Change of Joint ownership to single ownership

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An individual received company shares via stock options, with a loan from an Employee Welfare Trust. The shares were initially jointly owned, with the trust as the second owner, for loan security. After the loan was repaid, the trust's name was removed, making the individual the sole owner. The query concerns whether the increase in the shares' Fair Market Value (FMV) since their issue, compared to the original price, is considered taxable income. The consensus is that this change in ownership status, after loan repayment, does not constitute income, as the shares were always intended for the individual and held jointly only as security. The loan agreement and the nature of the joint ownership for security purposes are key to substantiating this claim.

Kanwar Jit Singh

Kanwar Jit Singh (Querist)
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26 January 2022 I was allotted shares of my company in lieu of vested stock options at a certain price. In order to buy the shares I was given a loan by an Employee Welfare Trust and the shares alloted were issues with me as the first owner and the Employee welfate trust as second owner.

After the loan was repaid, the name of the Employee Welfare trust was removed by notung this as a transfer to my name in the Memorandum of Transfers in the physical share certificates.

The FMV at the time of this transfer was more than the original exercise and issue price of the shares.

Does this difference qualify as "Income from other sources" or not.

My contention is that shares were in my name all the time so it is not an income if the share price has appreciated in the meanwhile till I dispose of the shares. What section of various Acts can I use to substanitate my claim.