Neutral impactEconomy
₹1.25 crore received under power of attorney: When can taxman treat property money in your account as taxable income?
Mint 1 hr ago·29 Sept 2026, 3:24 am
The Income Tax Appellate Tribunal (ITAT) recently ruled that money received by a taxpayer while acting as a power of attorney (PoA) holder does not automatically become their taxable income. In a specific case, the tribunal deleted a ₹1.25 crore addition made by the tax department after finding the funds were received on behalf of three property owners. This decision clarifies that the taxpayer was merely an agent and not the beneficial owner of the funds.
This ruling is significant for investors as it provides a clear legal precedent. It establishes that the tax liability for such transactions lies with the actual property owners, not the PoA holder. For investors, this means that income received under a PoA must be carefully scrutinized to ensure it is not being wrongly attributed to them as business income or salary.
Moving forward, investors should be cautious when receiving funds under a PoA. It is advisable to maintain clear documentation and proof that the money was received on behalf of another party. Taxpayers should also be prepared to demonstrate that the funds were not used for their personal benefit, as this distinction is crucial for avoiding incorrect tax assessments.
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- Category: Economy.
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