Dr. Sabesan Parameswaran Vs ACIT (ITAT Chennai)
ITAT Chennai held that as the PoA and sale deed are executed on the same day clarifies that PoA holder has no legal right or interest in the property. Further, GPA (General Power of Attorney) has not accounted for consideration in his ROI. Hence entire sale consideration taxable in the hands of assessee.
Facts-
The assessee has disclosed LTCG of Rs.29,81,660/- on account of sale of land. AO noted that the assessee as per sale deed received sale consideration of Rs.7,43,50,000/- and the assessee submitted the details and from the perusal of sale deed, it transpired that the assessee along with his grandmother C.T. Saraswathi has executed power of attorney in favour of one Shri S. Ramaswamy, the agent in respect of the property measuring 23586 sq.ft. i.e., 9 grounds and 1986 sq.ft., at Parameswari Nagar, L.B. Road, Adyar, Chennai. This Power of Attorney (PoA) was executed on 19.02.2015 as on the date of execution of the sale deed of this land on 19.02.2015 for a total consideration of Rs.7,43,50,000/-. The assessee explained that the assessee received this sum of Rs.30 lakhs only and hence, he has disclosed long term capital gain on Rs.28,81,660/-.
AO has not accepted the reasoning or explanation submitted by assessee and also not allowed proportionate claim of Rs.2,90,96,260/- and assessed LTCG on entire sale consideration of Rs.7,43,50,000/- and by taking assessee’s share of 2/3rd at Rs.4,92,63,696/- computed the total income. Aggrieved, assessee preferred appeal before CIT(A).
CIT(A) concluded that the assessee being legal owner of the property and the agent or the PoA holder Shir S. Ramaswamy was never a legal holder and he has any right to claim any consideration in the property, he treated the entire amount received by assessee of Rs.7,43,50,000/- and out of his proportionate share of 2/3rd is to be assessed as long term capital gain and assessed by AO rightfully. Aggrieved, now assessee is in appeal before the Tribunal.
Conclusion-
Held that we noted that the PoA and sale deed are executed on the same day by assessee as well as GPA (General Power of Attorney). It means the PoA holder has no legal right or interest in the property, and the entire consideration belongs to the assessee or other co-owner. Even otherwise, GPA has not accounted for the consideration in his return of income, and no capital gain is declared, either short-term or long-term. Hence, CIT(A) and AO has rightly concluded that receipt of 93% of the sale consideration i.e. 6,93,50,000/- i.e., sale of land without any encumbrance on the date when GPA was executed including GPA of Rs. 7,43,50,000/- clearly proves that the assessee has no intention of declaring the capital gain in his return of income.
Hence, we are of the view that the authorities below have rightly concluded that the entire capital gain is to be assessed in the hands of the assessee to the extent of his share and hence, we confirm the order of the lower authorities and dismiss this issue of assessee’s appeal.
FULL TEXT OF THE ORDER OF ITAT CHENNAI
This appeal by the assessee is arising out of the order of the Commissioner of Income Tax (Appeals)-2, Chennai, in ITA No.117/2017-18 dated 02.04.2019. The assessment was framed by the ACIT, Non-Corporate Circle-2, Chennai for the assessment year 2015-16 u/s.143(3) of the Income Tax Act, 1961 (hereinafter the ‘Act’) vide order dated 29.12.2017.
2. The only issue in this appeal of assessee is as regards to the order of CIT(A) confirming the action of AO in treating the amount of Rs.6,86,06,500/- received by Shri S. Ramaswamy as income of the assessee under the head ‘long term capital gain’.
3. Brief facts are that the AO during the course of assessment proceedings noticed from the computation of income filed by assessee that the assessee has disclosed long term capital gain of Rs.29,81,660/- on account of sale of land admeasuring 6462 sq.ft., comprised in survey No.2/5, block No.22, LB Road, Chennai. The AO noted that the assessee as per sale deed received sale consideration of Rs.7,43,50,000/- and the assessee submitted the details and from the perusal of sale deed, it transpired that the assessee along with his grandmother C.T. Saraswathi has executed power of attorney in favour of one Shri S. Ramaswamy, the agent in respect of the property measuring 23586 sq.ft. i.e., 9 grounds and 1986 sq.ft., at Parameswari Nagar, L.B. Road, Adyar, Chennai. This Power of Attorney (PoA) was executed on 19.02.2015 as on the date of execution of the sale deed of this land on 19.02.2015 for a total consideration of Rs.7,43,50,000/-. The assessee explained that the assessee received this sum of Rs.30 lakhs only and hence, he has disclosed long term capital gain on Rs.28,81,660/-. The assessee filed a letter dated 28.11.2017 filed details of amount received as under:-
“Sale deed is for a total sum of Rs.7,43,50,000/-
The above sum is received by the assessee, his grandmother C.T. Saraswathi and S. Ramaswamy, the power of attorney holder on his own account as below:-
