The Income Tax Appellate Tribunal (ITAT), Jalandhar bench has held that the income tax cannot be levied on the transfer of property through the Power of Attorney.
The assessee was given general Power of Attorney by Smt. Harsharan Kaur to maintain the property. The said property was not transferred in the name of the assessee at any point of time and later on the Power of Attorney was given to one Sh. Deepak Pal Singh. The AO was of the view that the value of the said plot equal to stamp duty value @ Rs.1 lac per marla was chargeable to tax in the hands of the assessee as “income from other sources” u/s 56(2)(vii)(b) of the Act. The AO made the addition of Rs.46,50,000/- which was equivalent to the stamp duty value of the property.
The assessee contended that the Power of Attorney does not give ownership rights to the assessee and that the document referred to and relied upon to infer transfer of the plot was nothing but the Power of Attorney executed by the lady owner in assessee’s favor. It was further submitted that in common parlance, it is well known that a Power of Attorney only authorized its holder to deal with the property as per the wishes of the principal/owner, laid out in attorney executed and the attorney holder does not become the owner of the property, by virtue of the attorney executed in his favor.
On appeal, the Tribunal held that only on this basis that a general Power of Attorney was given to the assessee by Smt. Harsharan Kaur to maintain the property, it cannot be said that the assessee received the property and was liable to pay the tax on the stamp duty value of the said property.
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