Assessee, a US tax resident, entered into a share purchase agreement on 20-4-2006 for sale of shares of a company to Infosys Technologies Ltd  for a consideration.  Sale was subject to terms and conditions of that agreement which included conditions precedent to sale and non-fulfilment of which conferred, upon parties, right to rescind contract-Assessee received portion of sale consideration on 30-6-2006. Assessee treated capital gain on sale of shares as long-term capital gain as date of acquisition of shares was 30-6-2005 and date of sale was 30-6-2006, being such shares held for more than 12 months.  Assessing Officer treated date of execution of share purchase agreement i.e. 20-4-2006 as date of transfer of shares and since shares were held for period less than one year, he treated gain on transfer of shares as short-term capital gain. CIT(A) affirmed the order of the AO. On appeal the Tribunal held that  where share purchase agreement stipulated conditions precedent to sale, non-fulfilment of which gave right to parties to rescind contract, effective date of transfer would be date of receipt of sale consideration and delivery of shares and not date of execution of share purchase agreement. Thus, assessee having held shares for more than 12 months i.e., from 30-6-2005 up to 30-6-2006, shares were to be treated as long-term capital assets and gain on transfer of shares was long-term capital gain. Appeal of aassessee is allowed. As the addition on account of capital gain is  deleted, corresponding penalty levied under section 271(1)(c) is also quashed.(AY. 2007-08)