. 32,75,716 was taxed under head "Salaries". first appeal did not change fortune of assessee. Before us, learned counsel for assessee contended that s. 15 puts to tax amounts under head "Salaries" received from employer or former employer. first submission was that stock option was provided by Amexco, which was grandparent of AEBL, being assessee s employer and hence employer-employee relationship was lacking insofar as stock option to assessee was concerned. He further relied on Circular No. 710, dt. 24th July, 1995 [(1995) 127 CTR (St) 1] to contend that where such employer-employee relationship was missing, perquisite of shares to employees could not be taxed. Then he referred to judgment of Hon ble Supreme Court in case of CIT vs. Infosys Technologies Ltd. (2008) 214 CTR (SC) 293: (2008) 297 ITR 167 (SC) for proposition that even if employer- employee relationship remains, stock, option could not be treated as perquisite. He referred to language of s. 17(2)(iii) to contend that only value of any benefit or amenity granted or provided free of cost or at concessional rate in specified cases allotted or transferred to assessee by employer could be put to tax. He further submitted that since cl. (iiid) was omitted by Finance Act, 2000 w.e.f. 1st April, 2001, same could not be applied to assessment year under consideration, i.e., 2001-02. He further invited our attention to s. 17(2)(iii) and submitted that proviso inserted to this clause was added as matter of abundant caution and hence could not be considered for imposing additional liability of tax in this regard. sum and substance of his submissions was that primarily assessee is not employee of Amexco, which had allotted shares to him and secondly, amount received on sale of such shares could not be put to tax under any section of Act. Per contra, learned Departmental Representative strenuously argued that case of assessee was covered within ambit of proviso to s. 17(2)(iii). He further contended that assessee was entitled to receive stock option of Amexco only due to his employment with AEBL and hence employer-employee relationship cannot be lost sight of. He, therefore, relied on impugned order. impugned order. We have heard rival submissions and perused relevant material on record. primary question to be decided is as to whether or not employer- employee relationship is existing in present case. assessee is employee of AEBL, USA, branch in India, which is wholly owned subsidiary of American Express International Banking Company. Such holding company is wholly owned subsidiary company of Amexco, which had allotted shares under employees option scheme to assessee. On 24th Feb., 1997, assessee was granted non-qualified stock option by Amexco to purchase 1000 shares at exercise price of $ 66.43 per share. One-third of stock option was exercisable on or after each of exercise date, viz., 24th Feb., 1998, 24th Feb., 1999 and 24th Feb., 2000. Similarly on 23rd Feb., 1998, assessee was granted stock option by Amexco for purchasing its 1650 shares at exercise price of $ 87.96 per share. One-third of stock option was exercisable on or after each of exercise date, viz., 23rd Feb., 1999, 23rd Feb., 2000 and 23rd Feb., 2001. Such stock options could be exercised after said dates within period of 10 years from respective dates of grant. On 11th July, 2000, assessee exercised stock option in respect of 333 shares granted on 24th Feb., 1997 and 550 shares out of option granted on 23rd Feb., 1998. Such shares allotted to him were sold on 14th July, 2000. learned Authorised Representative has relied on Circular No. 710, dt. 24th July, 1995 in which Board had clarified that where shares held by Government in company have been transferred to employee, there will be no perquisite because employer-employee relation does not exist between Government and employee. From this Circular, we are unable to appreciate view canvassed by learned Authorised Representative for obvious reason that it extends only to transfer of shares by Government to other employees for purposes of disinvestment of shares, held by it in Government companies or PSU s. In such circumstances, Government is also shareholder, who off-loads its shares to others including inter alia, existing shareholders. On other hand, in our case shares have been allotted by wholly owned holding company of assessee s employer. Here relation between Amexco and AEBL, of whom assessee is employee, cannot be lost sight of. It is further noted that this stock option was given to assessee only by virtue of employment with AEBL and due to good services rendered by him. scheme was floated by holding and subsidiary company under which only better serving employees of subsidiary companies were given option to purchase shares at subsidized price of holding company. It is further noted that this scheme only empowered selected employees, who had given greater contribution in their job in AEBL. Further, all employees were not entitled to this plan and it was purely sole discretion of management of assessee company that employees were selected for giving benefit under this scheme. These facts recorded by AO have remained uncontroverted on behalf of assessee. Under these circumstances, we find that allotment of shares to assessee by Amexco is only directly due to and by virtue of his employment with AEBL. It is indirect allotment by AEBL through Amexco, and thus by allotting shares holding company has stepped into shoes of its subsidiary company. It would be noted infra that proviso to s. 17(2)(iii) applies to facts of case and it covers not only direct but "indirect" allotment of shares, debentures or warrants under any Employees Stock Option Plan. Under these circumstances, we cannot hold that employer-employee relationship is missing insofar as stock option by Amexco to assessee is concerned as it is indirect allotment by AEBL. Turning to taxability of perquisite value, we find that assessee was given option for purchasing shares in earlier years and event of exercising option and selling such shares occurred in previous year relevant to assessment year under consideration. This entire exercise may b e viewed in three stages. First, when employee is given stock option exercisable after certain period. Second, is stage when such option is exercised and securities are allotted to employees. Third, is stage when such allotted shares are, in fact transferred by employee and profit is earned. It is true that at time when assessee is given option for purchasing shares after certain period, there may not arise any perquisite because allotment is generally subject to some conditions, which may or may not be fulfilled in due course of time. Further value of benefit cannot be conceived at that point of time, which would eventually accrue to employee. It is further quite possible that employee may not reach up to stage of exercise of option or may be disqualified due to one reason or other. Hence, any benefit of taxable nature cannot be said to have accrued or arose to employee when stock option is made available. Further stages come when such option is exercised and shares are allotted. It is here that question of taxability arises. Now, we would proceed to determine taxability or otherwise of amount in context of s. 17(2). At this stage, it would be relevant to note down provisions of ss. 17(2)(iii) and (iiia), and their legislative history, which is as under: Section17(2) perquisite includes "(iii) value of any benefit or amenity granted or provided free of cost or at concessional rate in any of following cases (a) by company to employee who is director thereof; (b) by company to employee being person who has substantial interest in company; (c) by any employer (including company) to employee to whom provisions of paras (a) and (b) of this sub-clause do not apply and whose income [under head Salaries (whether due from, or paid or allowed by, one or more employers), exclusive of value of all benefits or amenities not provided for by way of monetary payment, exceeds (fifty) thousand rupees.] Provided that nothing contained in this sub-clause shall apply to value of any benefit provided by company free of cost or at concessional rate to its employees by way of allotment of shares, debentures or warrants directly or indirectly under [any Employees Stock Option Plan or Scheme of company offered to such employees in accordance with guidelines issued in this behalf by Central Government.] [Explanation. For removal of doubts, it is hereby declared that use of any vehicle provided by company or employer for journey by assessee from his residence to his office or other place of work, or from such office or place to his residence, shall not be regarded as benefit or amenity granted or provided to him free of cost or at concessional rate for purposes of this sub-clause;] (iiia) value of any specified security allotted or transferred, directly or indirectly, by any person free of cost or at concessional rate to individual who is or has been in employment of that person......." Sec. 17(2)(iiia) was inserted by Finance Act, 1999 w.e.f. 1st April, 2000 and omitted by Finance Act, 2000 w.e.f. 1st April, 2001. By same Finance Act, simultaneously, proviso was inserted to s. 17(2)(iii). Adverting to facts of case we find that insofar as cl. (iiia) is concerned, that cannot be applied to facts of instant case for obvious reason that it was omitted w.e.f. 1st April, 2001, i.e., assessment year commencing from 2001-02 and thereafter. Since we are dealing with asst. yr. 2001 -02, naturally, cl. (iiia) would not govern scene. At this juncture, we would like to deal with contention raised on behalf of assessee whereby reliance has been placed on judgment of Hon ble Supreme Court in case Infosys Technologies Ltd. (supra). In our considered opinion this judgment would not assist assessee s case any further for reason that assessment years involved in that case were 1997-98 to 1999- 2000 and it has been specifically mentioned in one of last paras of judgment that this decision would be applicable only in relation to law prevailing before 1st April, 2000 and hence would not apply to law after 1st April, 2000. Hence, reliance of learned Authorised Representative on this judgment is of no consequence as it dealt with law prevailing prior to year in question. Now, we have to examine as to whether cl. (iii) to s. 17(2) can be applied to facts of case. As noted above that simultaneous with omission of cl. (iiia), proviso to cl. (iii) was added, which is therefore, applicable to year in question. learned Authorised Representative has argued that proviso inserted by Finance Act, 2000 should be considered as inserted by way of abundant caution. He further contended that omission of cl. (iiia), which contained specific provision for treating employees stock option as perquisite under s. 17(2) should be considered as omission of specific provision and hence this benefit could not be considered to be falling under s. 17(2)(iii) of Act. He relied on judgment of Hon ble Supreme Court in case of V.M. Salgaocar & Bros. (P) Ltd. vs. CIT (2000) 160 CTR (SC) 225: (2000) 243 ITR 383 (SC). We are fully in agreement with learned Authorised Representative insofar as ratio of this judgment is concerned, which lays down that that insertion of cl. (vi) in s. 17(2) and s. 40A(5) by Taxation Laws (Amendment) Act, 1984 and its subsequent repeal by Finance Act, 1985, provided clear distinction to interpret provisions of ss. 17(2) and 40A(5) before insertion of cl. (vi). effect of this judgment is that where specific provision has been enacted, general provision would exclude subject- matter of this specific provision and if at later stage such specific provision is omitted, that by necessary implication, should not be construed as having been included in general provision. Coming back to point, we note that cl. (iiid) contained specific provision for treating value of any security allotted or transferred to employees free of cost or at concessional rate as perquisite. It impliedly meant that such benefit was subject-matter of coverage under this clause only and should be deemed to be not part of any other clause of s. 17(2). When this clause was removed from statute, ordinarily, it should have been presumed that legislature has intended not to tax this benefit under any other provisions of s. 17(2). However, we find that this general rule of interpretation is exceptionable in present case. Whereas cl. (iii), general provision for treating value of any benefit or amenity granted or provided free of cost or at concessional rate by employer to employees ought to have excluded perquisite value in respect of shares allotted free of cost or at concessional rate, which was hitherto subject-matter of cl. (iiia), but by insertion of proviso to cl. (iii) legislature made its intention loud and clear that scope of general provision has been simultaneously extended to cover perquisite earlier covered in cl. (iiia). No authority is required to be cited for rule of interpretation that proviso generally carves out exception to main section. inclusion of item in scope of section is sine qua non, which is sought to be taken away by proviso. contention of learned Authorised Representative in this regard would have merited acceptance, if there had been only omission of cl. (iiia) without simultaneous insertion of proviso to cl. (iii) taking within its sweep free or concessional allotment of shares, debentures or warrants directly or indirectly under stock option schemes to its employees. If contention of learned Authorised Representative is accepted and brought to logical conclusion, that would make provision redundant. It, therefore, clearly reveals that perquisite which was hitherto subject-matter of cl. (iiia) would henceforth be considered as subject-matter of cl. (iii). Now, when cl. (iii) is read in entirety, it brings out that value of benefit or amenity granted or provided free of cost or at concessional rate by employer to employees, etc., including concession in respect of allotment of shares and securities, etc., free of cost or at concessional price would be covered under s. 17(2)(iii). effect of proviso to this clause is that where shares, debentures, warrants, etc., are provided by company free of cost or at concessional rate to its employee by way of allotment, directly or indirectly, under any employees stock option plan, that would not be considered within ambit of this clause provided such plan or scheme is in accordance with guidelines issued in this behalf by Central Government. It therefore, boils down that if scheme is in accordance with guidelines issued by Central Government, no perquisite value on account of stock option would be considered for taxation as perquisite under s. 17(2) and vice versa. It is further noted that guidelines regarding employees stock option plan or scheme have been notified under Notification No. SO 1021(E), dt. 11th Oct., 2001. From orders of authorities below, we find that no exercise has been done by authorities below for determining that whether employees stock option scheme is in accordance with guidelines issued in this behalf by Central Government or not. Further there is no material on record for verifying this fact. In these circumstances, we are of considered opinion that it would be just and fair if impugned order on this score is set aside and matter is restored to file of AO. We order accordingly and direct him to decide this case afresh in accordance with our observations contained hereinabove. In result, appeal is allowed for statistical purposes. *** KANU KUMAR MUKERJI v. ASSISTANT COMMISSIONER OF INCOME TAX