Ramchandra Reddy Pothuganty vs ITO
The assessee sold two plots as per the Registered Sale Deed. On verification, the AO noted that the capital gain on the sale had escaped assessment and issued a notice to the assessee. The assessee stated that he is not the owner of the property but is only a power of attorney holder and therefore, there cannot be any capital gains. The vendees denied having paid any amount for the purchase of the property since they had no sources of income at that time and stated that the amount was paid by their respective fathers.
AO observed that the GPA was irrevocable and that the assessee acquired an absolute right/interest over the property. He transferred the property to the vendees and therefore, capital gain has arisen. The CIT (A) confirmed the order of the AO and the assessee is in second appeal before the Tribunal. Hyderabad ITAT held that 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. In the result, assessee’s appeal is allowed.