2012 (12) TMI 460 - HC - Income Tax

Income from sale of plot - assessee claimed that 3/4 share belong to his sister - AO added the the same under the head income from our sources - CIT(A) and ITAT deleted the addition - held that - The assessed amount payable to three sisters was received by the assessee on account of power of attorney executed by them in her favour. At the most she could be treated as an agent. The amount has to be assessed in the hands of sisters and not at the hand of the assessee. Therefore, the order of Tribunal does not suffer from any illegality.

Summary

Issues:
1. Whether the Tribunal was justified in deleting the addition of Rs.52,50,000/- made by the Assessing Officer under the head income from other sources?
2. Whether the amount received by the assessee holding power of attorney should have been taxed at her hands?

Analysis:
1. The appeal pertained to the assessment year 2006-2007, where the respondent assessee filed a return of income at Rs.6,92,670 and disclosed long term capital gain of Rs.942,375. The dispute arose as the assessee claimed long term gain on a 1/4th share of a plot owned by her father, leased for 999 years. The Assessing Officer contended that the sale consideration received by the assessee on behalf of her three sisters, as per the power of attorney, should be taxed as income from other sources. The Commissioner of Income Tax (Appeals) allowed the appeal, stating that the amount could not be taxed in the hands of the assessee as she did not own the property to the extent of her sisters' 3/4th share. The Revenue appealed to the Tribunal, which upheld the decision, leading to the present appeal.

2. The Revenue argued that the amount received by the assessee, holding power of attorney, should have been taxed in her hands, contrary to the Tribunal's decision. The Revenue contended that as the assessee received the amount on account of the power of attorney executed by her sisters, she should be considered liable for taxation. However, the Court dismissed the appeal, stating that the amount received by the assessee was as an agent for her sisters, and therefore, the taxation should be imposed on the sisters and not on the assessee. The Court found no illegality in the Tribunal's decision and upheld the dismissal of the appeal.

In conclusion, the High Court dismissed the appeal under Section 260-A of the Income Tax Act, 1961, against the Tribunal's order deleting the addition of Rs.52,50,000/- made by the Assessing Officer under the head income from other sources. The Court held that the amount received by the assessee, holding power of attorney, was to be assessed in the hands of her sisters as the assessee acted as an agent in receiving the amount on their behalf.