SMT. SHRUSHTI U. MULIK,PUNE vs. INCOME-TAX OFFICER, WARD - 2 (3), PUNE

It emerges at the outset that these five assessees’ identical sole substantive grievance challenges correctness of both the learned lower authorities’ action assessing long term capital gains of Rs.21,02,627/- (in “lead” ) and varying sum(s) in other four appeals; as the case may be, after holding them to have transferred the corresponding capital asset in Village Yerwada, Sangamwadi, Pune. Mr. Jasnani sought to highlight the fact that all these assessees were co-owners in the foregoing asset who had transferred the same by way of the joint development agreement in issue dated 31.12.2007 falling in the relevant previous 3 ITA Nos.1152 to 1156/PUN/2019 year and therefore, the learned lower authorities have rightly assessed the consequential capital gains in their respective hands after applying section 2(47)(v) of the Act.

I find no merit in the Revenue’s foregoing arguments. It is noted with the able assistance coming from the assessees’ side that these co-vendors as well as the vendee had inserted clause (4) in the above stated joint development agreement that the effective date thereof would read “this agreement will become effective only on the date of conversion of the zone in respect of the said land from Agricultural to Residential, which is the pre-requisite condition of this agreement and hence is the Essence of the Agreement. Upon the conversion of zone of said land from Agricultural to Residential, this agreement will automatically become effective without requiring any further act from the parties herein”. It is made clear that there is no material at all in the case files to conclude that the assessees’ land in issue stood converted from agricultural to residential in the relevant previous year so as to make the agreement itself effective. I therefore conclude in these peculiar facts and circumstances that both the learned lower authorities have erred in law and on facts in holding these assessees to have transferred their respective shares in the foregoing capital asset by invoking section 2(47)(v) of the Act. The impugned capital gains addition in all