Property bought with gifted money not benami

SC vasudeva

• As per rules, the PPF account continues to earn interest after the death of the depositor till the final payment. How this interest income is to be shown in the income-tax return by the nominee/legal heir till the closure of the account?
• How to show the gifted amount in the income-tax return by the donee and donor in their respective returns? 
• Two persons have a joint residential house property in the ratio of 4/5 and 1/5. If any of them buys a plot, will he be considered owner of the two properties and whether any income-tax is due to him and if that is so, is it mandatory to show them in the return?
• If any person buys property with the gifted amount from a close relative, will it be benami property? — Sohan Lal Arora

• The nominee or legal heir is not required to show the interest income earned in PPF account till such time the original depositor is alive as such exempt interest income is required to be shown by an assessee depositor himself.
• There is no column in the income-tax return to reflect the amount of gift received by a donee. Similarly, there is no column in the income-tax return to reflect the amount gifted by a donor.
• In case the land is owned in the ratio of 4/5 and 1/5, the presumption is that the building has also been constructed by the joint owners in the same ratio.  However, this presumption can be rebutted by providing the evidence that the building has been constructed by either of them with his own resources and one of the joint owners has permitted the other co-owner to construct the house on the jointly owned plot of land.
• A property bought with a gifted amount cannot be treated as a benami property provided the gift is irrevocable and the property is not held for the immediate or future benefit, direct or indirect, of the person who has provided the consideration.

If Senior Citizen Saving Scheme of Post Office is extended for 3 years after the expiry of 5 years, will it earn benefit under Section 80C in the year of extension.  Suppose my Senior Citizen Saving Scheme matures in September 2017 and I get it renewed (which is done for 3 years by PO), can I claim benefit under Section 80C in 2017-18. — PL Garg

Section 80C of the Act provides that in computing the total income of an assessee, being an individual or Hindu Undivided Family, there shall be deducted in accordance with and subject to the provisions of the section, the whole of the amount paid or deposited to the extent of Rs 1,50,000 in various schemes or for purposes specified in the said section. It seems you have already claimed deduction to the allowable extent as and when the amount was deposited for the first time. However, the renewal of the deposit already made would not be covered within the term ‘Deposit’ defined by Senior Citizen Scheme Rules 2004. The term ‘Deposit’ in accordance with the above scheme means the money deposited in an account under the provisions of the Rule. A plain reading of the definition of the term “Deposit” does not seem to cover the renewal of the deposit already made. It would not be covered as a fresh deposit and therefore may not entitle you to claim the deduction under Section 80C of the Act.