Section 50C cannot tax a mere power of attorney holder; capital gains addition deleted while expense disallowance stood.

Section 50C could not be invoked to assess capital gains in the hands of a person who executed the sale deed only as power of attorney holder for the original landowners, because he was neither the owner nor deemed owner of the land and had no independent capital asset transferred in his own right. The capital gains addition was therefore deleted. The disallowance of business expenses was sustained because the assessee failed to produce supporting evidence showing that the expenditure was incurred wholly and exclusively for business purposes. The appeal succeeded only in part, with relief confined to the capital gains issue.

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Issues: (i) Whether capital gains could be assessed in the assessee's hands under section 50C of the Income-tax Act, 1961 on the basis of the sale deed executed by him as power of attorney holder of the original landowners in favour of his wife. (ii) Whether the disallowance of business expenses of Rs. 74,923/- was liable to be interfered with.

Issue (i): Whether capital gains could be assessed in the assessee's hands under section 50C of the Income-tax Act, 1961 on the basis of the sale deed executed by him as power of attorney holder of the original landowners in favour of his wife.

Analysis: The assessee executed the sale deed only in the capacity of a power of attorney holder. The material on record did not show that he was the owner or deemed owner of the land, or that he had acquired the capital asset in his own right before its transfer. The delegated authority was confined to correcting revenue records and effecting transfer on behalf of the original owners. In such circumstances, the transfer could not be treated as transfer of the assessee's own capital asset, and the machinery provision under section 50C could not be invoked to assess capital gains in his hands merely because stamp valuation was adopted at a higher figure.

Conclusion: The addition of capital gains in the assessee's hands was deleted and the issue was decided in favour of the assessee.

Issue (ii): Whether the disallowance of business expenses of Rs. 74,923/- was liable to be interfered with.

Analysis: The assessee did not produce material to show that the expenditure was incurred wholly and exclusively for the purposes of business. The finding of the first appellate authority sustaining the disallowance was supported by the absence of supporting evidence.

Conclusion: The disallowance was upheld and the issue was decided against the assessee.

Final Conclusion: The appeal succeeded only in part, with relief granted on the capital gains addition and the remaining disallowance sustained.

Ratio Decidendi: Section 50C can be applied only to the transfer of the assessee's own capital asset, and not where the assessee acts merely as a power of attorney holder without ownership or a real beneficial interest in the property transferred.

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