Levy of Income Tax on Both Land Owner and GPA Holder for Same Income amount to Double Taxation: ITAT [Read Order]

The Income Tax Appellate Tribunal (ITAT), Visakhapatnam bench consisting of Shri Duvvuru R L Reddy, Judicial Member, and Shri S Balakrishnan, Accountant Member held that levy of Income-tax on both landowner and GPA holder for the same income amounts to double taxation under Income Tax Act 1961.

The appellant revenue filled petition against the order of CIT (A)-10, Hyderabad passed on 10/07/2019. The respondent-assessee is an NRI who sold various immovable properties by dividing them into plots through General Power of Attorney (GPA) executed in favour of Sri. Yarlagadda Ravi Chandra Prasad, brother of the assessee. The assessee e-filed return of income on 26/03/2016 admitting total income at Rs. 71,041/- and again filed a revised return of income on the same day revising the income returned at Rs. 2,71,790/-. Statutory notices U/s. 142(1) was issued by the AO for which the assessee furnished clarification. The AO issued a detailed show-cause notice on 5/10/2016, for which the assessee furnished the details of the gift of land given to her brother and the loan taken from M/s. Viswaroopi Energy Private limited. The respondent-assessee filed appeal before CIT (A) against the assessment of income at Rs. 1,72,30,151/- by the AO.

 It was contended by the assessee that the land was gifted to the GPA holder without registration and the land was developed into plots and all aspects relating to the land were handled by the GPA holder. The lower authority observed that the sale deeds in respect of the sale of land/plots were also executed by the GPA holder and section 160 and 161 0f the Income Tax Act is applicable by treating the GPA holder as the “representative assessee”. The CIT(A) treated the sale of plots as the business income of the GPA holder and allowed the transactions involved in cash payments of Rs. 30 lakhs received from Sri P V Satyanarayana against the advance payment made by cheque by the assessee.  The appellant revenue argued that the property gifted was not a registered gift and it is not valid as per the provisions of the Transfer of Property Act and the contended against the cash payment received by the assessee.

It was observed by the Tribunal that the GPA holder namely Sri. Yarlagadda Ravi Chandra Prasad has disclosed the income from the sale of plots gifted by his sister in his return of income and discharged his liability of taxes on his return of income and the same cannot be taxed once again in the hands of the assessee. The Tribunal observed that there is no loss of revenue for the department on account of the income being taxed in the hands of the GPA holder and disallowed the claim of revenue.

Further, held that in the absence of any cogent documentary evidence, the withdrawals from the bank account of Sri PV Satyanarayana could not be accepted and held the contention of the assessee as invalid. The appeal of revenue was partly allowed. Sri K. Hari Prasad appeared for the assessee and Sri SPG Mudaliar appeared for the revenue.

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