2014 (3) TMI 356 - AT - Income Tax

Sale of property Power of Attorney (POA) was cancelled - assessment in the hands of assessee as an agent or as property owner - Assessment of capital gain u/s 50C of the Act Fair market value of the property for the purpose of indexation whether the capital gains in question have been rightly assessed in assessee s hands or not - Assessee contended that he had acted as power of agent on behalf of the actual owner/vendor and the sale price of the property has been wrongly increased and even the property sold has been inappropriately valued without any basis - Held that - As per the recitals in the registered power of attorney dated 01.09.2006, no consideration had been paid by the assessee to the actual owner - In the sale deed as well, the assessee had merely acted as an agent - the stand adopted by the actual owner of having received Rs.25,00,000/-, at the time of executing power of attorney does not inspire confidence the contents of a registered document cannot be disbelieved by a letter particularly without any other supporting evidence - earlier also the same owner had executed similar power of attorneys and revoked them later on thus, the assessee could not have been treated as owner of the property sold on 23.10.2008 resulting in computation of capital gains in his hands Decided in favour of Assessee.

Summary

Issues involved:
Assessment of capital gains on sale of property under section 50C and fair market value for indexation.

Analysis:
The appellant contested the assessment of capital gains on the sale of a property, challenging the application of section 50C and the fair market value used for indexation. The appellant, a retired government servant with pension and interest income, filed a return declaring income of H7,65,590/-. The Assessing Officer assessed capital gains from the sale of a plot based on the guideline value of H60,00,000/-, resulting in a total income of H61,25,290/- and a demand of H16,94,560/-. The appellant argued that he acted as a power of attorney holder agent of the actual owner, disputing the valuation and indexation used in the assessment.

In the lower appellate proceedings, the appellant reiterated his arguments, but the CIT(A) rejected them. The appellant maintained that he acted as an agent on behalf of the actual owner, contested the increase in the sale price from H25,00,000/- to H60,00,000/-, and challenged the valuation of the property at H11,00,000/- as of 1.4.1981. The Revenue supported the CIT(A)'s order.

Upon review, the Tribunal considered whether the capital gains were rightly assessed in the appellant's hands. It was revealed that the actual owner had executed a registered power of attorney in the appellant's name without any consideration. The Tribunal found that the appellant had acted as an agent, and the actual owner's statement confirmed that he received H25,00,000/- from the appellant for the property. Given these circumstances, the Tribunal accepted the appellant's legal plea and allowed the appeal.

In conclusion, the Tribunal ruled in favor of the appellant, emphasizing that the appellant's role as an agent was supported by the registered documents and the actual owner's statement. The Tribunal found that the appellant could not be treated as the owner of the property sold, leading to the acceptance of the appellant's primary argument. The other arguments raised by the appellant were deemed irrelevant in light of this decision.