Archive · 6 Sep 2026
ITAT Rejects LTCG Tax Liability for Property PoA Holder
Bhuri Devi owned a property bought in 2005.
Her son, Roop Narayan Choudhary, had permission to act for her.
He later signed a sale deed transferring the property to his wife and son.
Tax officials said he should pay tax on the property’s increase in value.
They believed he may have paid for the property and treated him as its owner.
The ITAT disagreed because the registered deed named Bhuri Devi as the owner.
It said having power of attorney does not make someone the owner.
The tribunal therefore removed the ₹28.83 lakh tax addition from Choudhary’s assessment.
The Jaipur ITAT deleted an LTCG addition of ₹28.83 lakh assessed against Roop Narayan Choudhary.
The property was registered in the name of Choudhary’s mother, Bhuri Devi, in 2005 for ₹4 lakh.
Choudhary later used a power of attorney to sell the property to his wife and son.
The tax officer treated Choudhary as the deemed owner, citing questions about funding and cash transactions.
The ITAT ruled that a power of attorney grants authority to act but does not transfer property ownership.
- Who
- Roop Narayan Choudhary, Bhuri Devi, the tax officer, and the Jaipur bench of the Income Tax Appellate Tribunal.
- What
- The ITAT deleted a ₹28.83 lakh long-term capital gains tax addition assessed against Choudhary.
- When
- The ruling was pronounced on 3 September 2026; the property was purchased on 25 January 2005 and sold on 12 May 2011.
- Where
- The decision was issued by the Jaipur bench of the Income Tax Appellate Tribunal.
- Why
- The tribunal found that Choudhary acted only as Bhuri Devi’s power-of-attorney holder and was not the property owner or recipient of the sale proceeds.
Tax Department’s Position
ITAT’s Position
Who owned the property
Tax Department’s Position
The tax officer treated Roop Narayan Choudhary as the deemed owner, questioning whether his mother had the financial means to buy the property and noting the cash transactions.
ITAT’s Position
The ITAT relied on the registered 2005 deed, which identified Bhuri Devi as the absolute owner.
Effect of the power of attorney
Tax Department’s Position
The department treated Choudhary as responsible for the capital gain arising from the sale he executed.
ITAT’s Position
The tribunal held that a power of attorney gives authority to act for the owner but does not itself transfer ownership.
Who should bear the capital-gains tax
Tax Department’s Position
The officer assessed ₹28.83 lakh as long-term capital gains in Choudhary’s hands because he believed Choudhary had funded the property and had not shown that sale proceeds went to his mother.
ITAT’s Position
The ITAT held that the sale proceeds did not belong to Choudhary and deleted the tax addition from his hands.
- Tribunal
- Jaipur bench of the Income Tax Appellate Tribunal
- Tax addition deleted
- ₹28.83 lakh
- Original purchase price
- ₹4 lakh
- Purchase date
- 25 January 2005
- Sale date
- 12 May 2011
- Stamp-duty value used by officer
- ₹35.93 lakh
- Indexed purchase cost allowed
- ₹7.10 lakh