GPA holder cannot be taxed on sale of property When he was not owner of property

GPA holder cannot be taxed on sale of property When he was not owner of property

IN THE INCOME TAX APPELLATE TRIBUNAL

The Relevant Text of the Order as follows : 7. Having regard to the rival contentions and the material on record, I find that the GPA was given by three persons i.e. (i) Shri K. Pratap Reddy, Sri K. Madhav Reddy and Shri K. Dharma Reddy in favour of the assessee in the year 1990 and it is mentioned therein that the possession of the said land was also given to the assessee, but there is no consideration mentioned in the said GPA. As seen from the sale deed dated 28.06.2007, the landowners are shown as the vendors represented by the GPA holder i.e. the assessee herein and the consideration mentioned therein is Rs.13.00 lakhs. Further, from the statement of Shri K. Dharma Reddy on question No.15 and 16 therein, it is clear that he did not receive any consideration on account of GPA document and in reply to question No.25, he had stated that the total consideration for the entire land situated at Macha Bolarum, Secunderabad Cantonment was received by him and by his brothers at Rs.12 to 13 lakhs and he also confirmed the agreement cum sale dated 30.06.2008 as signed by him confirming the receipt of sale consideration. In reply to question No.27, he also stated that the amount shown to have been received after 2004 was received by his brothers and not by him. This is the statement of Shri K. Dharma Reddy under oath and therefore, it is clear that the GPA given to the assessee is not for the any consideration and therefore, the assessee has not become the owner of the property by virtue of the GPA. When the assessee is not the owner of the property, the sale consideration on account of sale deeds in favour of his son and nephew cannot be deemed to have been received by him in his own right and therefore, no capital gain has arisen in his hands. If the vendees are not able to explain their sources of funds, it is to be brought to tax in their hands and not in the hands of the assessee. 8. In the result, assessee’s appeal is allowed. Order pronounced in the Open Court on 5th October, 2020.