Income tax - Property (Regarding expenses Claim)

[Sangeetha D]

I have a power of attorney for an agricultural land I'm making expenses for that land to convert it into some residential plots. I'm having expenses bills in my name can the landlord claim expenses in Income Tax even bill is in my name

[YAGAY andSUN]

Holding a Power of Attorney (PoA) does not, by itself, entitle the landowner to claim income tax deductions for expenses that are incurred and billed in the name of the PoA holder. Under the Income Tax Act, deductions can only be claimed by the person who has actually incurred the expenditure, meaning the one in whose name the bills are issued and who has borne the financial liability. If the bills for development or conversion expenses are in your name, and payment is made from your own funds without reimbursement, the landowner has no direct financial linkage to those expenses and therefore cannot claim them.

However, if the expenses are incurred by you strictly in the capacity of a PoA holder, and the Power of Attorney deed or a separate agreement clearly states that all expenditures made by you are on behalf of the landowner, then the landowner may be able to claim such expenses—provided that reimbursement is made, or the landowner records such expenses in their books with proper supporting evidence. The key requirement is that there must be a demonstrable nexus between the landowner and the expenditure, both legally and financially.

In absence of such reimbursement or documentation, any claim made by the landowner may be disallowed during assessment or scrutiny. The assessing officer will examine who incurred the cost and who is legally liable for the same. Therefore, to ensure that the landowner can validly claim the expense, it is advisable to either have the bills issued in the landowner’s name or establish a clear reimbursement mechanism backed by formal records

AI Summary

Power of attorney holder's expenses cannot be claimed by landowner for tax deductions without proper reimbursement documentation A power of attorney holder incurred expenses for converting agricultural land into residential plots, with bills in their own name, questioning whether the landowner can claim these expenses for income tax purposes. The response clarifies that under the Income Tax Act, only the person who actually incurred the expenditure can claim deductions. Since bills are in the power of attorney holder's name, the landowner cannot directly claim these expenses unless there is clear reimbursement or the power of attorney deed specifically states expenditures are made on behalf of the landowner with proper documentation establishing financial nexus.