Transfer of property by way of GPA is not a valid transfer, So no capital gain arises

Smt. Maniza Jumabhoy Vs. Asst. Commissioner of Income Tax (ITAT Hyderabad)

Assessee has entered into is not a ‘sale deed’ as considered by the AO and CIT(A) but only an ‘agreement of sale cum Irrevocable General Power of Attorney’ for a property, which the Hon’ble Court has held that these three parties have no ownership rights or title and now property was/is in the possession of Hyderabad Water Works Department for a long period. Without establishing that the assessee has title to the property and also without any sale deed of the transaction, the agreement of sale registered may not give rise to transfer of rights in a particular property, particularly in view of the fact that the Hon’ble Supreme Court did not approve the transfer of property by way of GPA. In these circumstances, the very basis for levy of capital gains is in doubt. However, the order of the court has been pronounced subsequently and there may be further contentions on the issue between the parties. Therefore, it is better if AO examines the issue afresh, in the light of the orders of the Hon’ble Court on the issue and also the fact is that it is only an agreement of sale not a sale deed.

Full Text of the ITAT Order is as follows:-

This is an appeal by assessee against the order of the Commissioner of Income Tax (Appeals)-IV, Hyderabad, dated 25-10-2012. The appeal was originally disposed-off for non-appearance vide the order of ITAT date ^5th August, 2014 and later it was recalled by the order dated 18-02-2015, as assessee preferred an MA.

2. The appeal was filed with a delay of 430 days. Assessee has filed an affidavit explaining the reasons for delay. It was submitted that assessee is staying in Singapore and has signed as a confirming party in a land transaction entered by her brother, Shri Karim Nawaz Alladin and the documents were sent by courier to her. When she visited in the year 2008-09, her Chartered Accountant has asked her to file the return of income and subsequently she was not aware about any of the proceedings. It was further informed that the order was not served on her and she came to know when her bank account in RBS Bank was attached by the department in February, 2014. After the said event, she got in touch with her relatives and obtained the appellate order and on the advice of the Chartered Accountant, arranged to file the appeal on 09-04-2014. She has given list of her visits to India in the affidavit and why she could not attend to the matter immediately. Considering the affidavit filed and the objections raised by the DR, we are satisfied that assessee was prevented by a reasonable cause in preferring the appeal as she was not available in India and hence, the appeal is admitted condoning the delay.

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