CA. Naresh Jakhotia

TAX TALK-26.12.2011-THE HITAVADA TAX TALK BY CA. NARESH JAKHOTIA (Chartered Accountant) “ANCESTRAL PROPERTY PURCHASED IN 1936 SOLD NOW- INCOME TAX IMPLICATION” Query 1] We had an ancestral property purchased by our previous generation in 1936 and a house was built by them. My father and his 4 brothers were joint owners of the said property. After their death, their family members became the owners of the property. Now we sold the said property in Sept. 2011 for the total consideration of Rs. 277,44, 000/- & we (Total 18 members) received the consideration according to their ownership share. I am one of the co-owners amongst them and received Rs. 45, 77, 000/- as my share. Now please advise me the quantum of property gain tax, I am liable to pay. How it should be calculated? Is it to be paid on whole amount received? What are the ways to avoid the gain tax, how much should I invest in house property so as to save total gain tax liability as I wish to keep some liquidity with me. Wha...

TAX TALK-19.12.2011-THE HITAVADA TAX TALK BY CA. NARESH JAKHOTIA (Chartered Accountant) “RECEIVED NOTICE FOR ARREARS OF DEMAND!” Query 1] I have received arrear demand for the A.Y. 2002-2003 wherein the certain points as mentioned below were mentioned: · The amounts mentioned as outstanding demand(s) are liable to be adjusted against the refunds arising on processing of return in CPC. This may be treated as intimation u/s 245 of the Income Tax Act, 1961. · Please contact your current jurisdictional Assessing Officer for any clarifications on the Demand(s) stated in this intimation. · Any rectification/correction of the demand can be made only by the Assessing Officer. CPC cannot carry out any modifications to the above demands nor can it clarify issues regarding these demands. · In order to know your current jurisdictional Assessing Officer (AO) you may log on to http://www.incometaxindiaefiling.gov.in and click on “Know Jurisdiction” under “SERVICES”. This is for the financial year 20...

TAX TALK-12.12.2011-THE HITAVADA TAX TALK BY CA. NARESH JAKHOTIA (Chartered Accountant) “TRANSFER OF FLAT BEFORE SALE DEED: WHETHER CAPITAL GAIN OR BUSINESS INCOME?” Query 1] Till now, I used to deposit annually Rs. 40,000/- in my & Rs. 15,000/- each in the two PPF accounts of my minor children. Now, I wish to deposit Rs. 1 Lacs each in all the three PPF accounts. Is it permissible? What will be the tax implication of the principal and interest in the accounts of the minors? Your opinion will be highly appreciated. [Parantap Chandurkar- parantap2010@gmail.com ] Opinion: There is a limit on subscription in the PPF Account. Any individual may, on his own behalf or on behalf of a minor of whom he is the guardian, subscribe to the Public Provident Fund any amount not less than Rs. 500/- and not more than Rs. 1,00,000/- in a year. (The limit of deposit in the PPF A/c has been increased from Rs. 70,000/- to Rs. 1,00,000/- w.e.f 01.12.2011 vide Notification F.No. 1/9/2011-NS-II, dated 25-...

TAX TALK-12.12.2011-THE HITAVADA TAX TALK BY CA. NARESH JAKHOTIA (Chartered Accountant) “TRANSFER OF FLAT BEFORE SALE DEED: WHETHER CAPITAL GAIN OR BUSINESS INCOME?” Query 1] Till now, I used to deposit annually Rs. 40,000/- in my & Rs. 15,000/- each in the two PPF accounts of my minor children. Now, I wish to deposit Rs. 1 Lacs each in all the three PPF accounts. Is it permissible? What will be the tax implication of the principal and interest in the accounts of the minors? Your opinion will be highly appreciated. [Parantap Chandurkar- parantap2010@gmail.com ] Opinion: There is a limit on subscription in the PPF Account. Any individual may, on his own behalf or on behalf of a minor of whom he is the guardian, subscribe to the Public Provident Fund any amount not less than Rs. 500/- and not more than Rs. 1,00,000/- in a year. (The limit of deposit in the PPF A/c has been increased from Rs. 70,000/- to Rs. 1,00,000/- w.e.f 01.12.2011 vide Notification F.No. 1/9/2011-NS-II, dated 25-...

TAX TALK-28.11.2011-THE HITAVADA TAX TALK BY CA. NARESH JAKHOTIA (Chartered Accountant) “TRANSFER OF DEPRECIABLE ASSETS & EXEMPTION FROM CAPITAL GAIN” Query 1] I had purchased one office chamber in commercial complex in 1988, for Rs. 2 Lacs (WDV-2010, Rs. 27,000/-) and sold it this year for Rs. 32 Lacs. I am a senior citizen with income, from all sources, below exemption limit. Please tell me the tax treatment: a. Whether benefit of sec 50, 54 will be available or not? b. If not, what is the amount of tax to be paid? [yeshwant1938@gmail.com] Opinion: 1. You have sold an office block on which you have been claiming Depreciation. 2. Section 50 provides that where a capital asset forming part of a block of assets in respect of which depreciation has been allowed, when sold, if the full value of consideration exceeds the block value of the asset, such excess shall be deemed to be the capital gain arising from the transfer of short term capital assets. 3. In your case, probably, office ...

TAX TALK-21.11.2011-THE HITAVADA TAX TALK BY CA. NARESH JAKHOTIA (Chartered Accountant) “TDS CERTIFICATE NOT ISSUED DESPITE MANY REMINDERS & REQUESTS” Query 1] One of my relatives who is a Govt. employee, tax payer, purchased of plot in the year 1995 with a cost of Rs. 54,000/- and spent some money for boundary wall of Rs. 21,000/- (Total expenditure was Rs, 54,000/- + Rs. 21,000/- = Rs. 75,000/-). Now (2011), he has sold that plot with a cost of Rs. 15,00,000/-. My questions are as follows: 1. How much he has to pay the tax? 2. If he invests the whole money in MIS, or some bonds, etc, still he has to pay tax? 3. What are ways to avail the tax benefit? 4. If he purchases a flat/plot with the sale proceeds of his plot, still he has to pay some tax? 5. Is it called capital gain? I request you if you could guide something. [susantakumardutta@yahoo.com] Opinion: It is presumed that a) The plot is purchased in the FY 1994-95.(If it is purchased in F.Y. 1995-96, “259” used below shall be...

TAX TALK-14.11.2011-THE HITAVADA TAX TALK BY CA. NARESH JAKHOTIA (Chartered Accountant) “AMOUNT DEPOSITED IN THE PPF ACCOUNT OF WIFE: INCOME TAX IMPLICATONS” Query 1] I am 76 years of age and would have only the contributions to the PPF A/c as the category of investment eligible for Deductions U/c 80C, as the benefit of deduction on the Investments made in ELSS is proposed to be withdrawn from 1st April, 2012. I wish to contribute Rs. 30,000/- to the PPF A/c of my Spouse to claim the full benefit of Rs. 1 Lacs U/s 80C. However, I need clarifications and guidance with regards to: 1. Whether the contributions made to the PPF A/c of the Spouse will be treated as ‘Gift, and/or, attract the ‘Clubbing provisions’ as per the New Direct Tax Code, being introduced from 1st April, 2012? 2. If the ‘Clubbing provisions’ are applicable, whether the Interest credited every year on such contributions, on ‘cumulative basis’, is to be added to my income, as ‘tax-free Income’, every year? 3. Whether a w...

TAX TALK-07.11.2011-THE HITAVADA TAX TALK BY CA. NARESH JAKHOTIA (Chartered Accountant) “SECOND HOUSE PROPERTY: INCOME TAX IMPLICATONS” Query 1] I have some confusion regarding house property income. Please clear my doubts. 1. I have taken two home loans. One home is in place of work and other in different city. Both the house properties are self occupied & have not been let out. One loan is 10 year old; employer has given it with lesser interest rate and the other taken last year only. New Loan amount: Rs. 11 Lacs for 15 year term, Interest Rs. 1,12,858/- & Principal Rs. 72,088/- in the first year. 2. I have not let out other home. I want to take interest benefit for both loans can I? Please explain whether it is possible? 3. Which Form I have to use for filing Income Tax Return? ( Two Home loans) 4. How to file return, detailed steps for claiming loss on house property? 5. I have already paid tax without counting 2nd loan and I want refund now. Can I get refund? 6. Since othe...

TAX TALK-31.10.2011-THE HITAVADA TAX TALK BY CA. NARESH JAKHOTIA (Chartered Accountant) “EXEMPTION U/S 54F & U/S 54EC CAN BE CLAIMED SIMULTANEOUSLY” Query 1] I had purchased an agriculture land in the year 1995 and sold the same in April- 2011. The agricultural land was well within rural land as per Income Tax Act. i.e., there was no village having more than 10,000 populations & is not within the circle of 8 Km as per pervious census, but as per latest census the population of a nearby village has been more than 10,000. My queries are: 1. From when the new census would apply? 2. Whether my sale would attract LTCG or it would be free from capital gain tax available on sale of Rural Agricultural Land? [ dalmia_shivratan@rediffmail.com ] Opinion: In normal course, any income from transfer of agricultural land shall be tax free if the agricultural land is not situated: (a) in any area which is comprised within the jurisdiction of a municipality (Whether known as a municipality, mun...

TAX TALK-24.10.2011-THE HITAVADA TAX TALK BY CA. NARESH JAKHOTIA (Chartered Accountant) “PROCEDURE FOR MAKING CORRECTION IN THE INCOME TAX CHALLANS” Query 1] a] If I deposit amount of Rs. 6 Lacs in a FDR with Bank for 3 years on which Bank deducts TDS directly. In such case, whether bank will also deduct on current A/c. or S.B. A/c Interest? [bsc.arya@gmail.com] b] I am a student pursuing CA-Final. Recently, during our bank audit, we have come across the interest payment of more than Rs. 10,000/- to the customer. No Tax is deducted by the bank in the current year nor has been done so in the past as well. I have gone through section 194A which no where provides exemptions from TDS on interest payment on Saving A/c. I have gone through the Circular No. 22/68-IT(B) [F.No. 12/23/68-IT(B)], dated 28-3/13-5-1968 which also confirms the deduction of Tax at source on Saving bank account interest. Please examine whether TDS will be applicable or on interest credit on saving bank A/c? [xxxx5147@...

Format of application to bank for challan correction to be requested by the taxpayer To The Branch Manager, --------------------------- (Address of Branch) Taxpayer Details : Taxpayer Name : Taxpayer Address : Taxpayer TAN/PAN : Name of Authorized Signatory : (in case of non-individual taxpayer) Sub : Request for Correction in Challan No: 280/281/282/283 [Strike out which ever is not applicable] Sir/Madam, I request you to make corrections in the challan data as per following details : Challan Details: BSR Code Challan Tender Date (Cash/Cheque Deposit Date) Challan Sl. No. Sl. No. Fields in which correction required Please Tick Original Details Modified Details 1. TAN/PAN (10 digit) 2. Assessment Year (YYYY) 3. Major Head code (4 digit) 4. Minor Head code (3 digit) 5. Nature of Payment (3 digit) 6. Total Amount (13 digit) Note: Please tick against the relevant fields where changes are required. Tax payer/Authorized Signatory Date Note: 1. Attach copy of original challan counterfoil. 2....

TAX TALK-17.10.2011-THE HITAVADA TAX TALK BY CA. NARESH JAKHOTIA (Chartered Accountant) “SURPLUS FROM CHIT FUND & INCOME TAX IMPLICATIONS” Query 1] Sir, I have following questions. Can you clear them please 1. I am a housewife. I am able to save Rs. 2000/- to Rs. 3000/- per month from household expenses given by my husband and putting it my SB account. I am having PAN card. I have accumulated Rs. 60,000/- so far. a) I would like to put some amount in Bank Fixed deposit or company NCD and b) some amount in Reliance Gold Savings fund. My husband has paid the income tax on the amount given to me for household expenses. The interest that I will get from FD or NCD, will it be tax free as it is in my name or it is to be added to my husband's income? 2. What are the tax implications for gold savings fund if I redeem within one year and after one year? 3. This is regarding investment in Chit fund. We took a chit for Rs. 1 Lacs for 50 months. Due to bidding the total amount we pay over ...

TAX TALK-10.10.2011-THE HITAVADA TAX TALK BY CA. NARESH JAKHOTIA (Chartered Accountant) “DON’T HAVE PAN CARD / NUMBER, HOW TO RETRIEVE IT?” Query 1] 1. I would be grateful to you if you solve my query. My father is a retailer and was not having taxable income till last year. He has lost his PAN card & we don’t have copy of it. We don’t know his PAN Number also. This year he is suppose to file the income tax Return. It won’t be possible to file the return without PAN. What should we do? Do we apply for new PAN card? If possible, how can we get new copy of old PAN number itself? Please advice. 2. I have a commercial property which I have given it on Rent @ Rs. 1,50,000/- per month. I have come to know that corporation tax @ 40% is applicable on such rent. Since annual rent is more than Rs. 8,00,000/-, Service tax is also applicable as Rs. 1,50,000/- received by me is inclusive of the service Tax. Further there will be TDS Deduction & my other income is also above Rs. 6,00,000/- ...

TAX TALK-03.10.2011-THE HITAVADA TAX TALK BY CA. NARESH JAKHOTIA (Chartered Accountant) “RS. 100/- PER DAY PENALTY FOR NON FILING OF QUARTERLY TDS RETURN” Query 1] Sir, I have two house properties in Gujarat (Kutch & Ahemdabad) purchased by me in the year 1978 & 1982. I wish to sale the same in the current year. The capital gain roughly calculated on the above flat sell is around Rs. 43 Lacs & Rs. 67 Lacs respectively. I wish to purchase two flats, one in Raipur & the other one in Nagpur for Rs. 60 Lacs each. I have two sons, one in Raipur & the other one in Nagpur. The flat is intended to be purchased by me with my son name as the co-owner in each of the flat separately. I have following queries for which I seek your guidance: 1. Whether the capital gain amount will be exempt as my total investment in the residential house properties will exceeds the total amount of capital gain? 2. Whether the exemption is restricted to purchase of one house property or both the h...

TAX TALK-26.09.2011-THE HITAVADA TAX TALK BY CA. NARESH JAKHOTIA (Chartered Accountant) “EMPLOYEE WELFARE TRUST ALLOTING SHARES TO ITS EMPLOYEE AT A DISCOUNTED PRICE-INCOME TAX IMPLICATION” Query 1] Sir, I am in the Company which got listed last year at NSE & BSE. The Company is having Employees Welfare Trust before its got listed in NSE & BSE. Employees Welfare Trust is holding shares of the Company since more than 5 to 6 years. Now Employees Welfare Trust is offering shares to employees (based on their tenure, performance & designation) at a discounted rate (say Rs. 15) as compared to the market rate around Rs. 200 on the date of transaction. I have accepted the offer and bought shares, with lock-in period of 6 months (insider trading). I am getting contrasting opinion on the matter and confused, whether difference of Fair Market Value - Purchase Price (Rs. 200/- – Rs. 15/-) i.e., Rs. 185/- is taxable as income from other source? Or, it will be taxable as and when I will ...

TAX TALK-19.09.2011-THE HITAVADA TAX TALK BY CA. NARESH JAKHOTIA (Chartered Accountant) “IS IT MANDATORY TO FILE THE ITR WITH DIGITAL SIGNATURE NOW?” Query 1] I have a query. Kindly provide me your opinion. I had purchased a property from a builder. I had made part/full payment to the builder. But due to some reasons I did not register the property. Now I wish to sell the property. The purchaser would make me the payment and the builder would come for the registration to register the property directly in favor of new buyer. I want to know whether the profit arising from the transaction would be considered as Capital Gain or as Income from Other Source? Kindly elaborate with section under the Income Tax Act. [Rahul Agarwal- keepwalkingalways@ gmail.com] Opinion: It appears that you have purchased the flat and the possession of the flat was handed over to you by the builder. Due to some technical or procedural lapses, the sale deed appears to have not been executed in your favor. Since t...

TAX TALK-12.09.2011-THE HITAVADA TAX TALK BY CA. NARESH JAKHOTIA (Chartered Accountant) “MCX PROFIT- WHETHER SPECULATIVE?” Query 1] Sir, what is the right procedure to compute Income Tax on MCX transactions (Profit or Loss)? Is it a speculative profit or loss? Income of a salaried Senior Citizen from Salary and all other sources is Rs. 2 Lacs. His profit from MCX transactions of Silver is Rs. 75,000/- & from Sugar is Rs. 25,000/-. What will be his tax liability? [srf.fatnani@yahoo.co.in] Opinion: 1. The Central Government has notified NSE, BSE, MCX stock exchanges & United Stock Exchange of India Ltd as a recognized stock exchange for the purpose of section 43(5) as a result, the profit/loss in MCX is not considered as a speculative profit/loss. The expenses incurred like brokerage, transaction charges are deductible expenses while working out the profit/ loss from the transactions. 2. The total income of the senior citizen mentioned in the query is of Rs. 3 Lacs. It is presume...

TAX TALK-05.09.2011-THE HITAVADA TAX TALK BY CA. NARESH JAKHOTIA (Chartered Accountant) “IS IT COMPULSORY TO QUOTE DOCUMENT IDENTIFICATION NUMBER?” Query 1] Sir, Kindly clarify the following points in the Tax Column of “The Hitavada” 1. Is it compulsory to mention ‘Document Identification Number’ (DIN) in the Income Tax return for Assessment Year 2011-2012? Kindly enlighten me about the procedure for getting DIN? 2. On Reorganization of share capital, company allots new shares in definite proportion to the old shares and for fractional shares, company sends cheque/draft in lieu of the same. How this amount of fractional share is treated in Income Tax. Can we assume that the Security Transaction Tax is deducted for claiming exemption under L.T.C gain? 3. On transfer of equity shares through Stock Exchange, is it not compulsory to deduct Security Transaction Tax in all the shares traded through Stock Exchange. 4. Regarding Interest on cumulative term deposit with banks, referring C.B.D.T...

TAX TALK-15.08.2011-THE HITAVADA TAX TALK BY CA. NARESH JAKHOTIA (Chartered Accountant) “INCOME TAX ON ACQUISITION OF AGRICULTURAL LAND” Query 1] I had bought an agriculture land (6 acres) for Rs. 15,000/- in 1987-88 situated in Rural area, 35 kms from Nagpur. Now govt. wants the land for industrial development. It offered Rs. 13 Lacs per acre. I am in Government Service with annual salary of Rs. 6.50 Lacs & in tax bracket of 30%. I don’t have any other income. My queries are 1. Whether LTCG is applicable for project affected land? 2. If yes, what are the tax implications there on? 3. What are the remedies to minimize the taxes? 4. My uncle posses 5 acre land at same place as ancestral property. Will he be also required to pay LTCG tax? [bondre_vira@yahoo.in] Opinion: Rural Agricultural Land is not a capital assets & income arising from transfer of agricultural land is not at all chargeable to tax as Income from capital gain. Agricultural Land is considered as Rura...

TAX TALK-22.08.2011-THE HITAVADA TAX TALK BY CA. NARESH JAKHOTIA (Chartered Accountant) “NO LOAN SHOULD BE TAKEN AGAINST LTCG BONDS” Query 1] a] Sir, I have paid the insurance premium of the policy taken out by my mother as proposer for me. Similarly, I have also paid the premium of my younger brother. The premiums were paid by me by cheques only & my bank passbook reflects both the above payments. The LIC Premium receipts are, however, issued in their name (Mother & Brother). I want to know whether I will be able to get income tax deductions towards these payments. Similarly, if I make the LIC Premium payment of my father in the F.Y. 2011-12, whether I will be eligible for income tax deduction? Please elaborate. b] I have read in the earlier issues regarding the investment in the REC/ NHAI Bonds for saving Long Term Capital Gain Tax. Accordingly, I have invested in the bonds issued by NHAI, 1 ½ years back. I am in need of some amount for purchase of one agricultural La...

TAX TALK-15.08.2011-THE HITAVADA TAX TALK BY CA. NARESH JAKHOTIA (Chartered Accountant) “INCOME TAX ON ACQUISITION OF AGRICULTURAL LAND” Query 1]I had bought an agriculture land (6 acres) for Rs. 15,000/- in 1987-88 situated in Rural area, 35 kms from Nagpur. Now govt. wants the land for industrial development. It offered Rs. 13 Lacs per acre. I am in Government Service with annual salary of Rs. 6.50 Lacs & in tax bracket of 30%. I don’t have any other income. My queries are 1. Whether LTCG is applicable for project affected land? 2. If yes, what are the tax implications there on? 3. What are the remedies to minimize the taxes? 4. My uncle posses 5 acre land at same place as ancestral property. Will he be also required to pay LTCG tax? [bondre_vira@yahoo.in] Opinion: Rural Agricultural Land is not a capital assets & income arising from transfer of agricultural land is not at all chargeable to tax as Income from capital gain. Agricultural Land is considered as Rura...