Dear friend Vijay,
Section 17(2)(vi) reads as under:
the 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.
specified security means the securities as defined in clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956) and, where employees stock option has been granted under any plan or scheme therefor, includes the securities offered under such plan or scheme;
Hence, such shares would be taxable in the hands of directors as perquisites, provided they are employees of the company (eg a managing director). However if they are not employees of the company than the same would be taxable under the head income from other sources u/s 56 of the act.
There would be no taxability in the hands of the company since there is no income that has accrued or arisen to the company.