GPA Holder not liable for Income Tax on Sale of Property: ITAT [Read Order]

The Income Tax Appellate Tribunal (ITAT) held that the sale of the property by the Vendee cum Agreement of General Power of Attorney (AGPA) holder cannot be considered as “sale” for the purpose of imposing a capital gain tax for the purpose of Income Tax Act, 1961 since the assessee is neither a signatory to the subsequent Sale Deed nor is he the recipient of any of the sale consideration.

The assessee, an individual, did not file any return of income for the relevant assessment year. The Assessing Officer (AO) received information that the assessee has sold a property during the Financial Year 2011-12 for an amount of Rs.9,90,000/-. The assessee had not offered to tax any capital gains from the said transaction. Therefore, the AO initiated proceedings under Section 147 of the Income Tax Act.

The assessee contended that he had entered into an Agreement of Sale cum GPA in respect of the property and the sale consideration was received in entirety and the possession of the same was also handed over to the transferee of the property, Shri A.Manikyam. So, the Vendor was the AGPA-holder and not the assessee and according to him, there was no transfer of property by the assessee.

The tribunal comprises a Judicial Member P. Madhavi Devi held that the sale of the property by the Vendee cum Agreement of General Power of Attorney (AGPA) holder cannot be considered as sale of property by the assessee except being described as the Vendor, the assessee is neither a signatory to the subsequent Sale Deed nor is he the recipient of any of the sale consideration.

“The Vendee has executed the Sale Deed by virtue of the said AGPA, as he has sold the property to another party for Rs.9,90,000/-. The sale of the property by the Vendee cum AGPA-holder cannot be considered as the sale of property by the assessee. Further, it is worth noting that except being described as the Vendor, the assessee is neither a signatory to the subsequent Sale Deed nor is he the recipient of any of the sale consideration. In view of the same, it is held that the assessee is not liable for tax on any capital gain arising out of the transfer of property vide Document No.1610/2012, dt.14-03-2012.”