need to check and reply
Capital Gains arising from property transaction through POA
I bought a property (property 1) from a middle person who held Power of Attorney for that property and got the sale deed registered on 20/6/2011 for amount 17,04,000, But came to know immediately after a day or two that the property had double document issues(having another track of duplicate ownership by another person illegaly) hence confronted the middle person and he agreed to replace it with another property(property 2) he had in same locality. Within two months we got that property 2 registered with sale deed in my name but he(middle person) was not willing/ready to register the property 1 in his name(as he said multiple registrations in short span will create problem for him to sell it out later) and hence he got a Power of Attorney from me and separately on a stamppaper he mentioned that he had paid/compensated me for the property 1 and took the same from me. The guideline value for the properties were same (and minimal) during these transactions. But now he has sold the property 1 on 5/10/2015 which I got to know a week before through the Encumberance certificate which shows 72Lakhs as guideline value registered and the actual cost of sale/transaction as 56,40,000. I am worried as he took only the Power of Attorney then and the property transfer now shows from my name and hence the LTCG that would arise out of it will be showup in my name for IT dept. I spoke to him regarding the same but he easily and negligently says you take care of the taxes. I have all other documents but the Power of Attorney he took from me and the document written in stamp paper on that day of exchanging the property is not with me but i believe i can get the copy of POA or other doc from SRO. Please help me with suggestion/directions on the way to handle in the current scenario, also as this year IT filing dates is nearing closure is there a way i can intimate my stance to IT dept in a formal/procedural way and should I declare it in my IT filing or any Legal notice/filing case and keeping that copy intimated to IT dept will be required, please help with suggestions. Thanks, Karunakaran
Asked 9 years ago in Capital Gains Tax
Hello Sir,
The best way forward is to get a Copy of the POA, which should say that you had sold the property in 2011. So that you can prove that your transaction had come to an end in 2011 itself and you are in no way related to the current transfer.
Trust this clarifies your query.
Feel free to call back/ get back in case of further clarifications.
Thanking You.
Regards,
Rohit R Sharma
BCOM, ACA, LLB-GEN, CERT. FAFP.
Thanks for the quick response and valuable information, yes I am trying to get the same from him but he is not ready to give and asking me to take care of paying the tax myself. Discussed with few lawyers and their suggestion is to send legal notice to deposit the money out of the sale through POA to me(as i'm the owner legally) which will make him to come for negotiation table / settle out of court. Now my concern is that if we disclose now then it will be a Long term capital gain and will have to pay 20% I believe after indexation but since there is only two more days for filing to close and later(say after 3-4 months) if he comes for negotiation /settlement offline then I believe the tax that I would have to pay at that point of time would be much higher, a) is that right that I would have to pay high rate of taxes if not disclosed now and after the filing due date closes ? b) if so what would be the percentage, is that like the voluntary disclosure scheme of 45% or some other percentage or penalty? and c) If I'm filing tax before due date then can i simply file revised return later to add this capital gain and still pay the 20% LTCG, if so, do i have choose any particular ITR form when filing now to enable this revision/re-filing later? Please help clarify. Thanks, Karunakaran
Asked 9 years ago
Hello Sir,
Yes, the option of negotiation can also be considered. And don't worry about the Taxes, you can file a delayed return after the due date too.
The Rate of Tax will be the same, only you will need to pay interest on the amount of Tax.
Trust this clarifies your query.
Feel free to call back/ get back in case of further clarifications.
Thanking You.
Regards,
Rohit R Sharma
BCOM, ACA, LLB-GEN, CERT. FAFP.
Sorry..will revert after 5 August. Too busy in filings
Dear Rohit, Thanks for the answer, it helps to an extent but since the legal route to get agreement copy or to bring him to negiotation would not have a definite timeline and may go upto 6months to 1 year as well, I was thinking whether I shall go ahead and file the returns now without mentioning the capital gain now and so thereby I'll have the option/privelege to submit revision/rectifiations for my IT returns(for any reason) later on. My question was a) if i file IT returns now without showing this property/capital gain and later can i revise/rectify and submit it and b) should any specific ITR form to be utilized now so that the capital gain can be included in revision/rectification later ? or c) you suggest I should wait (even if it is for an year or so) to submit this year returns till this issue is cleared? Thanks,Karunakaran
Asked 9 years ago
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