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TMI Blog2017 (8) TMI 557X X X X Extracts X X X X X X X X Extracts X X X X ..... the basis of presumption and suspicion tax liability cannot be fastened on such receipt on the assessee. - Decided in favour of assessee. Receipts earned from brokerage income - “income from other sources” or “business & profession” - Held that:- In both the years the income of the assessee in respect of brokerage is accepted by the Department, we find that AO has not made any inquiry from the persons from whom the assessee had received brokerage/commission. Under these facts, the AO was not justified in rejecting the claim of the assessee of earning brokerage/commission. Therefore, we direct the AO to treat the same as business receipt of the assessee and allow the expenditure made thereon. Hence, we deleted the addition made by the AO by treating the brokerage receipts as income from other sources and disallowing the expenditure incurred thereon. Hence, the net profit declared at ₹ 5,77,816.65 be treated as net profit from business of brokerage. Thus, this ground of assessee’s appeal is also allowed. - ITA No. 266/JP/2017 - - - Dated:- 10-7-2017 - SHRI BHAGCHAND, AM AND SHRI KUL BHARAT, JM For The Assessee : Shri Vijay Goyal (C.A.) For The Revenue : Shri R. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es. Aggrieved by this, the assessee preferred an appeal before Ld. CIT(A), who after considering the submissions also affirmed the view of the Assessing Officer. 3. Now, the assessee had filed the present appeal before this Tribunal. 4. At the time of hearing, the Ld. Counsel for the assessee submitted that ground no. 1 is also related to ground no. 2, therefore, he wish to make argument in respect of ground no. 2, first. The Ld. Counsel for the assessee reiterated the submissions as made in the written submissions. The submissions of the Ld. Counsel for the assessee on this ground are as under:- 3.3 Submission of Assessee ( i) The assessee has filed complete details:- The assessee has filed all the requisite details/information vide letter dated 17-10-2012 (PB pg 23-27), dated 04-02-2013 (PB pg 28- 30) dt 25-02-13 (PB pg 31-35) dated 27-02-2013 (PB pg 36) and dt 18-03-2013 (PB pg 37-39). The assessee has discharged his onus and proved that the impugned property was owned by Shri Sultan Meena and he has acted as an agent of Shri Sultan Meena in sale transaction of the impugned property. The assessee has earned only brokerage income in the transaction a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lish that the assessee has received amount of ₹ 2,97,95,240/- in respect of sale transaction of the said land. Mere non production of Shri Sultana Meena, automatically the assessee does not become owner of the said property. Therefore, liability of capital gain tax cannot be fixed on the assessee. As earlier submitted the main source of income of the assessee is Commission/Brokerage from arranging purchase/sale of real estate in the hands of other clients and not in own account. If the department fails to trace the original person, the income from such transaction in the form of capital gain cannot be recovered from the brokerage/commission agent. We hope you will find the above details/information in order and we will be more grateful to furnish more details/information, if so required, immediately. ( ii) The addition was made in the hands of assessee without bringing any evidence or positive material:- The Id AO rejected the evidence submitted by assessee and assessed the entire sale proceed of the land as income of the assessee on surmises, conjectures ad suspicion. The department has no material to show that the assessee was the owner of the land or the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this power of attorney. In the registered sale deed the status of the assessee is clearly mentioned that the assessee was acting as power of attorney holder of Shri Sulatan Meena and real and beneficial owner of the land is Shri Sultan Meena. ( iii) Personal Presence of Shri Sultan Meena It is an admitted fact that the notice issued by the department to Shri Sultan Meena was served. Therefore, the identity of Shri Sultan Meena is not in doubt. The assessee has no statutory powers to enforce the attendance of any person. The department has been vested with vast powers by the legislation. The department can use its powers and make necessary inquiries to unearth the truth. The department can make inquiry from the Shri Sultan Meena. It is the Assessing Officer's statutory duty to enforce attendance of a witness if the evidence is material. If power to called the witness and examine him are not exercised judicially than the addition cannot be made. Reliance is placed on the following decisions. 1) Nathu Ram Premchand Vs CIT (1963) 49 ITR 561 (All); 2) E.M.C. Works P Ltd Vs ITO (1963) 49 ITR 650 (All) ( iv) Sale consideration was received in cash:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Id AO himself has not accepted this analogy in completion of assessment since the cost of the land has not been deducted while computing the income. ( ix ) Power of attorney executed in favour of assessee does not make the assessee owner of the property The land owner executed the power of attorney in favour of the assessee. The land owner has not transferred the ownership of the land in favour of the assessee. Hon ble Supreme Court in the case of Suraj Lamp and Industries (P.) Ltd. v. State of Haryana [2012] 340 ITR 1, has held that:- Scope of Power of Attorney 13. A power of attorney is not an instrument of transfer in regard to any right, title or interest in an immovable property. The power of attorney is creation of an agency whereby the grantor authorizes the grantee to do the acts specified therein, on behalf of grantor, which when executed will be binding on the grantor as if done by him (see section 1A and section 2 of the Powers of Attorney Act, 1882). It is revocable or terminable at any time unless it is made irrevocable in a manner known to law. Even an irrevocable attorney does not have the effect of transferring title to the grantee... ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gainst the said order of the Tribunal, the revenue filed appeal before Hon ble High Court. Hon ble High Court confirmed the order of Tribunal. The relevant finding of Hon ble High Court is as under:- 11. In the present case we find that there is no transfer to or enabling enjoyment of property in favour of the assessee in any manner and therefore, sub-clause (vi) of Section 2(47) of the Income Tax Act does not get attracted. Clause 21 of the power of attorney, which has been already referred to supra, clearly reveals that no consideration was received from the power agent for appointing him as power of attorney. It also emphasised therein that the property right has not been handed over to the power agent. We are, therefore, unable to accept the plea of the Revenue that there was an element of transfer or enabling enjoyment in favour of the assessee. The letter of the land owner subsequently issued does not come to the aid of the Department. It is the duty of the power of attorney holder to deliver the amount received for the purpose of transfer of property. Therefore, no fault could be found on the part of the assessee. Assuming that he had delivered certain sum to the la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2006 appointed Shri Suraj Narayan, son of Shri Narain Singh Khatoria as their power of attorney in respect of 0.30 hect. of agricultural land situated in khasra No. 13 at village Bhakrota for getting the revenue record corrected in that respect and after getting its mutation in their name, sell this land to any person on their behalf and his acts were binding on them. The said power of attorney was executed on Non- Judicial Stamp paper of ₹ 500/-. However, the registering authority adopted value at ₹ 13.80 lacs and for stamp duty purposes and charged stamp duty of ₹ 27,600/- thereon. The said power of attorney is found laid on record at assessee s paper book pages 22-23. 12. The admitted fact is that the appellant after correction of revenue record and recording the said land measuring 0.30 hect. in the name of Shri Bharat Singh and Shri Vijay Pal Singh, sold the same to Smt. Radha Devi Khatoria vide sale deed dated 19/12/2007 placed at assessee s paper book pages 49 to 54. The said sale deed has been executed by the appellant in his capacity as a power of attorney of Shri Bharat Singh and Shri Vijay Pal Singh for a sale consideration of ₹ 4.11 lacs. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re, have erred in bringing to tax the income from capital gains in his hand though the same may be a subject matter of taxation in the hands of the real owners. In this view of the matter, the addition so made being unjust and uncalled for, the same is directed to be deleted. Therefore, liability of tax cannot be fixed on the assessee and the income from the sale of land cannot be added in the assessee's income. The humble assessee prays your honor kindly set aside the orders of lower authorities and delete the addition made by ld AO and confirmed by ld CIT(A). 4.1 On the contrary, Ld. Departmental Representatives opposed the submissions and supported the order of the authorities below. 4.2 We have heard the rival contentions, perused the material available on record and gone through the order of the authorities below. The Ld. CIT(A) has decided this issue by holding as under:- 6.3 I have gone through the assessment order, statement of facts, grounds of appeal and written submission carefully. It is seen that the appellant had obtained power of attorney from Shri Sultan Meena on 20.01.2007. The power of attorney was for the agriculture land owned by Shri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s stated that the owner of the land wished to sale the land for personal and family needs. It is recorded in the sale deed that the attorney holder received a sum of ₹ 269,37,000/- as a Power of Attorney of the owner of the land. This fact is remained undisputed. 4.4 We have given our thoughtful consideration to the facts of the present case even if it is assumed that the assessee has received money and not handed over the same to the land owner such receipt is a liability not an income so far the assessee is concerned. Since, the Revenue has not brought any material on record suggesting that this power of attorney was executed in lieu of a consideration. In the absence of such material, purely, on the basis of presumption and suspicion tax liability cannot be fastened on such receipt on the assessee. During the course of hearing Ld. Counsel for the assessee has placed reliance on the judgment of the Hon ble Madras High Court in the case of Commissioner of Income Tax Vs. C. Sugumaran, dated 3/11/2014 in Tax Case (Appeal) no. 840 of 2014. The Hon ble High court, under the identical facts decided the issue of tax liability qua the attorney holder as under:- 12. We, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12. The admitted fact is that the appellant after correction of revenue record and recording the said land measuring 0.30 hect. In the name of Shri Bharat Singh and Shri Vijay Pal Singh, sold the same to Smt. Radha Khatoria vide sale deed dated 19/12/2007 placed at assessee s paper book pages 49 to 54. The said sale deed has been executed by the appellant in his capacity as a power of attorney of Shri Bharate Singh and Shri Vijay Pal Singh for asale consideration of ₹ 4.11 Lacs. Smt. Radha Devi Khatoria happens to be wife of the appellant. The enquiries conducted by the AO reveals that Shri Suraj Narain Khatoria, the appellant has not returned or made payment of the aforesaid sale consideration of ₹ 4.11 lacs to Shri Bharate Singh and Shri Vijay Pal Singh as the same is stated to have been denied categorically by them, but appellant s cae is that the said payment stood made to Smt. Manju Yadav as is evidenced by the sale deed executed by the appellant. For such a controversy, the remedy lies somewhere else. The sub-Registrar, in this case has adopted value of this property at ₹ 42 lacs for stamp duty purposes, which has been treated as sale consideration b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eipts earned from brokerage income and declared under the head of business profession and disallowing the expenses thereon claimed at ₹ 1,76,583/- claimed to have been incurred on business receipts. 5.1 The Ld. Counsel for the assessee reiterated the submissions as made in the written submission. The Ld. Counsel submitted that the assessee is maintaining proper book of accounts. The books of accounts are not rejected. The assessee has given the complete details on the individuals from whom he had charged brokerage commission. The AO has rejected the claim on the ground that specific particular of land was not given and payments received in cash are not verifiable. Ld. Counsel submitted that the assessee had given all the information with regard to the location of land under transaction and the name of transacting parties. It was submitted before the AO that enquiries from State Land Revenue Authorities of the concerned area could be made to ascertain ownership of land in that locality during the relevant period. He submitted that, the assessee has been working in the field of real estate from past many years and declaring income from brokerage and commission from such ..... X X X X Extracts X X X X X X X X Extracts X X X X
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