The Income Tax Appellate Tribunal (ITAT), Hyderabad bench has recently held that the provisions of section 50C of the Income Tax Act, 1961 would not be applicable where the assessee executed a Sale Deed through GPA holders to the children of assessees.
In the instant case, both the assessees had purchased the said property through Agreement of Sale cum GPA along with possession. As per the relevant documents, the sale consideration for the said land was mentioned as Rs.40 Lakhs only. Subsequently, they registered a Sale Deed in favour of their children, who are aged 22, 20 and 18 respectively.
The Assessing Officer, while completing the assessment against the assessee, found that the sale consideration was less as per the report of the SRO and made an addition by invoking section 50C of the Act.
On the second appeal, the Tribunal observed that the children are all students, without any source of income of their own.
“By virtue of the said Agreement of Sale cum GPA, the assessees have acquired a right in the said property but have not become absolute owners of the property and by virtue of the Sale Deed dt.21-07-2008, the original owners through the GPA holders had sold the property to the children of the assessees before us. Thus, it is seen that there is actually no sale of property by the assessees before us and the Sale Deed has been executed by the original owners through GPA holders to the children of assessees. Therefore, in my opinion, there is no transfer of property by the assessees in fact it is the acquisition of property by the assessees in the names of their children and it is not the case of transfer or gains on sale of the property,” the Tribunal added.
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