I bought a property on an agreement to sell plus a general power of attorney and a will, with possession and full payment. Do I own it?
No. A three-judge bench of the Supreme Court held that a sale agreement, a general power of attorney and a will - singly or together - convey no title and create no interest in immovable property. Immovable property can be transferred only by a registered deed of conveyance. A power of attorney creates an agency, not a transfer, and even an irrevocable one does not pass title; a will operates only on death and is revocable until then. The purchaser is left with the agreement, which can support specific performance and the limited protection of section 53A of the Transfer of Property Act.
Decided by the Supreme Court (Supreme Court of India - R.V. Raveendran, A.K. Patnaik and H.L. Gokhale, JJ; judgment by R.V. Raveendran, J) on 2011-10-11, reported as (2012) 340 ITR 1; (2012) 1 SCC 656; AIR 2012 SC 206; (2011) 11 SCALE 438. It bears on section 2(47) of the Income Tax Act 1961, in Capital Gains and How Tax Law Is Read matters.
This is the judgment that ended the practice of treating GPA sales as a mode of transfer, and it overruled the contrary view in Asha M. Jain v Canara Bank to the extent that decision recognised such transactions as concluded transfers. For a tax practitioner it fixes the civil-law starting point for any argument about when ownership in immovable property passes: without a registered conveyance it has not passed, whatever the parties call the papers. That matters wherever the date or fact of transfer decides a tax question - the year of capital gain, the availability of a deduction tied to acquisition, the treatment of a purchaser holding only possession and a power of attorney. The Court was explicit that its holding does not touch genuine powers of attorney given to family members or the sale agreements and powers of attorney used in ordinary development agreements.
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By an earlier order dated 15 May 2009 in the same petition the Supreme Court had drawn attention to the ill-effects of what are called GPA sales, that is transfers made by an agreement of sale, a general power of attorney and a will instead of a registered conveyance. The modus was that the seller took the full price, delivered possession and executed an agreement of sale confirming payment and possession, an irrevocable general power of attorney authorising the buyer or his nominee to deal with and dispose of the property, and a will bequeathing the property to the buyer against the risk of the seller dying first. The Court had noted that the device was used to escape stamp duty and registration charges, to escape capital gains, to invest unaccounted money and to avoid unearned increase payable to development authorities, and that it bred defective titles, resale frauds and land mafia. Notice went to the Union and to Delhi, Haryana, Punjab and Uttar Pradesh, all of whom agreed the practice should be curbed. Haryana had cut stamp duty on conveyances from 12.5 per cent to 5 per cent.
The Court reiterated that immovable property can be legally and lawfully transferred or conveyed only by a registered deed of conveyance, and that GPA sales and SA/GPA/WILL transfers do not convey title, do not amount to transfer, and cannot be recognised as a valid mode of transfer. Courts will not treat them as completed or concluded transfers, and they cannot be relied on as deeds of title or made the basis for mutation in municipal or revenue records, except to the limited extent of section 53A of the Transfer of Property Act. The same applies to leasehold property, which can be transferred only by a registered assignment of lease. The observations of the Delhi High Court in Asha M. Jain v Canara Bank recognising power of attorney sales as a mode of transaction were held not good law to the extent they treated such transactions as concluded transfers. Existing transactions may still be used for specific performance, for the section 53A defence, and for regularisation, and mutations already effected need not be disturbed. The special leave petition was directed to be listed for disposal on its own merits.
The Court worked from the statutory definitions. Section 5 of the Transfer of Property Act defines transfer by reference to conveying, and section 54 says a sale of tangible immovable property worth one hundred rupees or more can be made only by a registered instrument, adding expressly that a contract for sale does not of itself create any interest in or charge on the property. Narandas Karsondas was applied for the proposition that ownership passes only on execution of conveyance, and Rambhau Namdeo Gajre for the proposition that section 53A gives the proposed transferee a shield against the transferor alone, leaving the transferor full owner until a registered sale deed is executed. A power of attorney is not an instrument of transfer at all: following State of Rajasthan v Basant Nehata, it creates an agency under which the donee acts in the donor's name and in a fiduciary capacity, and irrevocability does not convert it into a transfer, though the holder may of course execute a conveyance under it. A will is a posthumous disposition, revocable during the testator's life and not a transfer inter vivos, and registering it adds nothing. Section 17 of the Registration Act makes conveyances compulsorily registrable, and section 17(1A) requires registration of contracts relied on for section 53A. Since none of the three documents effects a transfer, their combination cannot either.
We therefore reiterate that immovable property can be legally and lawfully transferred/conveyed only by a registered deed of conveyance.
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Handle my notice → Ask a CA on WhatsAppNo. A three-judge bench of the Supreme Court held that a sale agreement, a general power of attorney and a will - singly or together - convey no title and create no interest in immovable property. Immovable property can be transferred only by a registered deed of conveyance. A power of attorney creates an agency, not a transfer, and even an irrevocable one does not pass title; a will operates only on death and is revocable until then. The purchaser is left with the agreement, which can support specific performance and the limited protection of section 53A of the Transfer of Property Act. This was decided by the Supreme Court (Supreme Court of India - R.V. Raveendran, A.K. Patnaik and H.L. Gokhale, JJ; judgment by R.V. Raveendran, J) and bears on section 2(47) of the Income Tax Act 1961. It is reported as (2012) 340 ITR 1; (2012) 1 SCC 656; AIR 2012 SC 206; (2011) 11 SCALE 438. This is the judgment that ended the practice of treating GPA sales as a mode of transfer, and it overruled the contrary view in Asha M. Jain v Canara Bank to the extent that decision recognised such transactions as concluded transfers. For a tax practitioner it fixes the civil-law starting point for any argument about when ownership in immovable property passes: without a registered conveyance it has not passed, whatever the parties call the papers. That matters wherever the date or fact of transfer decides a tax question - the year of capital gain, the availability of a deduction tied to acquisition, the treatment of a purchaser holding only possession and a power of attorney. The Court was explicit that its holding does not touch genuine powers of attorney given to family members or the sale agreements and powers of attorney used in ordinary development agreements. If it applies to you, the first step is this: Treat the date of the registered conveyance as the date title passed; do not accept a general power of attorney or an agreement with possession as proof of ownership in a title or tax file.
By an earlier order dated 15 May 2009 in the same petition the Supreme Court had drawn attention to the ill-effects of what are called GPA sales, that is transfers made by an agreement of sale, a general power of attorney and a will instead of a registered conveyance. The modus was that the seller took the full price, delivered possession and executed an agreement of sale confirming payment and possession, an irrevocable general power of attorney authorising the buyer or his nominee to deal with and dispose of the property, and a will bequeathing the property to the buyer against the risk of the seller dying first. The Court had noted that the device was used to escape stamp duty and registration charges, to escape capital gains, to invest unaccounted money and to avoid unearned increase payable to development authorities, and that it bred defective titles, resale frauds and land mafia. Notice went to the Union and to Delhi, Haryana, Punjab and Uttar Pradesh, all of whom agreed the practice should be curbed. Haryana had cut stamp duty on conveyances from 12.5 per cent to 5 per cent. The matter was decided on 2011-10-11 by the Supreme Court (Supreme Court of India - R.V. Raveendran, A.K. Patnaik and H.L. Gokhale, JJ; judgment by R.V. Raveendran, J). On those facts the Supreme Court held as follows. The Court reiterated that immovable property can be legally and lawfully transferred or conveyed only by a registered deed of conveyance, and that GPA sales and SA/GPA/WILL transfers do not convey title, do not amount to transfer, and cannot be recognised as a valid mode of transfer. Courts will not treat them as completed or concluded transfers, and they cannot be relied on as deeds of title or made the basis for mutation in municipal or revenue records, except to the limited extent of section 53A of the Transfer of Property Act. The same applies to leasehold property, which can be transferred only by a registered assignment of lease. The observations of the Delhi High Court in Asha M. Jain v Canara Bank recognising power of attorney sales as a mode of transaction were held not good law to the extent they treated such transactions as concluded transfers. Existing transactions may still be used for specific performance, for the section 53A defence, and for regularisation, and mutations already effected need not be disturbed. The special leave petition was directed to be listed for disposal on its own merits.
The Court worked from the statutory definitions. Section 5 of the Transfer of Property Act defines transfer by reference to conveying, and section 54 says a sale of tangible immovable property worth one hundred rupees or more can be made only by a registered instrument, adding expressly that a contract for sale does not of itself create any interest in or charge on the property. Narandas Karsondas was applied for the proposition that ownership passes only on execution of conveyance, and Rambhau Namdeo Gajre for the proposition that section 53A gives the proposed transferee a shield against the transferor alone, leaving the transferor full owner until a registered sale deed is executed. A power of attorney is not an instrument of transfer at all: following State of Rajasthan v Basant Nehata, it creates an agency under which the donee acts in the donor's name and in a fiduciary capacity, and irrevocability does not convert it into a transfer, though the holder may of course execute a conveyance under it. A will is a posthumous disposition, revocable during the testator's life and not a transfer inter vivos, and registering it adds nothing. Section 17 of the Registration Act makes conveyances compulsorily registrable, and section 17(1A) requires registration of contracts relied on for section 53A. Since none of the three documents effects a transfer, their combination cannot either. In the words reproduced by the source cited on this page: "We therefore reiterate that immovable property can be legally and lawfully transferred/conveyed only by a registered deed of conveyance."
It was decided by the Supreme Court on 2011-10-11 and is reported as (2012) 340 ITR 1; (2012) 1 SCC 656; AIR 2012 SC 206; (2011) 11 SCALE 438. Binding on every court and authority in India. A Supreme Court decision binds every assessing officer, every Commissioner (Appeals), every bench of the Income Tax Appellate Tribunal and every High Court in India. An officer who declines to follow it is acting contrary to law, and that refusal is itself a ground of appeal. On section 2(47), the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It cuts both ways and is cited by both sides. The Court reiterated that immovable property can be legally and lawfully transferred or conveyed only by a registered deed of conveyance, and that GPA sales and SA/GPA/WILL transfers do not convey title, do not amount to transfer, and cannot be recognised as a valid mode of transfer. Courts will not treat them as completed or concluded transfers, and they cannot be relied on as deeds of title or made the basis for mutation in municipal or revenue records, except to the limited extent of section 53A of the Transfer of Property Act. The same applies to leasehold property, which can be transferred only by a registered assignment of lease. The observations of the Delhi High Court in Asha M. Jain v Canara Bank recognising power of attorney sales as a mode of transaction were held not good law to the extent they treated such transactions as concluded transfers. Existing transactions may still be used for specific performance, for the section 53A defence, and for regularisation, and mutations already effected need not be disturbed. The special leave petition was directed to be listed for disposal on its own merits. It arises in Capital Gains and How Tax Law Is Read matters, on section 2(47) of the Income Tax Act 1961, and was decided by Supreme Court of India - R.V. Raveendran, A.K. Patnaik and H.L. Gokhale, JJ; judgment by R.V. Raveendran, J. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Where a client holds property on an SA/GPA/WILL set, get a registered deed of conveyance executed - the Court expressly left that route open and said pre-existing transactions already acted on by development, municipal or revenue authorities need not be disturbed. Keep the section 53A point separate: possession under a written contract still gives a shield against the transferor, and after the 2001 amendment such a contract must itself be registered to have that effect. Do not cite this case as authority against ordinary development agreements or family powers of attorney; paragraph 19 carves them out.
Validity check could not be completed. No later Supreme Court history was checked. The judgment is by a three-judge bench and is expressed as a reiteration of settled law, but the position after 2011 has not been verified from the material read. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
This is a property law judgment. It decides nothing under the Income-tax Act 1961 and does not mention sections 2(47), 45, 50C or 56(2)(x), which the batch line lists; those are left out except section 2(47), retained because the case is used in tax practice on the question of when a transfer of immovable property occurs. The only tax reference in the judgment is the Court's remark that GPA sales were used to avoid capital gains. The reader should note the judgment does not consider section 2(47)(v), which treats possession under a section 53A contract as a transfer for income tax purposes, and nothing here displaces that provision. The order also disposes only of the reference issue; the special leave petition itself was directed to be listed for final disposal on merits and that later order was not read. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The Court reiterated that immovable property can be legally and lawfully transferred or conveyed only by a registered deed of conveyance, and that GPA sales and SA/GPA/WILL transfers do not convey title, do not amount to transfer, and cannot be recognised as a valid mode of transfer. Courts will not treat them as completed or concluded transfers, and they cannot be relied on as deeds of title or made the basis for mutation in municipal or revenue records, except to the limited extent of section 53A of the Transfer of Property Act. The same applies to leasehold property, which can be transferred only by a registered assignment of lease. The observations of the Delhi High Court in Asha M. Jain v Canara Bank recognising power of attorney sales as a mode of transaction were held not good law to the extent they treated such transactions as concluded transfers. Existing transactions may still be used for specific performance, for the section 53A defence, and for regularisation, and mutations already effected need not be disturbed. The special leave petition was directed to be listed for disposal on its own merits.
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