THE HON’BLE SRI JUSTICE GODA RAGHURAM & THE HON’BLE SRI JUSTICE N. RAVI SHANKAR I.T.T.A.No.335 OF 2011 JUDGMENT: (Per Sri NRS,J) The point raised in this assessee’s appeal under Section 260A of the Income Tax Act, 1961 (for short Act), is whether the appellant for the Assessment Year 2007-08 made any capital gain in the transaction covered by the sale deed dated 11.10.2006 executed by him and is assessable to income tax on the amount of capital gain as held by the assessing officer and the Income Tax Appellate Tribunal. We have heard the matter at length at the admission stage. 2 A copy of the sale deed dated 11.10.2006 executed by the appellant in favour of the third party is filed by him. It shows that the appellant earlier obtained a sale agreement-cum-General Power of Attorney (GPA) from the owner i.e. a firm called M/s.Shaw Eswarlal Vadilal for the property in question on 28.06.2005 and later on sold the same to a third party i.e. M/s.Kanyaka Steels, Guntur under the present sale deed dated 11.10.2006. The sale consideration in both the documents is mentioned as Rs.27 lakhs. The property in question is 3,432 sq. yards of land with a godown in it and is situate in the limits of Guntur Municipal Corporation. The assessing officer took all the incomes declared by the appellant and assessed the capital gain at Rs.67,70,050/- and determined the total tax at Rs.32,52,445/- and after deducting the prepaid taxes determined the balance tax payable at Rs.31,95,585/-. In this appeal only the capital gains calculation is disputed. 3. Appellant’s contention is that he merely acted as an agent and never acquired ownership in the property in question and therefore did not make or realize any capital gain. This contention has been rejected by the assessing officer but was accepted by the appellate authority. However, the Income Tax Appellate Tribunal, Visakhapatnam (tribunal), in department’s appeal restored the order of the assessing authority. 4 We have gone through the order dated 14.07.2011 of the Tribunal. It shows that several circumstances have been relied upon by it to conclude that the appellant did acquire ownership in the property and made a capital gain. We are of the opinion that the tribunal’s order is in accordance with law and does not call for any interference for the following reasons. The first is, as observed by the tribunal, the appellant himself for the Assessment Year 2007-08 i.e. the relevant year disclosed a short term capital loss of Rs.14,150/- in respect of the transactions covered by the sale agreement-cum-GPA and also the sale deed dated 11.10.2006. It may be noted that if the appellant had not dealt with the property as its owner there was no need for him to show this loss. This is the first minus point against the appellant. 5 The second is that the sale agreement-cum-GPA would show that the appellant paid the entire sale consideration of Rs.27 lakhs under it and the said GPA was executed by the above firm as an irrevocable power of attorney in his favour. Further under the said document the appellant was also given the power to manage the property in question by paying taxes, collect rents from the tenants and terminate the existing leases and execute fresh leases also. The said terms and conditions would show that under the GPA the appellant has acquired for all practical purposes all the incidents of ownership of the property in question as if it is an out and out sale. 6 The third reason is that the sale deed dated 11.10.2006 and its terms would show that the appellant had executed it not only as an agent of the above firm M/s.Shaw Eswarlal Vadilal but also joined in it as a co- executant and the sale deed reads that the above firm gave possession of the property with the permission of the assessee. Added to this, after obtaining the GPA dated 28.06.2005 under which he paid the entire sale consideration the assessee waited for 1 year 4 months in executing the sale transaction through the sale deed dated 11.10.2006 again only for Rs.27 lakhs. The tribunal observed that it is highly improbable to believe that the appellant who is a money lender would have indulged in the above transactions and paid the entire sale consideration of Rs.27 lakhs under the GPA without any profit motive. The tribunal relied upon the above circumstances to conclude against the assessee and observed that the assessing officer was right in obtaining the valuation certificate from its Engineer regarding the fair market value of the property and calculating the capital gain. The tribunal also observed that the appellant did not raise any objection regarding the transactions but only objected to obtaining the valuation report regarding the fair market value of the property basing on the basic value registers of the concerned sub- registrar fixed for the purpose of stamp duty. 7 Then coming to the contention of the appellant that his GPA and the sale deed cannot constitute a transfer within the meaning of Section 2(47 of the Act, it may be noted that the terms and conditions of the GPA would show that the said transaction would fall under clauses (i) and (ii) of Section 2(47) of the Act as the recitals in the GPA have the effect of the firm relinquishing its rights in the property or the extinguishments of its rights in it in favour of the appellant. Alternatively the circumstances in this case, as observed by the Tribunal, would show that the appellant being a money lender can be said to have treated the property in question as stock in trade for the purposes of his business as contemplated under Section 2(47)(iv) of the Act. Thus the above contention of the appellant is rejected and it can also be said that Section 50C of the Act which enables the assessing officer to obtain valuation report in a case like this is also applicable to the assessee. 8 We accordingly find that the matter involves a pure question of fact and the tribunal’s order does not suffer from any illegality or infirmity and the matter does not raise any question of law. This appeal is therefore dismissed at the admission stage. No costs. ________________________ GODA RAGHURAM, J ________________________ N. RAVI SHANKAR, J Date:10.10.2011 Kvsn