Tribunal affirms capital gain treatment, rejects claim of lower consideration. Eviction expenses allowed, evidence required.

The Tribunal upheld the decision to treat the entire sale consideration of Rs.7,43,50,000/- as long term capital gain in the individual's hands, rejecting the individual's claim of having received only Rs.30 lakhs. The Tribunal found that the power of attorney holder had no legal right to claim consideration, affirming the lower authorities' assessment. The Tribunal allowed the individual's claim for eviction expenses but required evidence for substantiation, remanding the issue for fresh adjudication by the Assessing Officer. The appeal was partly allowed for statistical purposes.

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Issues:
1. Treatment of amount received by an individual as income under 'long term capital gain'.

Analysis:
The appeal arose from the Commissioner of Income Tax (Appeals)-2, Chennai's order regarding the assessment framed by the ACIT, Non-Corporate Circle-2, Chennai for the assessment year 2015-16 under section 143(3) of the Income Tax Act, 1961. The main issue was the confirmation of the action of the Assessing Officer in treating the amount of Rs.6,86,06,500/- received by an individual as income under the head 'long term capital gain'. The individual had disclosed long term capital gain of Rs.29,81,660/- on the sale of land, but the Assessing Officer noted that the individual, along with his grandmother, had executed a power of attorney in favor of another individual for a property sale, leading to the receipt of a total consideration of Rs.7,43,50,000/-. The individual claimed to have received only Rs.30 lakhs and disclosed long term capital gain accordingly.

The Assessing Officer questioned the individual's failure to declare capital gain on the entire sale consideration and requested explanations. The individual detailed the circumstances, including the power of attorney given due to family responsibilities and legal issues with the property. The Assessing Officer, however, did not accept the explanations and assessed long term capital gain on the entire sale consideration. The Commissioner of Income Tax (Appeals) upheld this decision, considering the individual as the legal owner and the power of attorney holder as not having any right to claim consideration. The Tribunal noted the clauses in the power of attorney agreement and sale deed, highlighting that the principal was to receive monetary consideration, and the power of attorney holder had no legal right or interest in the property.

The Tribunal concurred with the lower authorities that the individual had not intended to disclose the full capital gain, as evidenced by the execution of the power of attorney and sale deed on the same day, with the power of attorney holder not declaring any capital gain. Therefore, the entire capital gain was to be assessed in the individual's hands. Regarding the disallowance of eviction expenses claimed by the individual, the Tribunal allowed the claim but directed the individual to provide evidence to substantiate the expenses. The issue was remanded back to the Assessing Officer for fresh adjudication. Consequently, the appeal was partly allowed for statistical purposes, with the Tribunal's order pronounced on 16th November 2022 in Chennai.

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