FLATS FOR SLUM DWELLERS

Sanjeev Singh Bariana finds out that Chandigarh plans 17,000 rehabilitation apartments

In a major step towards erasing the dark spots of slums from the face of City Beautiful, Chandigarh Housing Board (CHB) has prepared a draft proposal for approximately 17,000 one-room apartments in Dhanas and Maloya villages.

Confirming the development, Mohanjeet Singh, the Chairman of the CHB, said: “The Administration has drafted a plan of acquiring 329 acres of land in the area. The Board has also worked out the specifications of the scheme implementation. The matter is, however, pending before the local court because of petitions filed by certain local residents.”

The Board officials are hopeful of the quick disposal of the petition and plan to commence development on the front of project implementation. The Board has also worked on an elaborate plan for housing the Economically Backward Sections in Sectors 38 (West) and 49.

Mohanjeet Singh said that there would be a provision of 1,120 flats in Sector 38 (West) and at least 1,024 flats in Sector 49. He has said till date between the period of 1980 and 2005, the Administration had given 16,661 houses to the economically backward sections in the UT. These housing localities are spread all over the city at Karsan, Dadu Majra, Sector 25, Mauli Jagran, Sector 56, Dhanas and Maloya, he added.

He also said that the Administration was working seriously for shifting the Kumhar Colony from its current location in Sector 25 to Sector 52. It is worth mentioning that according to the latest biometric survey, Chandigarh has 23,841 slum dwellers.

Tirlochan Singh, a resident of Sector 46, said: “The masterplan of the city had not planned for any place housing slum dwellers. At the same time, slums are an accepted part of the Indian life today and more so at a prosperous place like the city. It is unthinkable under the Constitution to stop the population inflow at places offering livelihood. The Administration efforts in rehabilitating the slum dwellers is appreciable.”

Jatinder Singh, a resident of Maloya, said: “The original inhabitants of the land were being pushed out of their land. All rehabilitation is being done for the outsiders and there is nothing concrete in return for the original inhabitants. It is also a well-known fact that a large number of the allottees in the flats leave their flats after they get the ownership for some quick money. There are also unspecified cases of more than one allocations managed by some parties”.

A senior official said there were certain loopholes in the policy implementation. However, the Administration was committed to regulate the entire slums structures in the city. Adequate arrangements were also being made about the required infrastructure to sustain the new habitation.

Residents feel that certain important housing projects in the city, particularly in the Southern belt were facing the problem because of the existing slums. Majority of the flats being constructed by the housing societies were nearing their completion near Colony V. The existing slums adjoining the housing societies are not merely eyesores, they also pose questions regarding cleanliness and other facilities for the population that shifts there.

Realtor-farmer tussle casts shadow on SEZs

Finance Ministry and Commerce Ministry at loggerheads, reports Manoj Kumar

With former Prime Minister V.P. Singh joining the farmers opposing acquisition of land by the UP government for the Reliance special economic zone (SEZ) in Dadri, large number of investors taking stakes in these mega projects are apprehensive about their future.

Although the government has already approved 150 SEZs across the country, yet a temporary moratorium has been put on them till at least 75 of them become operational. It is another matter that applications for another 200 SEZs are pending with the government.

In fact, apart from affected villagers, Finance Ministry has also opposed indiscriminate approval of these mega projects claiming that it would affect loss of revenue to the state exchequer worth Rs 90,000 crore by 2009-10.

The International Monetary Fund has also joined the ministry and central bank in warning New Delhi against the “perverse economic incentives” underlying the recent proliferation of tax-advantaged special economic zones.

Alerting the government to the loss of sorely needed tax revenues, Raghuram Rajan, the IMF’s chief economist, said tax holidays were simply encouraging companies to shift existing production to the new zones.

Meanwhile, builders investing in the SEZ say the government is already extending various tax concessions to the investors in infrastructure, so extending them to SEZs would only lead to boosting exports and creations of employment opportunities.

Says Amol Arora, Executive Director, EmGreen Projects Limited: “A tax break for SEZ developers makes no difference in the long run as after the initial holiday, SEZs will create a huge tax base. So, far from losing revenue for the exchequer, SEZs will provide a net tax gain in the future.”

Since companies within the zone get 15-year income tax holiday besides benefits like zero customs duty on inputs, service tax exemption, self-certification and single window clearances, he said, they would be able to create infrastructure at a fast pace at a competitive price.

JB Goel, Chairman Express Builders Ltd, opines: “India is lagging behind China due to higher taxation where SEZs are prevalent. To counter this scenario we need to have own SEZs to increase exports.”

However, critics point that over a million farmers will be displaced from their homes with the creation of these SEZs, and government is acquiring land forcibly at a much cheaper rate from them to benefit the big industrial houses.

“The farmers are being asked to surrender their age-old cultivated land by getting few lakhs per hectare, while the builders and government agencies are getting hundreds of crores by selling our land,” says a farmer leader, adding that even during British period farmers were not exploited so openly.

Writing in the IMF’s September issue of Finance & Development magazine, the chief economist, who is stepping down next year, says the companies would also inevitably shift all investment that would have taken place outside the zones into the new SEZs.

“Of course, the government says that only new investment will benefit, but who is to judge what new investment is? A poorly paid tax inspector?” says Rajan, economic counsellor and director of the IMF’s research department.

“If you create perverse economic incentives and then rely on bureaucrats to stand in the way of businesses exploiting them, the outcome will be little more, and a lot less revenue, but much richer bureaucrats,” he adds.

With a further 200 applications in the pipeline, the Finance Ministry has mounted a rearguard campaign against SEZs, claiming that they will cause a revenue loss to the government of Rs 900 billion ($19 billion) by 2009/2010.

Meanwhile, Commerce Minister Kamal Nath says long-term benefits derived from the SEZs will far outweigh the value of concessions and incentives.

The Commerce Ministry hopes the new SEZ legislation will provide entrepreneurs with incentives to develop business parks and industrial estates with world-class infrastructure, and attract $5 billion to $6 billion of investment by the end of 2007.

In the SEZ, say developers, they are creating infrastructure at a lower cost as goods required for development of infrastructure are provided without any duties.

Abdul Bari, Vice-President, marketing and business development adds: “The government should allow SEZs to flourish in our country simply because they promote exports and consequently boost our foreign currency reserves.”

Mega zones to come up in Haryana

Andhra Pradesh and Maharashtra lead the race in setting up the maximum number of Special Economic Zones, but the country’s biggest SEZs are coming up in Haryana.

The Board of Approval in the Commerce Ministry has so far given final clearances to 150 SEZs and in-principle nod to another 117 zones across the country.

While 27 SEZs have been given the final nod in Andhra Pradesh, Maharashtra is a close second with 26, followed by 20 in Tamil Nadu, 19 in Karnataka, 13 in Gujarat and 8 in Haryana, according to data compiled by the ministry.

States in the northern, eastern and north-eastern region are lagging far behind. In fact, there is no zone proposed in the seven north-eastern states of Assam, Nagaland, Mizoram, Meghayala, Manipur, Arunachal Pradesh and Tripura.

Other states that draw a blank in the list of SEZs given final approval include Orissa, Himachal Pradesh, Chhattisgarh, Sikkim, Bihar and Jammu and Kashmir.

In terms of in-principle approval, Haryana is at the top with 23 zones proposed. Maharashtra has 19 SEZs with in-principle nod, followed by 15 in Karnataka, 9 in Uttar Pradesh and 7 each in Gujarat, Punjab and Tamil Nadu.

However, in terms of area, Haryana has the country’s biggest zones proposed. Gujarat is also getting a large number of bigger-sized multi-product zones, followed by Maharashtra.

Reliance Industries’ 10,000 hectare SEZ at Jhajjar in the northern state, which has received in-principle approval, is so far the country’s biggest zone proposed. This is followed by real estate giant DLF’s proposed 8,097 SEZ, which also received in-principle nod, in the state.

Besides Reliance and DLF’s mega SEZs, Haryana is also home to the country’s third largest proposed SEZs.

DS Constructions has proposed a 5,000 hectare SEZ, while other real estate firms Unitech and Emmar MGF are also building two 4,000 hectare SEZs in the state.

Dubai-based realty giant Emmar, in association with local partner MGF, is in fact developing seven special economic zones in the state. DLF has proposed another 1,000 hectare SEZ and the Raheja group is setting up a 2,000 hectare SEZ in the state. All these zones have been given in-principle approval.

Most of the proposed SEZs in Andhra Pradesh are in information technology or pharma sectors. In fact, of the SEZs given final nod, the state has only two multi-product zones - the 4,134 hectare Kakinada SEZ and the 2,309 hectare APIIC SEZ. Two more SEZs bigger than 1,000 hectares are coming up in the state, as per the official data.

Maharashtra has only one multi-product SEZ with final clearance and eight more have been given in-principle nod by the Board of Approval.

In terms of area, Gujarat is also witnessing large-sized SEZs. — PTI

Investors rush towards Navi Mumbai
Green signal to SEZ, airport jacks up realty, says Shiv Kumar

It’s a veritable Gold Rush in Navi Mumbai with investors, speculators and eternal optimists rushing in to buy land.

With the Union Civil Aviation Ministry giving the green signal for a new airport measuring 3,000 acres in Mumbai’s satellite town last month — the only planned township in Western India — a boom looms round the corner.

“Land prices across Navi Mumbai have doubled in the past one year,” says Rajesh Doshi, a real estate agent in Vashi. Earlier this year, Mukesh Ambani announced plans for a SEZ measuring 38,000 acres complete with commercial and residential developments. The announcement of the long-awaited airport at Kharghar only adds to the bullish sentiment.

Hottest properties in Navi Mumbai include Panvel, the entry point into the township where the SEZ is to start, and Kharghar, where the airport is to be sited. Properties have nearly tripled and are slated to rise as the sharks move in.

The City Industrial Development Corporation, which owns most of the land in Navi Mumbai, is raking in the moolah selling land at Rs 70,000 per square metre now as against Rs 27,000 just a year ago.

“With the SEZ and airport, infrastructure in Navi Mumbai will improve in the next decade,” says a tax and financial consultant who is advising people to invest in the township.

Incidentally, land prices in areas adjoining Navi Mumbai are also rising. Hinjewadi, in Pune’s outskirts where a new IT city is coming up, will be just a 90 minute drive from the new airport — quicker than by road to Nariman Point in Mumbai. Pune’s development authorities are hoping to rake in the moolah when more land is acquired from farmers at Hinjewadi.

Real estate observers say Navi Mumbai’s boom time really came two years ago when Reliance Industries set up the Dhirubhai Ambani Knowledge Park at Koparkhairne in Navi Mumbai. The company also began to hoard residential properties in a big way to house its executives thereby causing a boom in the township.

The resulting boom has, however, hit the average buyer the most. “Prices in Navi Mumbai are as high as Mumbai now,” says Anahita Grover, a marketing consultant. According to her the lack of quality power supply is a major hindrance for Mumbaiites moving in.

Navi Mumbai was originally planned as a satellite city to decongest Mumbai. Located on the mainland (Mumbai comprises a small strip of seven islands connected by reclamation), Navi Mumbai offered huge amounts of land. Even after Navi Mumbai was connected through road and rail links across the sea to Mumbai, there were few takers for the new city till the end of the last century.

Navi Mumbai is divided into 14 nodes. To keep the momentum of this township going, Cidco (City & Industrial Development Corporation of Maharashtra Ltd) is wooing top class educational institutions like the Indian Institute of Management-Ahmedabad (IIM-A) and corporate houses.

HDFC moots $750 m scheme
R. Suryamurthy

As India emerges a hot spot for real estate investment, HDFC has come up with an international scheme to raise $750 million to be infused into the sector.

The HDFC International Real Estate Fund proposes to raise $720 million from international investors, banks, financial institutions, multilateral agencies and high net worth individuals across Europe, North America and Asia.

The balance $30 million would be raised domestically by the HDFC by subscribing to the units of the international scheme.

The international investors would be pooling their investment into a company incorporated in Mauritius — India Offshore Real Estate Investments — which, in turn, would invest in the units of the face value of Rs 1,000 each issued by the international scheme. The amount raised is proposed to be invested in HDFC’s International Real Estate Fund, which will then finance real estate projects with foreign participation.

The Cabinet Committee on Economic Affairs has approved Indian Offshore Real Estate Investments (IOREI) to invest up to $720 million in the units issued by HDFC International Real Estate Fund.

The HDFC Property Fund would invest through HDFC International Real Estate Fund in Indian companies. All these approvals would result in the country receiving Rs 3,240 crore of FDI.

Buzz on Bourses
Grasim’s acquisition

Mumbai: Grasim Industries, an Aditya Birla Group company, has acquired 50,000 equity shares of Rs 10 each, equivalent to 100 per cent of the paid up capital, of Harish Cement at Mandi in Himachal Pradesh at Rs 20 per share. With this, Harish Cement has become the wholly owned subsidiary of Grasim Industries, the Company said in a notice to the BSE. — UNI

Aerens Europark

New Delhi: Evershine Buildwell Pvt.Ltd., part of Aerens Group and Wianxx Impex Pvt. Ltd has launched a real estate venture, Aerens Europark, claimed to be India’s largest multiplex hotel-hyper-leisure-retail destination, spread over 7,50,000 sq ft, at an estimated investment of Rs 200 crore. Located on the Delhi-Ghaziabad section of NH24, this one-stop entertainment destination will have a hypermarket, hotel, food court and multiplex. — TNS

Citigroup pact

New Delhi: Gera Developments and Citigroup Property Investors have entered into a joint venture to develop an exclusive and unique project in Pune. This tie-up has taken place through the FDI route. The total value of the project will be about $125 million (Rs 550 crore). The development is of over two million square feet consisting of 600 unique, premium and high-end apartments, a Country Club and a hotel. — TNS

TAX tips
Relinquishing share in property is transfer
By S.C. Vasudeva

Q. When does the transfer in relation to a capital asset takes place? If I relinquish my share in a property will it amount to a transfer?

— Jatinder Singh, Malout

A. According to Section 2(47) of the Income-tax Act, 1961, (the Act) the word “transfer” in relation to a capital asset includes:

“(i) The sale, exchange or relinquishment of the asset; or

(ii) The extinguishment of any rights therein; or

(iii) The compulsory acquisition thereof under any law; or

(iv) In a case where the asset is converted by the owner thereof into, or is treated by him as, stock-in-trade of a business carried on by him, such conversion or treatment; or

(iva) The maturity or redemption of a zero coupon bond; or

(v) Any transaction involving the allowing of the possession of any immovable property to be taken or retained in part performance of a contract of the nature referred to in section 53A of the Transfer of Property Act, 1882 (4 of 1882); or

(vi) Any transaction (whether by way of becoming a member of, or acquiring shares in, a co-operative society, company or other association of persons or by way of any agreement or any arrangement or in any other manner whatsoever) which has the effect of transferring, or enabling the enjoyment of, any immovable property.

Explanation - for the purposes of sub-clauses (v) and (vi), “immovable property” shall have the same meaning as in Clause (d) of Section 269UA.”

As would be observed from the definition the word “relinquishment” is covered within the first limb of the above definition. The relinquishment takes place when the owner withdraws himself from the property and abandons his rights thereto which is nothing but a transfer as per the above definition. Accordingly, if you relinquish your share in the property, it will be termed as a transfer.

Registry and GPA

Q. During May 1989, I purchased a plot for Rs 20,000 through my father from my own saving of 15 years but the deed was registered in the name of my father (due to communication gap between the stamp vendor/deed writer and father the papers were purchased in the name of father). A General Power of Attorney (GPA) was given to me by my father, which is duly registered with the revenue authorities. It has been informed that in the event of death of any one, the GPA becomes null and void. If so, my questions are:

a) Should we get a new deed registered in my name for which an expenditure of Rs.35,000 has to be incurred cost of stamp paper.

b) A gift deed from father should be obtained and got registered.

c) A gift deed in the name of my son/daughter by me be got registered. Will this gift deed be valid for the purpose of selling in future in the event of death of any one (of GPA)

d) What is the appropriate procedure to avoid complications at the later stage?

— Nirmal Rani, Karnal

A. It would be better if a gift deed is registered in your and your children’s favour to prevent any complication at a later stage. Such gift deed, once registered, will give the rights of ownership over the plot to the person in whose favour the gift deed has been executed. Once the gift deed is executed, the GPA as executed by your father in your favour in respect of plot in question would become redundant. This is because the property in respect of which General Power of Attorney was executed does not remain in the name of your father.

Capital gain

Q. I purchased a plot in November 2001 and sold the same in June 2006. The details of payments made by me are as under:

1. July 2001 Rs 1,53,000

2. May 2002 Rs 1,30,000

3. August 2002 Rs 3,59,484

4. Total (1+2+3) Rs 6,42,484

(inclusive of interest)

5. Stamp Papers fee Rs 60,480

6. Registration fee Rs 7,900

7. Total (4+5+6) Rs 7,10,864

8. Sold in June 2006 Rs 9 lakh

9. Taken possession of the plot on March 15, 2002

— Mohinder Kaur, Kapurthala

A. The instalments paid by you with the indexed on the basis of the indexed for the year 2006-07. However, the Cost Inflation Index for 2006-07 is yet to be announced. Presuming the index for 2006-07 as 500, the computation of capital gain in your case would work out as under:

Sale Consideration Rs 9 lakh

Less: Indexed Cost of Acquisition (a) 1,53,000 x 500/426 Rs 1,79,578

(b) 1,3000 x 500/447 Rs 1,45,414

(c) 3,59,484 x 500/447 Rs 4,02,107

(d) 60,480+7,900 x 500/447 Rs 76,488

Total 8,03,587

Long term Capital Gain Rs 96,413

Tax thereon, including education cess Rs 19,669

It is presumed that the registration of the property was done after the full payment was made in August 2002.

The capital gains tax can be saved in case you invest the capital gain in the purchase of a residential house within a period of two years of the date of transfer of the plot or construct a residential house within three years from the date of transfer. You can also save the capital gains tax by investing the capital gain in the capital gains tax saving bonds issued by National Highways Authority of India or Rural Electrification Corporation Limited

Ground rent

Q. I had acquired a residential plot on leasehold basis from a housing development authority. The residential plot was acquired about 10 years ago and I have been paying ground rent to the authority concerned but have not been able to construct a residential house thereon. The residential plot has a commercial value. I, therefore, intend selling the same. Can the ground rent paid for the period of 10 year, which is a considerable amount, be considered as part of the cost of acquisition?

— Raghubir Singh, Nawanshahr

A. The ground rent is payable for the use of the land and therefore cannot be said to be an expenditure incurred for the acquisition of a capital asset. It cannot, therefore, be included in computing the actual cost of the plot owned by you. This view is also confirmed by an old Delhi High Court decision reported in 92 ITR 9.

Compensation for land

Q. I own an agricultural land of about 5 acres, which is situated in an urban area but is being used by my parents for agricultural purposes for the last number of years. The said agricultural land is being acquired by the Government by way of compulsory acquisition. I understand that there is some provision whereby such compensation would not be taxable to capital gains tax. Please let me know the correct legal position in this regard.

— Daljeet Singh, Phagwara

A. Section 10(37) of the Act provides that in case the following conditions are satisfied the capital gain on the compulsory acquisition of an urban agricultural land would not be exigible to capital gains tax.

1. The assessee is an individual or a Hindu undivided family.

2. He or it owns agriculture land situated in urban area.

3. There is transfer of the agricultural land by way of compulsory acquisition under any law or the consideration for transfer is approved or determined by the Central Government or Reserve Bank of India.

4. The agricultural land was used by the assessee (and/or his parents if the land was owned by an individual) for agricultural purposes during two years immediately preceding the date of transfer.

5 The asset maybe long-term capital asset or short-term capital asset.

6. Capital gain arises from the compensation or consideration, which is received by the assessee on or after April 1, 2004.

If the above conditions are satisfied, the capital gains (whether long term or short term) earned on account of the compulsory acquisition would be exempt from tax from the assessment year 2005-06 onwards. In case you satisfy the above conditions you can claim the exemption under the aforesaid section.

India the next big thing for Israeli realty firms

Gradient to dictate construction
There is a proposal to regulate structures on steep Himachal slopes, reports Rakesh Lohumi

Reckless urbanisation has in recent years played havoc with the hillscape. Blind race for owning property has led to the over-development in and around most of the towns and huge buildings have sprung up even on steep slopes. These structures are not only susceptible to geo-hazards, like earthquakes and landslips, but also lack requisite infrastructure like proper approach roads, ventilation and parking. The state capital and its periphery have been worst affected by the unregulated construction.

As per the Nelson’s Slope Density Provisions, no construction should be allowed on slopes of more than 40 degrees. However, in Dhalli, Sanjauli, Katchhighati and cemetery localities of the state capital huge multi-storied structures have been constructed on slopes of more than 70 degree. With a average of 4 to 4.5 storeys as much as 70 to 85 per cent of the area has been covered. The situation is no better in Bharari, Jeewanu colony, Chakkar, Tutu, Puabo and Central Shimla where the floor area ratio (FAR) has not been maintained. This ill-conceived structure could become a virtual death trap in the eventuality of natural calamities like earthquake and landslides. Major mishaps can occur as collapse of buildings could set off a chain effect bringing down all constructions on a slope.

Belatedly though, the Town and Country Planning Department has come out with a proposal to regulate constructions on steep slopes. On the basis of the Nelson’ s Slope Density Provisions and the recommendations made by the disaster management division of the Union Home Ministry it has proposed that on slopes up to 15 degrees only a maximum of three storeys plus attic be allowed. Similarly, only 2 storeys plus attic be permitted on slopes ranging from 16 to 30 degrees and a single storey plus attic on slopes in the 31 to 45 degree range.

Under these restrictions, a house builder will be able to get full plinth area at ground floor on slope up to 15 degree and hill cutting of only 2.90 metre will be involved in minimum-sized plot of 150 sqm having depth up to 15 metre. In case of slopes up to 30 degree with one basement full coverage will be achieved at second storey by 6 metres cutting on the hill in two levels.

For slope up to 45 degree, there will be construction on only 26 per cent of the plot area at basement. Full permissible coverage will be achieved at the second storey with a hill cut of 5.50 metre in two levels on plots having depth up to 10 m.

The department wants that as far as possible construction activities be discouraged on slopes of more than 30 degrees. No sub-division or transaction of land for construction purposes shall be allowed. However, the original owners of plots and their heirs be permitted to construct up to two storeys on such slopes, provided they have no other option available. The provision, it maintains, will go a long way in preservation of the natural slopes and enhance the green cover.

Once approved, in principle, as part of the development plan for Shimla, the new norms will be implemented in all planning areas of the state subsequently.

Haryana engages Wapcos
Vishal Joshi

In the first major plan ever since Independence, the state government has hired a private city development plan (CDP) consultant to give a better look to the old townships of the district and prepare outlines of the required modern day civic amenities.

The ambitious Urban Infrastructure Development Scheme for Small and Medium Towns (UIDSSMT), under the aegis of Union Ministry of Urban Development, the private agency would identify the possibilities of providing updated infrastructure according to the present day population of Karnal, Gharaunda, Asandh, Taraori, Indri and Nilokheri towns.

According to the ADC, Mr R. S. Kharab, Wapcos, a Gurgaon based urban consultant firm, would prepare the city development plans of the six townships.

Wapcos, Water and Power Consultancy Services, is a mini-ratna international consultancy firm in the field of water and power sectors.

He said the company had been asked to look at the possibilities of providing road, sewer and rainwater disposal, electricity poles transformers etc.

The ADC informed that the agency would be paid a sum of Rs 29.96 lakh within a stipulated time of September 29 for Karnal and October 16 for rest of the five townships.

He said that of the total amount the Centre would pay 80 per cent whereas the state government and local bodies concerned would share 10 per cent each.