Capital gain on transactions by power of attorney

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chiranjivsodhi

20 Points Posted on 25 March 2012

Dear Professional Colleagues,

I seek your expert comments on the following problem:

Stage 1:

Mr B purchased a plot from Mr A for Rs 10 lacs. An agreement of sale was executed and Mr B paid the full consideration by cheque. In return, Mr A gave Power of Attorney (POA) to Mr B.

Please note, the title deed was not transferred. Only POA was given. Title deed was still in the name of Mr A.

Stage 2:

After 5 years, Mr B sold that plot for Rs 22 lacs to Mr C.

Mr C paid full consideration to Mr B. Being the holder of POA, Mr B received all the sale consideration by cheque in his name and transferred title deed of plot to Mr C.

Now what will be the position of capital gain under the provisions of Income-tax Act? (For this transaction only)

a) Who will be the liable for capital gain tax?

b) Whether it is payable by Mr B (Capital gain = Rs 22 lac - Indexed cost of Rs 10 lac) ?

c) Whether it is payable by Mr A, who is the owner in records?

d) If it is payable by Mr A, then what will be the treatment for the cheque received by Mr B from Mr C and cheque paid to Mr A by Mr B?

Please guide.

Thanks & Regards.

CA. Chiranjiv Sodhi

Replies (4)

amit

111 Points Posted on 25 March 2012

Tax wil be payble by mr.A On 22-indexed coa of mr.A nd there wil be no role of mr.B for payment of capital gain

snskrishna chaitanya

analyst

23 Points Posted on 01 September 2016

mr. a is liable to pay capital gains tax on the capital gains resulting from the sale of asset to mr. b.

then, mr.b will be liable to pay capital gains tax on the capital gains resulting from the sale consideratin of Rs.22.00 lacs with cost as Rs.10.00 lacs.

by virtue of general power of attorney, mr. b has become the absolute owner of the property.

the above is the law.

however,the exact clauses of general power of attorney may change the above position.

and s.53A of transfer of property act provisions also may be considered.

gopinath

inter

24 Points Posted on 26 December 2018

Originally posted by : chiranjivsodhi
	Dear Professional Colleagues, I seek your expert comments on the following problem: Stage 1: Mr B purchased a plot from Mr A for Rs 10 lacs. An agreement of sale was executed and Mr B paid the full consideration by cheque. In return, Mr A gave Power of Attorney (POA) to Mr B. Please note, the title deed was not transferred. Only POA was given. Title deed was still in the name of Mr A. Stage 2: After 5 years, Mr B sold that plot for Rs 22 lacs to Mr C. Mr C paid full consideration to Mr B. Being the holder of POA, Mr B received all the sale consideration by cheque in his name and transferred title deed of plot to Mr C. Now what will be the position of capital gain under the provisions of Income-tax Act? (For this transaction only) a) Who will be the liable for capital gain tax? b) Whether it is payable by Mr B (Capital gain = Rs 22 lac - Indexed cost of Rs 10 lac) ? c) Whether it is payable by Mr A, who is the owner in records? d) If it is payable by Mr A, then what will be the treatment for the cheque received by Mr B from Mr C and cheque paid to Mr A by Mr B? Please guide. Thanks & Regards. CA. Chiranjiv Sodhi