OPEN APP
Home / Money / Calculators /  General power of attorney doesn’t convey any right or title

My father bought a residential government plot in Uttar Pradesh around 18 years back on a general power of attorney (GPA) which is in my brother’s name and he can sell the plot with this GPA. My brother got the first registry done in the name of the original allotee from whom we bought the plot with the GPA around 14-15 year back but have not done the registry in any of the family members’ name so far. We want to get this property registered in my brother’s and my name or any of the family members’ name. How will the financial transaction be treated from the income tax point of view? Can my brother gift this plot to me or any family member and get the property registered with the help of a gift deed? Will there be any complication in the future from the property ownership or income tax point of view?

—Rajeev

It appears from the facts narrated by you that at the time when your father bought the residential plot 18 years ago, the transaction was completed under a GPA and no deed of conveyance or other sale deed, which was duly stamped and registered, was executed between the parties.

It may be noted that a GPA granted in favour of any person with respect to any immovable property per se does not convey any right or title or create any interest in respect of such immovable property in favour of such person. Immovable property can be legally transferred/conveyed only by way of a deed of conveyance/sale deed which is duly stamped under the provisions of the Stamp Act applicable to the state in which such property is situated, as well as registered under the provisions of the Registration Act, 1908. Of course, a power of attorney can be granted by the party transferring the property (transferor) to the party to whom the property is to be transferred (transferee) for the purposes of granting authority to the transferee to execute the conveyance/sale deed in favour of the transferee, and registration of the conveyance/sale deed on behalf of the transferor. However, such a power of attorney itself would not grant any right, title or interest in the immovable property in favour of the transferee, and a conveyance/sale deed would be required to be executed, stamped and registered for this purpose. It may be noted that in some states, such a power of attorney itself will have to be stamped and registered.

The above view takes support from the judgement of the Supreme Court of India pronounced in October 2011 in the matter of Suraj Lamp and Industries Pvt. Ltd vs the state of Haryana and others.

In this judgement, the Supreme Court has reiterated that GPA transactions are not “transfers" or “sales" and that such transactions cannot be treated as completed transfers or conveyances; however, nothing prevents affected parties from getting registered deeds of conveyance to complete their title. The Supreme Court has further held that GPA transactions may also be used to obtain specific performance or to defend possession under section 53A of Transfer of Property Act, 1882.

However, with respect to GPAs executed prior to the date of the judgement, the Supreme Court has provided certain concessions and held that they may be relied upon to apply for regularization of allotments/leases by development authorities and if the documents relating to GPA transactions have been accepted by any developmental authorities or by the municipal or revenue authorities to effect mutation of the records in respect of any property, such acts need not be disturbed merely on account of the decision of the Supreme Court.

Therefore, from the judgement of the Supreme Court it can be concluded that while GPA transactions are not valid transactions, if the same have been executed prior to the date of the Supreme Court judgement, they may be relied on for regularization of allotments/leases by development authorities. Further, if any such development/municipal authorities have relied on GPAs to register any transaction prior to the date of the Supreme Court judgement, the same would not be affected. Accordingly, in your case, the registration of the property in the records of the Uttar Pradesh government authorities in the name of the original allottee would be valid. However, with respect to the transfer of this property from the name of the original allottee to that of your brother, you will need to approach the appropriate governmental authority to ascertain whether they would regularize the sale under the GPA in the name of your brother and the date from which it would be effective, in view of the Supreme Court judgement. Note that if the sale under the GPA is regularized in the name of your brother, he cannot further transfer the same to you or to any other person under a GPA and such transfer would have to be completed by way of a duly stamped and registered gift deed/deed of conveyance.

Please note that it is advisable to consult a local lawyer with respect to the rules and regulations of the governmental authority in the state from whom the plot has been acquired to understand the manner in which the regularization of the acquisition in the name of your brother is to be carried out. You are also requested to consult a tax consultant as regards the implications of the above transactions from an income tax perspective.

Queries and views at mintmoney@livemint.com

Subscribe to Mint Newsletters
* Enter a valid email
* Thank you for subscribing to our newsletter.

Never miss a story! Stay connected and informed with Mint. Download our App Now!!

Close
×
Edit Profile
Get alerts on WhatsApp
My ReadsRedeem a Gift CardLogout