Power of attorney holder slapped with ₹29 lakh LTCG tax after property sale: ITAT decides who should pay

Can merely holding a power of attorney (PoA) for a property make you liable to pay long-term capital gains (LTCG) tax when that property is sold?

The Jaipur bench of the Income Tax Appellate Tribunal (ITAT) has answered no in the case of Roop Narayan Choudhary vs DCIT, deleting an LTCG addition of nearly ₹29 lakh made in the taxpayer’s hands.

The ruling, pronounced on 3 September 2026, draws a clear line between having the authority to execute a property transaction and actually owning the property, according to a TaxGuru report.

What was the case about?

The property belonged to Bhuri Devi, the assessee’s mother, under a registered purchase deed dated 25 January 2005. The property had been purchased for ₹4 lakh.

Years later, Bhuri Devi gave her son, Roop Narayan Choudhary, a power of attorney to act on her behalf. As her attorney, Choudhary executed a sale deed on 12 May 2011, transferring the property to his wife and son.

However, the tax department later treated Choudhary as the “deemed owner” of the property and taxed him on the resulting capital gain.

The Assessing Officer took the stamp-duty value of the property at ₹35.93 lakh and allowed an indexed purchase cost of ₹7.10 lakh. The difference of ₹28.83 lakh was assessed as LTCG in Choudhary’s hands, according to the TaxGuru report.

Why did the tax officer treat the son as the owner?

The tax officer questioned whether the mother, described as a housewife in the original purchase deed, had the financial means to purchase the property for ₹4 lakh.

The officer also noted that the transactions were in cash and that there was no proof before him showing that the sale proceeds had been transferred to the mother.

Based on these circumstances, the officer concluded that the son had actually funded the property and treated him as its deemed owner.

Why ITAT say a PoA gives authority, not ownership?

The ITAT disagreed with the approach. It noted that the registered deed from 2005 clearly showed Bhuri Devi as the absolute owner. Choudhary had only acted as her attorney when executing the 2011 sale deed, as per the TaxGuru report.

The Tribunal held that merely acting under a power of attorney did not transfer ownership of the property to the attorney. It also noted that the sale proceeds did not belong to Choudhary, making him not liable for the capital gain.

In simple terms, a PoA allows one person to act on another person’s behalf. It does not by itself make that person the owner of the asset.

What does the ruling mean?

The ruling reinforces an important distinction for property transactions. Being authorised to sign or execute a sale is not the same as owning the property. The capital gain generally remains taxable in the hands of the actual owner, as per a TaxGuru report.

Therefore, the ITAT waived the ₹28.83 lakh LTCG liability, holding that the person authorised to execute a property sale is not necessarily the person liable for the resulting capital gain.

Disclaimer: This is only for informational and educational purposes. Please consult a qualified expert for the latest laws and regulations.