ASSOCIATE MEMBER OF CHS


Flat in Co-op Housing Society (CHS) has been purchased & registerd in joint names - "A" & "B" (A's name appearing first).

"A" had taken bank loan to buy the flat and paid EMIs from his account and claimed benefits under IT. After 3 years, "A" paid entire bank amount.

 
Q1: "A" wants to give irrevocable power of attorney to "B" and register this with the Registrar of properties.  Is it essential to pay any kind of consideration money to "A" by "B"?? If yes, will it be considered as Income in the hands of "A"???
Q.2: Now, when "B" desires to sell the flat, is it required to involve "A" in the transaction of sale as POA has been registered with the Registrar??? 
 
Reply   
 
Advocate

Dear Mr Tekwani:


The answer to Q.1 is Yes, Mr A can give a Irrevocable POA to B and no consideration is essentially required to be paid to pass the POA, In case consideration is paid to A then it amounts to Capital Gains.


If B desires to sell the property, then no involvement of A is required, however, in case no consideration was paid while the POA was executed then the amount of sale consideration qualifies for LT Capital gains. 

 
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Govt..Employee

 By giving irrevokable POW on an immovable property to another person means what ?


This is a way of sale without registration thereby avoiding Stamp duty on sale. Any POW for sale of immovable property compulsorily registerable and you have to pay stamp duty on it as per your State Act. 


Otherwise, if you don't receive any consideration, you can give it as a gift. Why are you not doing so?


 

 
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Scientist/Engineer

POA is valid for sale or purchase of flats. But the Society will not recognise a POA for the exercise of rights on the Society. Even without a POA an Associate Member has the right to vote in a General Meeting in the absence of the Member.

Normally an Associate Member cannot exercise the rights of Member except as stated above. But in this case the Associate Member is also a beneficial owner. Hence he can exercise the rights of a Member, provided the Member relinguishes his rights.

When I say rights on the Society, I mean rights such as becoming a member of the Managing Committee etc. No one can be a member of the Managing Committee on the basis of a POA

 
Reply   
 
Scientist/Engineer

The stamp duty for a power of attorney will be a small amount only. It will not be as high as for transfer of immovable prperty

 
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