Case Law Details
The Supreme Court today ruled in the case of Suraj Lamp & Industries Pvt. Ltd. Vs State Of Haryana that sale transactions carried in the name of general power of attorney will have no legal sanctity and immovable property can be sold or transferred only through registered deeds. “Transactions of the nature of `GPA sales or `SA/ GPA/ WILL transfers’ do not convey title and do not amount to transfer nor can they be recognised or valid mode of transfer of immovable property.
“The courts will not treat such transactions as completed or concluded transfers or as conveyances as they neither convey title nor create any interest in an immovable property.
“Such transactions cannot be relied upon or made the basis for mutations in municipal or revenue records,” Justice Raveendran, writing the judgement, said.
The apex court said the amendments to stamp and registration laws by various states do not address the larger issue of generation of black money and operation of land mafia and hence there was a need to reduce the stamp duty though it may result in loss or revenue.
“When high stamp duty is prevalent, there is a tendency to undervalue documents even where sale deeds are executed.
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I wish buying a piece of land from a person in whose name Power of Attorey is registered by the principal land owner.
The Encumbrance Certificate obtained from local Sub-Register Office also states that the GPA is registered in the agent’s name.
Pl. clarify if I go for sale deed with the GPA party, will it be valid or else need I call the Principal owner for sale deed.
Thanks.
s.r. ramesh
Hosur-635 109. Tamilnadu.
@RL Garg
On the limited question of tax consequence/implicatio of the SC verdict, the following aspects call for a special noting:
1. As observed: “As noticed in the earlier order, these kinds
of transactions were evolved to avoid prohibitions/conditions regarding
certain transfers, to avoid payment of stamp duty and registration charges on
http://www.taxguru.indeeds of conveyance, to avoid payment of capital gains on transfers, to invest unaccounted money (‘black money’) and to avoid payment of
‘unearned increases’ due to Development Authorities on transfer.
2. No doubt, the court has categorically ruled against the legal validity of the types of transactions, including transfers effected through an instrument of ‘GPA’,not by a proper sale deed registered and stamp duty paid. Nonetheless, the Court , has, in its wisdom, for obvious reasons, added a rider by way of a direction to the effect that the ruling shall not affect the validity of the transactions concluded before the specified date and acted upon for several purposes. If that is the correct understanding/import of the court’s judgment,then what should necessarily follow is that,the tax consequences would be the same as if those transactions were to be regarded as valid.
Seeing, however, that the court’s judgment being first of its kind (except that, in the recent past, there has been at least one other similar instance,- that is where the SC has handed down a view against the builders’ right to sell a portion of ‘common areas’ as caqr parks to individual buyers of flats) has cetainly given rise to more than one imponderable and complex issue.Perhaps, these are matters which call for clarifications, from the judiciary and/ or the government in consultation with the juiciary, sooner than later.As otherwise, protracted disputes and court litigation would seem inevitable.
What will be the treatment in Income Tax Act for the purposes of Capital Gains or Depreciation etc. for this judgment. Pl enlighten