15 [2019] 72 ITR (Trib.) 578 (Hyd.) Veerannagiri Gopal Reddy vs. ITO ITA No. 988/Hyd/2018 A.Y.: 2008-2009 Date of order: 24th May, 2019
Section 45 – Capital gains arise in the
hands of owners and not in the hands of general power of attorney holder
FACTS
The assessee, an individual, did not file
return of income for A.Y. 2008-09. The AO, however, received information that
the assessee is holding GPA for certain persons and had sold the immovable
property belonging to them for a consideration of Rs. 8,40,000 against a market
value of Rs. 38,08,000 as per the registration authority. Based on this
information, the assessee’s case was reopened u/s 147.
In response to the notice u/s 148, the
assessee did not file return of income. Therefore, the AO issued a notice u/s
142(1) along with a questionnaire requiring the assessee to furnish the details
in connection with the assessment proceedings. In response, the assessee filed
a copy of the sale deed and contended that he has executed the sale deed as a
GPA holder only and has not received any amount under the transaction.
The AO observed that the assessee had not
filed any evidence in support of his contention but has filed a reply on 29th
February, 2016 in which he has justified the sale of plot for a sum of Rs.
8,40,000 as against a market value of Rs. 38,08,000. Therefore, the AO held
that the assessee sold the plot to his daughter not only as a GPA holder, but
also as owner of the property and has earned capital gain therefrom. The AO
brought the capital gains to tax.
Aggrieved, the assessee preferred an appeal
to the Commissioner (Appeals) who confirmed the action of the AO.
Aggrieved, the assessee filed an appeal to
the Tribunal.
HELD
The Tribunal observed that in the year 1994
the assessee was given a registered irrevocable GPA by landowners and it was
stated therein that the possession was also given to the assessee to enable him
to handover possession to the purchaser. The GPA did not mention about the
receipt of consideration from whomsoever. It was 13 years later that the
assessee executed the sale deed in favour of his daughter and in the sale deed
it was mentioned that a sum of Rs. 8,40,000 was received by the vendors from
the vendee in the year 1994 and the vendor has handed over possession to the
vendee. The Tribunal agreed with the Revenue authorities that it is not
understandable as to why GPA was executed in favour of the assessee when the
entire consideration was received in 1994 and even possession handed over.
The Tribunal also noted that the recitals in
the GPA stated that the assessee is not the owner of the property but has only
been granted authority to convey the property to a third party. Therefore, the
Tribunal held that it cannot be considered that the assessee became owner of
the property by virtue of an irrevocable GPA.
It held that in the relevant previous year,
the assessee has executed the sale deed in favour of his daughter and in the
sale deed it has been mentioned that the total sale consideration was paid in
the year 1994. This fact also cannot be accepted, because if the entire sale
consideration was paid in the year 1994, then the vendors or even the GPA
holder could have executed the sale deed in favour of the vendee in that year
itself. Therefore, the sale is only in the year 2007 but capital gain would
arise in the hands of the owners of the property and not the GPA holder.
It observed that the Hon’ble Supreme Court
in the case of Suraj Lamps & Industries Pvt. Ltd. vs.
State of Haryana (2012) 340 ITR 2 has held that GPA is not a deed of
conveyance and hence cannot be construed as an instrument of transfer in regard
to any right, title or interest in the immovable property. It also considered
the judgment in Wipro Ltd. vs. DCIT 382 ITR 179 (Kar.), which has
considered the above judgment as well as the judgment in the case of State
of Rajasthan vs. Basant Nahata (2005) 12 SCC 77 to hold that a power of
attorney is not an instrument of transfer in regard to any right, title or
interest in an immovable property.
The Tribunal held that since the assessee is
not the owner of the property, capital gains cannot be brought to tax in his
hands.
