Invocation of section 50C - Power of attorney transactions - ownership - Section 53A of transfer of property act, 1882

Facts:

Assessee filed his return which was completed under section 143(3). Subsequently it was reopened under section 147 and arising out of an ITAT order the reopened assessment was dismissed in favour of the assessee. Arising out of a search on the assessee it was alleged that he was the owner of certain transferred properties and since the transfer value was lower than the stamp value, section 50C was invoked on the assessee and additions sustained. CIT(A) upheld the additions partly. Contention of the assessee was that he was only a General Power of attorney (GPA) holder for one Cyrus investments and the transfers were done for and on behalf of the said entity besides the fact that the same capital gain on transfer has already been declared in the hands of the succeeding company of Cyrus investments. Accordingly it would tantamount double taxation of the same income in two hands. The plea of the revenue was that the assessee was the owner of the lands and the PoA was only a sham. On higher appeal -

Held partly in favour of the assessee that for the factual finding whether the said capital gain was already assessed to tax in the hands of the succeeding company the case was remanded back to the AO.

Ed. Note: The way the case has travelled needs noting - the said lands were originally belonging to late Paigah Khurshid Sah and the legal heirs had filed a suit for partition. The Nizam of Hyderabad Nawab Mir Osman Ali VII then acquired a part of these lands and was also a party to this partition suit. The Nizam sold the lands to FE Dinshaw Ltd. then Cyrus investments who executed the PoA in favour of the assessee. The decision also makes a good reading of PoA transactions, claim of ownership and on lines of section 53A of TOP act, 1882 as well. 

Case: Sanjeeva Prasad Ponnapula v. Dy. CIT 2023 TaxPub(DT) 3813 (Hyd-Trib)