2019 (10) TMI 628 - AT - Income Tax

Additions on account of long term capital gains arising from transfer of land - short term capital gains arising from transfer of building - General Power of Attorney executed by Shri Umed Singh owner of the property was without any consideration - THAT - The receipt is also executed by Shri Umed Singh in favour of Shri Vikas Shukla for sale of the above property for a sum of 2, 50, 000/-. Shri Umed Singh has also executed Registered General Power of Attorney in favour of assessee and given all the powers as a General Attorney to look into the property or to execute Registry or to purchase stamps or claim any refund etc. This General Power of Attorney is not subjected to any consideration. No amount has been paid by the assessee to Shri Umed Singh through this Registered General Power of Attorney. Therefore General Power of Attorney executed by Shri Umed Singh owner of the property was without any consideration. The assessee later on as General Power of Attorney holder of owner of the property Shri Umed Singh executed sale deed in question in favour of her husband i.e. Shri Vikas Shukla in which it is specifically mentioned that sale consideration is earlier paid of 2, 50, 000/- it means Shri Vikas Shukla has paid to Shri Umed Singh. It is also mentioned in the registered sale deed that amount of consideration of 2, 50, 000/- has already been received. It would mean that at the time of execution of the registered sale deed no consideration of 2, 50, 000/- passed on from Shri Vikas Shukla to the assessee. It would further mean that the sale consideration of property of 2, 50, 000/- has already been received by Shri Umed Singh being original owner of the property. These facts and material on record clearly suggest that the assessee acted as a General Power of Attorney Holder of the property in question on behalf of Shri Umed Singh original owner of the property. The right of assessee as a General Power of Attorney holder was not greater to that of the owner of the property i.e. earlier right in favour of Shri Umed Singh and later on right transferred in favour of her husband Shri Vikas Shukla. There was no justification for Ld. CIT(A) to doubt the Ikrar Nama executed between Sh. Umed Singh and Sh. Vikas Shukla because it is supported by the affidavit of Sh. Umed Singh and the receipt. If CIT(A) was having doubt over the same he could have examined the marginal witnesses who have signed the agreement and the receipt in question. Further when in the registered power of attorney no consideration has passed on from assessee to Sh. Umed Singh there was no question of any transfer of property in favour of the assessee. Therefore there is no question of her transferring the same property in favour of her husband for consideration. It is well settled law that entries in the books or capital account are not determinative of earning of income. It depends upon facts of the case. The real income only could be taxed as per law. Considering the totality of the facts and circumstances and the documents on record it is clearly proved that Sh. Umed Singh has entered into an agreement to sale with Sh. Vikas Shukla for sale of property for a sum of 2, 50, 000/- which Sh. Vikas Shukla paid to Sh. Umed Singh. Documents to that effect were executed. The General Power of Attorney was executed in favour of the assessee so that assessee could registered the sale deed at appropriate time on behalf of Sh. Umed Singh in favour of her husband. Therefore there is no transfer of capital asset from the side of the assessee so as to attract provisions of long term capital gains and short term capital gains. There was no justification for authorities below to made addition in the hands of assessee on account of long term capital gains and short term capital gains. In this view of the matter we set aside the orders of the authorities below and delete both the additions.

Summary

Issues:
1. Condonation of delay in filing the appeal.
2. Addition of long term capital gains on the transfer of land.
3. Addition of short term capital gains on the transfer of building.

Condonation of Delay:
The appeal was time-barred by 50 days, with the assessee attributing the delay to the serious illness and subsequent demise of her husband. The Tribunal, after considering the medical certificates and explanations provided, held that the delay was due to a sufficient cause and thus condoned the normal delay in filing the appeal.

Addition of Long Term Capital Gains:
The Assessing Officer (AO) made an addition of ?9,90,000 on account of long term capital gains arising from the transfer of land, based on the stamp duty value of ?10 lakhs as per the registered deed. The assessee contended that she was not the owner of the land but merely a holder of a registered General Power of Attorney (GPA) from the original owner. The CIT(A) rejected the contention, noting that the Ikrar Nama provided by the assessee was not a registered document and that the property was shown in her capital account. However, the Tribunal found that the assessee acted as a GPA holder for the original owner, and as no consideration passed between her and the buyer, there was no transfer of property in her favor. Consequently, the additions on long term capital gains were deleted.

Addition of Short Term Capital Gains:
The AO added ?10 lakhs as short term capital gains due to the transfer of the building on the land, which was not mentioned in the registered sale deed. The Tribunal found that as the property was not transferred to the assessee, there was no justification for taxing her on short term capital gains. The Tribunal emphasized that the entries in the capital account were not determinative of income, and after examining the documents and circumstances, concluded that no transfer of capital asset had occurred. Therefore, the addition on short term capital gains was also deleted.

In conclusion, the Tribunal allowed the appeal, setting aside the orders of the lower authorities and deleting both the additions of long term and short term capital gains.