INCOME TAX ACT, 1961

Section 45

Capital gains - Chargeability - Assessee being power of attorney holder of concerned capital asset -

AO noticed that assessee had done a land transaction but had not shown income from capital gains. Assessee's case was that he was power of attorney holder and signed document on behalf of owner of land but no consideration was received by him. As per AO, in the clause of agreement, it was clear that power of attorney holder would receive sale consideration in respect of transfer/sale of land. Accordingly, AO made addition in assessee's hands. Held: Power of attorney is not an instrument of transfer with regard to any right, title or interest in any immovable property. It is a creation of an agency, whereby grantor authorizes grantee to do acts specified therein, on behalf of grantor, which when executed would be binding on the grantor as if done and by him. In the instant case, terms of power of attorney clearly showed that property rights were not transferred to the power of attorney holder, i.e., assessee and there was also no provision for enabling enjoyment. It was not the case of AO that power of attorney was sham. Thus, assessee being neither owner nor deemed owner of concerned capital asset, same could not be taken as property of assessee and accordingly, AO erred in bringing to tax income from capital gains in assessee's hands. AO was directed to delete addition with the rider that AO was free to take action against real owner of land.

Followed:Gyan Chand Agarwal v. Addl. CIT [ITA No. 266/JP/2017 assessment year 2010-2011 Order, dated 10-7-2017] : 2017 TaxPub(DT) 3859 (Jp-Trib).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2013-14

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