Transfer by gift not treated as transfer; cost and holding carry over, except ESOP gifts treated as transfer. Section 47(iii) provides that transfer of a capital asset by gift, under a will or into an irrevocable trust by an individual is not a transfer for capital gains; the transferee takes the cost to the previous owner and inherits the previous owner's period of holding. The exclusion does not apply to securities allotted under an ESOP that are gifted by the employee-in that case the gift is treated as a transfer and sale consideration is the market value at the time of gift.