A recent decision by the Income Tax Appellate Tribunal (ITAT) addresses whether a power of attorney (POA) can expose someone to capital gains tax when a property is sold. The ruling draws a clear distinction between the authority to sign off on a sale and actual ownership of the asset.
The case involved the son who faced long-term capital gains tax, which the ITAT subsequently cancelled. The tribunal’s reasoning focuses on separating the right to execute a sale from ownership of the property.
Key takeaway
- A POA holder is not automatically regarded as the owner for tax purposes.
- For property-related capital gains, ownership remains the decisive factor in determining tax liability.
As a result, the ₹29 lakh LTCG tax in this matter was removed, illustrating the tribunal’s stance on distinguishing selling authority from ownership.
