CA. Naresh Jakhotia

TAX TALK-30.05.2011-THE HITAVADA TAX TALK BY CA. NARESH JAKHOTIA (Chartered Accountant) “MCX/ NCDEX PROFIT: WHETHER SPECULATIVE PROFIT?” Query 1] 1) I want to know whether the deduction of interest on HBA for self occupied house is admissible when the house is in the sole name of the wife and the bank has given HBA loan to the husband, EMI is being paid by the husband from his salary bank account and the husband wants to claim the deduction u/s 24 for self occupied house. In other words if the self occupied house is not in the name of the assessee, whether deduction u/s 24 can be claimed for such property as self occupied? 2) With reference to your reply to Query No. 3 in the Hitavada Money Dt.18.04.11, you are requested to reconsider the reply with reference to the case O.P. Sharma Vs ITO [1986] 17 ITD 45 in which it is mentioned that the interest portion on non- refundable withdrawal is allowed on the portion of loan [Dubaldhaniya@gmail.com] Opinion: - 1. Ownership is a condition pre...

TAX TALK BY CA. NARESH JAKHOTIA (Chartered Accountant) “NO TDS DONE ON CAPITAL EXPENDITURE: WHETHER PROPORTIONATE DEPRECIATION IS DISALLOWABLE?” Query 1] Sir, I along with my brother purchased plot at Nagpur; But, due to some financial complications it is registered in brother’s name only. Now I wish to take its half portion back by way of Gift. What will be Tax implications to both of us? We both are in 30% slab of IT. [kshirish1968@rediffmail.com] Opinion: Gift between the “Relatives” inter se is not at all taxable, neither in the hands of the donor nor in the hands of Donee. The definition of Relatives, for the purpose, includes Brother, Sister , Mother, Father etc. Query 2] Sir, our factory construction work was in completed in the Financial year 2008-09 & the commercial production commenced from February-2009. Certain payment were done without TDS to the contractors engaged for Sheds works, Ducting works etc. The expenses were debited to the concerned capital assets & not ...

TAX TALK BY CA. NARESH JAKHOTIA (Chartered Accountant) “ISSUE OF SHARES BELOW THE FAIR MARKET VALUE: INVESTOR LIABLE TO PAY INCOME TAX” In the last issue of Tax Talk dated 09.05.2011, we have elaborated the provision of section 56(2) (vii). It was opined therein that “Issue of shares below the fair market value would be taxable as income from other source”. In response to our opinion, we have received few feedbacks doubting the taxability of difference between the Issue Price and Fair Market Value as Income. We are very happy to see the feedback & divergent views given by the active readers of our column. We appreciate the comment provided by our vigorous Readers. The three main divergent views expresses in the feedback were: 1. Section 17 (2) of Income tax governs taxation of shares allotted or transferred to the employee by the employer or former employer, free of cost or at a concessional rate. It is taxed by an express & clear provision as perquisite whereas nothing specifi...

TAX TALK BY CA. NARESH JAKHOTIA (Chartered Accountant) “ISSUE OF SHARES BELOW THE FAIR MARKET VALUE: INVESTOR LIABLE TO PAY INCOME TAX” Query 1] If a private limited company mobilizes the equity from private investor by issuing shares at par, Is there any provision to tax the difference between the book value & at par price as tax in the hands of investor? If this is so, how the private limited company would be able to mobilize the amount? In such case, why the investor would be required to pay tax without any actual income in his hands? Is it applicable for right issue also? [KDPL] Query 2] Kindly advise us on the following: ABC Pvt. Ltd. plans to issue: 1. Bonus shares in the ratio 1:1 2. Issue of new shares at Rs. 20/- per share a] Employees b] Non-employees or former employees. The fair value of each share is Rs. 40/- per shares. The question is - Whether the receiving shareholders are liable to tax as they are getting shares free/ below the fair price? [berarfinance@yahoo.com]...

TAX TALK BY CA. NARESH JAKHOTIA (Chartered Accountant) "LTCG: PAYING TAX MAY BE BETTER THAN SAVING TAX” Query 1] I am a Retired defense officer (64 years) & would request your valuable advice. I bought a flat for about Rs. 4 Lacs and took the possession in the year 1994. I put my son's name as joint owner when the sale deed was registered. He was a minor then & was aged about 18 years or so. I sold the same on 11th November 2010 and the full payment was made to me in my name. After indexing, the net long term capital gain comes to about Rs. 15 Lacs. My queries are: 1. Can I show 25% of the sale price in my son's name & Balance 75% will remain in my name? (My son is 34 years old now). 2. Is it better to pay the capital gains off and freely invest the remaining amount or better to put the Capital Gains amount into the Capital gain bonds of NHAI/REC etc? Which option is better? I am an IT payee in the highest tax bracket. 3. I don't want to invest into another...