High Court of Karnataka · Judgments and reasoned final orders
The Pr. Commissioner of Income-Tax, Central & Anr. v. Bileshivale Muddanna Govardhana Murthy
Income Tax Appeal No. 141 of 2026 ·
Section 2(47)(v) / section 53A Transfer of Property Act & section 153A: LTCG additions of Rs. 79.61 lakh and Rs. 17.51 crore on ancestral HUF land under a Joint Development Agreement deleted where subsequent civil court partition decree allotted the JDA land to other family members and assessee's unconverted agricultural share remained untransferred.
1. FACTS OF THE CASE
Following a search under section 132 on 01.10.2013 in connection with the Telecom Employee Co-operative Housing Society Ltd. Group, a notice under section 153A was issued on 05.11.2014 to the respondent, Bileshivale Muddanna Govardhana Murthy. For AY 2013-14, the Assessing Officer made additions of Rs. 79,61,430 (in respect of 14.5 guntas in Survey No. 69/2, Bileshivale Village) and Rs. 17,51,16,294 (in respect of 7 acres 31.5 guntas across various survey numbers) towards long-term capital gains on the premise that a Joint Development Agreement (JDA) executed by the assessee and family members constituted a 'transfer' under section 2(47)(v) read with section 53A of the Transfer of Property Act, 1882, and also added Rs. 7,75,000 by treating disclosed agricultural income as income from other sources. The CIT(A) affirmed the additions, but the ITAT Bengaluru (order dated 05.03.2026 in ITA No. 2192/Bang/2025) deleted them.
2. DISCUSSION BY THE COURT
Affirming the Tribunal's order, the Division Bench noted that the subject lands were ancestral properties belonging to a Hindu Undivided Family (HUF). First, the documents relied upon by the AO did not evidence an operative transfer in AY 2013-14 because a subsequent agreement had been executed, which would have been unnecessary if transfer had already taken place under the earlier agreement. Second, in a civil suit for partition of the joint family properties before the II Additional Senior Civil Judge, Bangalore (Rural), a final decree dated 13.07.2019 was passed under which the land forming the subject matter of the JDA fell to the share of other family members and not to the share of the assessee, while the assessee continued to hold the unconverted agricultural land allotted to his share. As these factual findings were supported by cogent material and were not perverse, no substantial question of law arose.
3. JUDICIAL DECISION
Holding that no substantial question of law arose for consideration under section 260A, the High Court dismissed Income Tax Appeal No. 141 of 2026 at the admission stage.
4. OUTCOME
In favour of the assessee (Bileshivale Muddanna Govardhana Murthy). The Revenue's appeal was dismissed, affirming the deletion of the Rs. 79,61,430 and Rs. 17,51,16,294 LTCG additions and the Rs. 7,75,000 agricultural income addition for AY 2013-14.
5. AKHB REVIEW POINT
AKHB analysis: where a section 2(47)(v) capital-gains assessment is framed against an individual co-parcener on the basis of an unconsummated Joint Development Agreement over undivided ancestral/HUF land, place on record any subsequent novation/supplementary JDA as well as civil court partition decrees allocating the JDA survey numbers to other co-parceners and proving continued agricultural possession of the taxpayer's allotted share.
Source: AKHB analysis based on paragraphs 5-10 / PDF pp. 4-6
Source and verification
Seven-page official High Court of Karnataka judgment PDF (2026:KHC:48520-DB); paragraphs 1-11 span PDF pages 1-7.
Original PDF: 7 pages · SHA-256: aeacdc4812ce3b3a6b45af07fb638353ea5695acc4ccfa1259f265b2f8a6420a
Supplied source-reviewed note retained; original bytes and identity validation checked in this release. Substantive re-review is not claimed for this record.
Applies sections 2(47)(v), 45 and 153A of the Income-tax Act, 1961 read with section 53A of the Transfer of Property Act, 1882 for AY 2013-14. Income-tax Act, 2025 equivalence is not verified.
Full judgment checked. Comprehensive subsequent judicial treatment has not been verified.
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