Private colonisers ignore quake threat

File photos: Manoj MahajanDespite Chandigarh and its surrounding areas falling in a seismic zone, builders are not adhering to the safety guidelines of the National Building Code 2005, says
Rajmeet Singh

Private colonisers on the periphery of Chandigarh are blatantly ignoring warning by experts that the seismic activity in the Chandigarh region - falling under seismic zone IV - has already entered its ‘return phase’ and an earthquake could strike anytime.

The guidelines of the National Building Code 2005 and implementation of the UNDP disaster risk management, supported by the Ministry of Home Affairs, are best being implemented on papers, lament experts dealing in designing of seismically-safe buildings. There is also a government agency working to enforce the guidelines on ground.

Hundreds of high-rise buildings (as high as 45 metres) are being constructed in peripheral towns like Zirakpur, Dera Bassi, Kharar and Mohali. “We have made amendments in the buildings bylaws and the builders have to get certification from an architect,” said an official in Punjab Town and Country Planning Department.

Architects are adding features like swimming pool at the rooftop, parking at the ground floor, large windows and not enough space on all sides of high-rise buildings. “These additions make building unsafe. None of the architects or civil engineers has been trained to design structurally safe buildings strictly within the ambit of the National Building Code. Efforts are being made to train architects through various courses now,” said Mr Jeet Kumar Gupta, a retired Senior Town Planner (STP) with the Punjab Town and Country Planning Department.

“There is an urgent need for a curriculum on designing earthquake-safe buildings. The architects and town planners should come forward to train themselves in designing buildings, which are structurally safe. It is the sole duty of the professionals to guide their clients about the designs to be incorporated in designing quake-safe buildings. The local civic bodies should register such professionals who provide the right kind of services to the clients.” CVR Murthy, Professor, Civil Engineering, IIT, Kanpur

It may be mentioned that experts from the IIT Kanpur have pointed out that the city and its neighbouring towns of Mohali and Panchkula were within few kilometres of the fault lines passing in the lower Shivaliks. Some of the fault lines pass beneath an inhabited area in Pinjore. Architects and civil engineers, who designed and constructed the buildings, had no formal training in the subject. While designing buildings in Chandigarh, Mohali and Panchkula no attention was paid to make these resistant to earthquakes.

Due to this reason, the buildings, especially the high-rise buildings should adhere to the building code. A number of towns of Punjab also fall in the seismic Zone - 4, which, is considered to be facing highest danger of earthquakes in India after the Zone-5, comprising certain areas of the Himalayas.

The past record of seismic activity of the region indicates that an earthquake strikes after a gap of 500 years. As many as 600 years have already passed since the last major seismic activity.

Putting lot of steel alone does not make a building safe. Certain compromises have been made about the safe designs for the sake of aesthetics, feel experts. Though seismically-safe buildings are in vogue in the region after increased awareness about vulnerability of the area to deadly quakes during the past about four years, but when it comes to designing a building a number of compromises are made.

It is high time that the respective state governments sit together and implement the UNDP disaster risk management programme. Under the programme, the state governments have to conduct a study of the earthquake-resistance capability of the important buildings and conduct drills of the disaster management plans.

Experts, who have been monitoring the seismic activity in the region, say there is an urgent need to upgrade the capabilities of the professionals through continuing education. The Indian Institute of Architects (IIA) has been playing a key role in the implementation of the disaster risk management programme.

Under the disaster risk management programme, the state governments have been asked to identify the buildings, including heritage monuments, which could be damaged due to an earthquake. Under the seismic zoning, the shapes of buildings and structural designs had been well defined but ignorance among the professionals delayed the implementation of the specifications. The level of ignorance on “behaviour” of buildings during an earthquake was high among the professionals. According to new zoning, there are Zones II, III, IV and V. The last zone, V, is most prone to calamity and the unsafe zone.



Rate hike to prick housing bubble, says RBI

Ahead of its quarterly policy review, the Reserve Bank has expressed doubts on the efficacy of “pre-emptive” raising of interest rates to prick a housing bubble.

“...There is a need to carefully evaluate consequences of monetary policy actions, specially when the housing market is seized by price bubbles. Raising interest rates more than what is required for overall price stability purposes may prove to be counterproductive,” the RBI said in “Occasional Papers.”

Such a policy could also be potentially damaging for other sectors in the economy, the central bank said in a chapter on “Identifying Asset Price Bubbles in the Housing Market in India-Preliminary Evidence.”

The papers have been issued at a time when several commercial banks have expressed the view that there should not be any further hike in short-term rates to contain inflation, which has crossed five per cent mark.

The bankers argue that with oil prices falling and seasonal factors tapering off, the Reserve Bank should not hike rates as it may impede high-growth momentum.

The RBI study said direct measures taken for demand compression may be less worthwhile than sectoral measures such as withdrawing or reducing regulatory accommodation.

As a pre-emptive measure, the RBI, in its annual policy statement for the current fiscal, had increased general provisioning for residential housing beyond Rs 20 lakh and commercial real estate from 0.40 per cent to 1 per cent.

The banks will now have to set aside Re 1 for every Rs 100 loan given for the housing sector beyond Rs 20 lakh against the earlier requirement of 40 paise.

The risk weight on bank exposure to commercial real estate had also been increased from 125 per cent to 150 per cent.

The study sounded a word of caution on the dangers of building up of systemic credit risk and the instability of the financial system as a whole from the rising level of loans taken by families in India for housing and other retail finances.

The study said concerns regarding the sustainability of increasing growth in housing and other retail financing by financial institutions now appear to be arising given the increasing load of household debt.

Though India has not so far experienced the pangs caused by bursting of bubbles in the housing sector, the need to take pre-emptive policy actions can hardly be overemphasised in the light of the experience in other countries, the RBI said.

“As part of calibrated policy response, the Reserve Bank has been gradually nudging financial institutions to exercise due diligence in the assessment of credit risks for exposures in the housing sector, while increasing the regulatory risk weights/provisioning for housing and real estate loans,” the study said.

The papers said the extent of speculation in the housing market is subdued and is primarily supported by lower interest rates and easy availability of credit.

On international scenario, the central bank said the strong upsurge in the housing market in the US is a source of concern, especially for the global financial market. — PTI



Malls with a new dimension
Geetu Vaid

With the popularity graph of malls and multiplexes soaring northwards in Punjab several new projects have been lined up by different companies. However, the stress now seems to be on futuristic theme-based malls so that the footfalls do not ring hollow at the cash counters. The Punjabi jet set is going to be wooed by mega brands through these mega-buck projects with the developers claiming to add a new dimension to the shopping and entertainment profiles in ‘sada Punjab’.

Mr Anuj Malhan, director, M/s Spirit Global Constructions Pvt Ltd, the company that last month announced a Rs 2000-crore project of building 60 malls and multiplexes in Punjab, is keen to bring theme-based malls as “this is the most effective way of beating competition,” he says. “We plan to change the themes every four to five months to keep up the uniqueness and customer interest,” he adds while disclosing that one project in Ludhiana would be based on a European city theme while the other one will have a 5-star hotel in it. All these 60 malls will be anchored by Pyramid, the largest theatre chain in the country.

The cities selected in the first phase of development include Ludhiana, Kapurthala, Muktsar, Patiala, Nawanshahr, Moga, Zirakpur, Hoshiarpur, Bathinda, Amritsar, Ropar, Mansa, Jalandhar, Ferozepore, Sangrur, Gurdaspur and Faridkot.

“Customer profile of each of these cities has been a major factor in the conceptualisation and designing of these malls,” said Mr Malhan.

The company has already launched its project, Global Mall, located on the Ludhiana-Jalandhar bypass. “This will be the first mall and multiplex to be situated on this stretch,” said Mr Malhan. The mall will have a hyper market, anchor store, 4-screen multiplex, night club on the rooftop along with shops, restaurants etc spread over an area of 2,30,000 sq ft and is expected to be completed by early 2008.

The company’s another mall and multiplex project on Ferozepore Road, Ludhiana, having a total built up area of over 7,50,000 sq ft, is expected to commence by December 2006. All 60 malls are proposed to be completed by 2010.

Making shopping affordable and exciting for everyone at these malls is the major USP of Malhan’s project.

On the other hand exclusivity is what another project in Ludhiana has to offer. “The malls have to do positioning and cater to niche segments in order to create footfalls and convert footfalls into revenues,” says Mr Ajay Nayar, director, FMI Developments. And this is the cornerstone of his Rs 100-crore project, Silver Arc, which is coming up on Ferozepore Road, Ludhiana. Set to be operational by end of 2007, this has brought the 100 per cent zoned mall concept to the industrial hub of Punjab, he tells, adding that each floor will have a special purpose.

The mall, designed by renowned architect Sanjay Puri from Mumbai, lays “special emphasis on positioning, visibility and circulation by providing a large atrium, and placing the department store at the back of the mall and the cinemas on top.”

PVR has planned a top-of-the-line six-screen multiplex for this development, which will include upmarket ‘Gold Class’. Pantaloon will be situated on three floors over an area of 40,000 sq feet.

Giving details Mr Nayar said, “The total development of over 3,00,000 sq feet will have an optimum mix of national and international shopping, food leisure and entertainment. International and national brands like Tommy Hilfiger, Calvin Klein and Fcuk will be brought to Ludhiana for the first time and other brands like Nike, Pizza Hut, Costa Coffee, Woodland, Archies, Sensa, Lilliput, Lee Cooper, too, are going to set exclusive retail outlets in the mall. One floor will be completely dedicated to the top designers of the country, including Suneet Verma, Tarun Tahiliani, Kimaya, Rana Gill, Renu Tandon and Ashima-Leena, to name a few.”

It has placed international brands taken Tommy Hilfiger, Calvin Klein, Fcuk, and French Connection on the ground floor while top Indian designers mentioned above would be on the second floor.

Multi-level parking for 500 cars is going to take care of the parking concerns of those visiting the malls.



Netting a house through the Net
Vibha Sharma

In real estate the only factors that really matter are location, location and location, claim experts. After all, it is the location of a particular property, which decides its price, premium, buy-ability, future potential and saleability.

To be able to understand the location of a property vis-à-vis other facilities and infrastructure in the vicinity requires a lot of legwork, as well as effort. You want to buy a house or rent it, but the catch is to be able to locate the right one. In the process you spend hours looking for your dream house in your dream location, the one that will suit your budget as well as also has a school, a market place, a hospital, ATMs, restaurants, movie theatres and medical help close by. Which means that one Sunday, which you have somehow managed from your hectic schedule, may just not be enough to be able to do so.

But now there is help at hand in the shape of this web and mobile combine data with maps. The facility will not only help you understand the location of the property which you want to rent or invest but also the best way to reach it.

This facility of surfing the net and zeroing on the location with the help of this website,, is available at the ultra-zero level for Delhi and the NCR region. As many as 163 cities in the country, including Chandigarh, have been marked with 75 per cent detailing, that is the street-level. And the company responsible for this first-time effort in India, CE Info Systems (P) Ltd., is in the process of uploading the information to make the detailing in other cities 100 per cent as well. Besides this, five lakh villages have also been marked and 1.7 million km of road length loaded on this effort, the map and data creation of which took close to 12 years.

" is India's only map enabled location based portal with map and locational data of over 160 cities across India and across 5,00,000 villages. We hope to be able to add more and more cities on our map, " Managing Director of CE Info Systems, founder of, Rakesh Verma, says.

This website is also designed to throw up the area around the house, you have seen showcased on the real estate portal or what your real estate agent has suggested, right on to your computer screen. It will also allow you to evaluate distances of provided services with the ease of navigating this information and doing an evaluation without having to step out of your home.

Verma, says, "Forget point A to point B, Internet-powered maps are moving from simple driving directions to richly layered landscapes of living information. Today the question that seems to face real estate sites, practitioners and the general public is how much impact Geographic Information Systems (GIS) will have on real estate and other closely related sectors."

He says that GIS has many applications in the real estate industry - an industry inherently spatial in nature - enabling real estate professionals and buyers of real estate both inter-city and intra-city to measure the true impact of location. This will help make appropriate judgments in many areas, including appraisal and market analysis, leading to greater accuracy and timeliness of relevant information.

Drawing a parallel with other interactive map portals like in the US and now Google Maps, Yahoo Maps, MSN Maps, CE Info Systems launched MapmyIndia in 2004. "Maps enable extensive information and market analysis of the surroundings," Verma says, adding "you can actually see the real world as you understand it."

The website provides the real estate industry the power of locational view through its zoomable maps." For example if I am looking for information regarding Sector 17 in Chandigarh all I have to do is search for it on MapmyIndia. Thereafter, you can search for ATMs, hotels, restaurants, hospitals etc around the place," he says.

Similarly, if you are considering buying a property or renting it, the decision process can be expected to become faster and less time consuming if you have all relevant and usable information at your fingertips at the click of a button. Apart from understanding the area around the place you are interested in and its functionalities, the site also allows you to calculate the textual driving directions with exact number of kilometres mentioned both inter-city and intra-city.

"This facility will also enable you to know the exact driving distance and driving route between your place of work and home. It also allows for providing e-location, a way of letting your friends and relatives know where you are located and how to reach you with last-mile directions to your home in the maze of nameless roads and tiny 'galis'," he adds.



A bathroom is a room too

Bathrooms are getting a lion’s share of the housing budget, with accessories like bathtubs costing as much as Rs 6 lakh, says Sheveta Pathak

As emphasis on interiors continues to grow, bathrooms too have not been left behind. The result is not only increased detailing but also higher expenditure on bathroom 'essentials and accessories' like bathtubs.

A global company offering bathroom products recently launched a bathtub costing Rs 5.95 lakh. The company expects tremendous response from this region and has reportedly sold off quite a few such tubs in this region.

The 'sok with chromatherapy', is 75-inch long having a 34.5-inch deep basin and comes with a 1.5-horsepower pump with a 4-kilowatt in-line heater, which powers the whirlpool system. The bath is made of acrylic and fiberglass with reinforced plastic for durability and easy cleaning. The ultra-deep reservoir of the sok effervescent bath allows two bathers to completely immerse themselves in the water as champagne-like bubbles emerge from 13 ports, aiming at soothing bathing experience.

A company spokesperson said sheet of bath water continuously spills over the tub's rim into a water channel and is re-circulated back into the tub, conserving water. Different colours in new sôk bath subtly change the ambience and mood enhancing colour therapy adds whole new sensory dimension to every immersion.

The product features eight hues that are sequentially transmitted via four LED light ports positioned within the inner walls of the bath. A simple touch of the button starts the colour sequence. The progression starts with neutral white and goes onto relaxing purple, indigo and aqua blue followed by green providing the balance and ultimately the stimulation of yellow, orange and red. Each colour is displayed approximately eight seconds and washes over the bather in a faded hue, turning solid, and exiting again as a faded hue, giving way to the next colour, the company said.



Vipul Infrastructure to invest Rs 5,000-6,000 crore

New Delhi-based Vipul Infrastructure Developers Ltd, which had developed Global Business Park and Millennium Plaza (in partnership with Unitech) in Gurgaon, will invest Rs 5,000-6,000 crores in real estate projects in various states, in the next 3-4 years.

The company has multiple projects under various stages of development in Gurgaon, Faridabad, Ludhiana, Maharashtra and Hyderabad, which call for investments to the tune of more than Rs 5,000 to Rs 6,000 crore in next three to four years.

Among all projects, the biggest is 150-acre Vipul World, an integrated township on Sohna Road, Gurgaon, where it has developed a Tech Square for IT company Dell.

“We have already started work on this project with an initial investment of Rs 450 crore ,” company’s Senior G Mr (Sales and Marketing) Brijesh Bhanote said.

The company also has integrated townships in Ludhiana (120 acre), Faridabad (115 acre) and Hyderabad (400 acre).

Work on the township in Ludhiana will begin only after January 2007, when the company expects to obtain the layout approval, whereas the Faridabad project is set to complete by December this year. A Rs 175-crore hotel-cum-mall is under construction in Amritsar which, Mr Bhanote said, the company had planned keeping in mind the huge demand for hotel rooms by tourists.

Also, the company has received an in-principle approval from Haryana Government to build a 150-acre ITeS SEZ in Gurgaon and is looking for suitable land near Sohna Road. — UNI



Courting harmony with Vaastu
Raghbir S Gill

Design techniques have undergone rapid transition due to the belief that the commercial age requires a different architecture from that of Vedic era. The mass housing compulsions in cities and towns of the present day human settlements in the shape of complexes, blocks and skyscrapers, have resulted in man losing his individuality and identity in the rapidly spreading concrete jungles. Vaastu becomes more than relevant in the present social scenario to strengthen the immunity of the mind so as face the evils of the materialistic age by balancing the five elements according to their proportion.

Though Vaastu, cannot change our destiny but it certainly can change the course of the destiny and put one in a better position. It is a science of balancing various energy fields of five elements through specific directions. The proper proportions of these elements in a structure keep the inmates healthy and their mind in perfect harmony. This enables them to think better and take right decisions at the right times with a balanced mind and to get over problems and live in peace and happiness in a dwelling that is in harmony with nature.

The invisible magnetic energy currents in the environment surround us. These waves have a positive effect on our mind and body. Therefore we should make sure that the places where we live and work are properly tuned to avoid failures, frustrations, financial losses, sickness and mishaps in our lives.

The mind is the most active and creative organ of our body. It needs regular charging from the continuous flow of invisible flow of energy currents for its healthy and positive performance. In case the natural flow of various energies is blocked at our place of residence or work, it will fail to revitalise us. As result our mind, the central force becomes sick and dull. One takes right decisions at wrong times or wrong decisions at right times, in both the cases it results in failures. Therefore, it is very important to know if these invisible forces are flowing in a proper proportion to give us positive results or are blocked and distorted causing mental anguish, financial losses, confusion, frustration, failures and mishaps in our lives.

A casual observation of a structure will reveal the effects of these forces on the human beings residing or working therein. This will clearly indicate that various energy fields, represented by the five elements, surround us. On an open ground these energy fields operate freely in an equilibrium and harmony. This equilibrium is disturbed when a structure is raised on a particular plot. So with the help of Vaastu principles we restore this proportionate energy to the plot of any measurement.

When this is achieved in a proper manner, it will regulate a harmonious flow of energy in the building. This harmony will provide a trouble-free happy and healthy life to the inmates by taking right decisions at the right times to get the optimum results.

Whereas a defective construction obstructs these forces that results distortion in the field for the inmates. The auspicious and inauspicious effects can be assessed in the existing structures through the science of Vasstu which will convince anyone that Vasstu works on set rules and the effects are always the same.

lIf young couples have any problem in having children or the adult males in the family are suffering from any ailment or facing setbacks n their career advancement then look for the defects in the Eastern side of the house.

lAny defect in the South-East corner causes disharmony in the husband-wife relationship and can escalate from petty bickering to altercation depending upon the profundity of the defect.

lAny fault in South of the house gives health problems, financial losses to the family head putting the family under financial constraints. Much exertion with little achievements, crises in the family, possibility of thefts etc. It can cause bilious disorders.

lThe deficiency in the South-West will impede the rise in fortunes of the inmates. It creates the conditions of inability to concentration, insomnia and feelings of extreme sadness, commits vices and face punishments up to imprisonment. Illness leading to acute or chronic disease resulting in premature deaths depending on the gravity of the problem in this corner.

lAny malfunctioning in the West side creates health problems for habitants and is inauspicious for the progeny being opposite to East. It causes strife resulting from lack of agreements amongst family members or business partners. Deviation from moral ideals. It causes genital problems.

lThe defect in the North-West turns the friendships into enmity and loss of influence. It adds to the liabilities while failure in the recovery of loans from the debtors leading to bankruptcy. Wastage of money through unproductive expenditure on the useless ventures. The delay in marriages of adult members of the family. Unnecessary involvement in court cases or lawsuits.

lThe faulty North side is inauspicious for the sources of earning. The gains do not match with the hard work one puts in. It gives rise to the problems to the females and brings sorrows in the family. Losses in property etc.

lNorth-East is considered an auspicious direction as the head of the Vasstu Purasha lies face down in this corner where God himself is standing on top of it. It is the corner where North and East Directions meet together. These two sides hold special positions because the Sun - rises from the East and North is the roof of the world and the magnetic pole too. Any defect in this corner ruins the overall prosperity of the family. It affects the health, wealth and progeny of the habitants hence blocking the worldly progress of the family. Any fault in this corner can cause the chronic diseases like cancer etc.

lBraham Sthan is the middle of the house which if cluttered, can be harmful and if damaged badly, can prove fatal to the head of the family.

Structures, looking alike, may differ in terms of Vaastu. Only a Vaastu expert can diagnose the predicament and its extent. He then prescribes the remedical measures which should be economical within the means of the inmates, structurally possible and suited to met the equipments of the inmates concerned. The process of correcting is complicated and should not be attempted without the help of Vaastu expert. There are mainly four factors for analysing the defects in the structure.

Elementary defects: These defects exist in the particular direction, corner or part of the building that manifest the specific problem experienced by the inmates. It is the strong factor, responsible for the manifestation of the problem.

Cumulative defects: These defects lie on the opposite side of the elementary defects making elementary defects more powerful and add to the gravity of the problem and its manifestation.

Additional defects: these are located within the above two types of the defects and have a bearing on them such as gradients of the plot, placement of the household items in residences or laying out of the machinery or plant in the industrial unit etc.

Compensatory factors: In case the opposite side of the elementary defects is strong with the benefic effects and there is absence of additional defects in the premises then these factos can resist the perplexity of elementary defects and help in diluting or delaying the manifestation of the related problems.

The gravity of the problem can be assessed by taking the above factors into consideration. Therefore it is advised to seek the help of Vaastu expert for proper analysis of the defects that create particular problem in the house or place of work.

(The writer is a Vaastu expert)



TAX tips
Tax on relinquishment of right
by S.C. Vasudeva

Q. We would like to address our query on possible capital gain to your expert panel on taxation in relation to out-of-court settlement the details are as under:

Ours is a society registered with the Registrar of Companies, however, the society is not registered with Income tax Department as a charitable institution or for any rebate etc. The society entered into an agreement dated 20.02.2003 for purchase of 9.5 acres of land at the rate of Rs 27.40 lakh per acre. A sum of Rs 5 lakh was given as advance money. At a later stage, however, the seller entered into a separate relationship with another buyer who bought 4 acres out of total 9.5 acres at the rate of Rs 67 lakh per acre by bypassing our agreement. We appealed to a court, which then passed an interim stay in our favour.

An out-of-court settlement was made between our society and the new buyer whereby Rs 95 lakh was given to the society by the new buyer, along with 2.4 acres of land, for which payment is to be made by the new buyer but the registry charges will be borne by our society. The expected market price of the land is Rs 50 lakh.

We request you that the name of our society be withheld from being printed.

Aakash Khandelwal, Amritsar

A. The query does not indicate the full facts of the case. Accordingly, I have replied to your query with certain presumptions. It has been presumed that 5.5 acres (the remaining portion) of the land was acquired by your society on the agreed rate and there was no dispute in that regard. It is further presumed that the land of 2.4 acre, which is being transferred to your society by the new buyer, is out of those 4 acres, which had been agreed to be sold to you at the rate of Rs 27.40 lakh per acre. The reply is therefore based on these assumptions. It is therefore the dispute with regard to the 4 acres, which has been taken into consideration for determining the effect of the transaction. The market price of the land of Rs 50 lakh per acre indicated in the query, in my opinion has no relevance for deciding the effect of the transaction as the land having area of 2.4 acres is being given free of cost to the society along with a sum of Rs 95 lakh. In my opinion, the amount of Rs 95 lakh should be considered as having been paid towards the relinquishment of right in respect of 1.6 acres of land (4 acres - 2.4 acres) which would be taxable as a long-term capital gain in case the period of three years have expired from the date of agreement to sell i.e. 20.02.2003. Otherwise it should be treated as a short-term capital gain. The cost of 2.4 acres of land would be the amount of registration charges paid by the society.

House building must for tax exemption

Q. I was allotted a flat in 1990, the possession of which was taken in 1992 and a consideration of Rs 2,36,000 was paid. Now I have sold this flat at Rs 13 lakh in 2006 and have purchased a plot for Rs 9.3 lakh in 2006. Could you kindly let me know my capital gains tax liability? Could this liability be reduced in case of senior citizen?

Rajkumar Verma, Sangrur

A. The facts given in the query are incomplete; as it is not indicated on which date/dates the instalments aggregating to Rs 2,36,000 were paid towards the acquisition of the flat. In view thereof, the indexation benefit has been considered from the financial year 1992-93 onwards in respect of the total amount of Rs 2,36,000. The indexed cost on that basis would be Rs 5,49,256. The capital gain on the said basis would be Rs7,50,744. The same would be a long-term capital gain, taxable at the rate of 20 per cent plus education cess at the rate of 2 per cent on the capital gains tax so computed.

The purchase of plot in itself would not entitle you to any exemption from the levy of capital gains tax. The exemption would be available only if you construct a residential house on such plot within a period of 3 years of the date of transfer of the flat. In case you are not able to appropriate the entire amount towards the construction of the house, the remaining amount of the capital gain should be deposited in a separate bank account to be opened under the capital gains scheme before the date of filing of return of income for the assessment year in which such capital gain was to be included for the purpose of computing the total income.

DA part of salary; hence taxable

Q. My query is: whether salary includes dearness allowance (DA) or not for the purpose of calculating taxable house rent allowance in term of Section 10 (13A) of Income Tax Act in case of Haryana Government employee where DA counts for gratuity but does not count for pension. Reference of Section/Rule/Instruction if any in this regard may kindly be quoted.

Jagmindar Aggarwal, Haryana

A. For the purposes of computing house rent allowance in terms of Section 10(13A) of the Income-tax Act 1961 (The Act) it has been clarified that salary shall have the meaning assigned to it in clause (h) of rule 2 of part A of Fourth Schedule to the Act. Fourth Schedule deals with the provisions regarding to recognised provident fund. Clause (h) of rule 2 of the said schedule defines salary as under:

“Salary includes dearness allowance, if the terms of employment so provide but excludes of other allowances and perquisites.”

This in my opinion means that in case the dearness allowance is being included in the salary for the purposes of provident fund contribution, the same should also be considered for the purposes of computing the amount under Section 10(13A) of the Act.

Deduction allowed on royalty on books

Q. Kindly give answers to my questions about income-tax calculations. My particulars are as under: I am a senior citizen.

I understand that house tax is deducted from the rent from property. How much more deduction is allowed for the repair and maintenance of the property?

Out of the income from royalty from books, how much deduction is allowed to me as author, when I have to spend a part of it on relevant books for the preparation of my own book. Is it sure percentage of the amount of royalty?

D.R. Mehta, Jalandhar

A. Your presumption as to the deduction of house tax paid from the annual rental of a property is correct. From the amount so arrived at, a deduction to the extent of 30 per cent of such an amount is allowed for calculating income from house property.

In case of an individual being a resident in India who is an author and his income includes any income, derived by him in exercise of his profession, on account of any lump-sum consideration for assignment or grant of any of his interests in the copyright of any book being a work of literary, artistic, scientific nature, or of royalty or copyright fee (whether receivable in lump sum or otherwise) in respect of such book, there shall be allowed a deduction in computing the total income of such an assessee, which shall be equal to the whole of the income referred to herein above or an amount of Rs 3 lakh whichever is less. The above deduction is subject to a proviso that where the income, by way of such royalty or the copyright fee, is not a lump-sum consideration in lieu of all rights of the assessee in the book, so much of the income, before allowing expenses attributable to such income as is in excess of 15 per cent of the value of such books sold during the previous year shall be ignored.

Section 80QQB of the Act which deals with the above deduction also provides that in respect of any income earned from any source outside India, so much of the income shall be taken into account for the purpose of this section as is brought into India in convertible foreign exchange within a period of six months from the end of the previous year in which such income is earned or within such further period as the competent authority may allow.

Capital gain applicable on investment made for NRI

Q. My son has been serving in USA in a software firm for the last six years against an H-1 visa. He wants to invest his savings in India by purchasing immovable property, in mutual funds etc. He has opened an NRE saving account for the purpose. Kindly advise: -

1. Whether I can invest his savings on his behalf and how?

2. Whether profits so booked can be credited to his NRE saving account?

3. What will be his tax liabilities on profits booked against property and other instruments?

R.C. Pahuja, Yamunanagar

A. You can make investments on behalf of your son provided you hold a valid power of attorney to do so. It would be better if a general power of attorney is executed by your son in your favour in USA, which should be registered in India also.

Schedule I of Foreign Exchange Management (Deposit) Regulations 2000 permits amongst others, the following credits in the said account:

(g) Maturity proceeds of government securities including national plan/savings certificates as well as proceeds of government securities and units of mutual funds sold on a recognised stock exchange in India and sale proceeds of units received from mutual funds, provided the securities/units were originally purchased by debit to the account holder’s NRE/FCNR account or out of remittances received from outside India in free foreign exchange.

(h) Refund of share/debenture subscriptions to new issues of Indian companies or portion thereof, if the amount of subscription was paid from the same account or from other NRE/FCNR account of the account holder or by remittance from outside India through normal banking channels.

(i) Refund of application/earnest money/ purchase consideration made by the house building agencies/seller on account of non-allotment of flat/plot/cancellation of bookings/deals for purchase of residential/commercial property, together with interest, if any (net of income tax payable thereon), provided the original payment was made out of NRE/FCNR account of the account holder or remittance from outside India through normal banking channels and the authorised dealer is satisfied about the genuineness of the transaction.

The dividend income from shares and income from mutual funds are exempt from tax. The interest on debentures or bonds would be taxable at normal rates applicable to individuals. The capital gain on sale of immovable property would be taxable. The rate of tax would depend upon whether it is a case of short-term capital gain or a long-term capital gain.



Prices crash around scam-tainted
Ludhiana City Centre Project

Kanchan Vasdev

The real estate boom around the City Centre Project - the fourth biggest project in the world - in Shaheed Bhagat Singh (SBS) Nagar in Ludhiana has gone bust with the exposure of an alleged scam in the project deal.

Residents owning properties in the area, who had hit a jackpot till two months go, are now doomed due to a slump in real estate business. In fact there are no buyers for land in SBS Nagar and those who had bought plots worth lakhs some time ago, expecting profits, have started having sleepless nights.

The government seems to have washed its hands off the controversy by dissolving the Ludhiana Improvement Trust and ordering an inquiry in to the scam. The SAD leaders, who had been sitting on dharna outside the project, seem to be in a no mood to give up till a CBI inquiry is ordered. Real estate dealers and residents know, if at all, a CBI inquiry is ordered the project would be in the cold storage for an indefinite time.

Property dealers in the area say that a 100 sq yard plot before start of the project was being sold for Rs 6 lakh to Rs 7 lakh. But after it was inaugurated the same plot went for Rs 20-25 lakh.

And now after the alleged scam there are no takers of property at all.

According to Mr Rishi Pal, a property dealer, G and H block of the SBS nagar has suffered the worst as the rate of property has dropped to Rs 12,000 to Rs 14,000 per square yard as compared to Rs 16,000 in the recent past. Similarly in F block also the rates have gone down from Rs 17,000 to Rs 14,000. "And still there are no takers and nobody wants to sell below this price."

"Those people who thought they would earn in lakhs have instead suffered huge losses. Nobody is willing to give them the same price at which they had bought. Nobody knows what would be their fate," said Mr Arvind Sharma, a resident of the area.

He added people were not sure whether the project would ever be completed due to its controversial status and the future was uncertain.

The fact that the work has also started going on a slower pace is making this impression stronger. "Earlier everybody wanted a house near the project. Now nobody wants to go there saying that the area is far off and one has to cross a railway line to reach there.

"Suddenly people have started seeing the negative points of that area."

Interestingly real estate companies, who had put up huge boards outside their offices in the area, have suddenly removed these so as not to fall in the net of any inquiry committee.

The project had attracted the attention of many investors who had bought land worth crores in the area. The city centre was advertised to be having a helipad and a mini golf course on its rooftop besides parking for 8000 cars. It was all set to bring Ludhiana on the international map.

Spread over an area of 26 acres, the project, being claimed as a city within Ludhiana city, was to come up at a cost of Rs 2000 crore.

Being developed by the Ludhiana Improvement Trust in collaboration with Today Homes and Infrastructure Private Limited, the mega project was being popularised as Ludhiana's dream as well as the nation's dream and was to be completed by February next year. Its fate now hangs in balance.



RBI tightens lending norms for housing
S.C. Dhall

Banks say the housing loans have become unvisible at the current rate of interest because interest rates on home loans are not keeping up with the rising cost of funds.

Meanwhile, the Reserve Bank of India has also tightens the lending norms for real estate sector. The RBI has tightened its measures for checking flow of funds from banks to the real estate sector.

In a communication to banks it has asked them to ensure that credit disbursed is used only for the purpose it has been processed and sanctioned there should not be any diversion of banks’ funds of for any speculative purposes.

It is understood that the RBI has received a number of complaints that borrowers are diverting their funds for speculative purposes after raising loans at a nominal rate of interest.

In another move the Delhi High Court has also advised the RBI to issue guidelines to banks that loans for commercial and housing sectors should be sanctioned after taking proper precautions. It has to ensure that all formalities have been completed from the urbank development authorities and Town and Country Planning department.

Banks should also get approval from their boards for norms encompassing, ceiling on the total amount of loans to real estate, single/group exposure limits for such loans, margins, security, repayment schedules and availability of supplementary finance. Such a policy is required immediately.

This means that prospective borrower can approach a bank after acquiring land then getting the permissions required from the authorities concerned.

All banks are also required to incorporate in their lending policy on real estate aspects relating to adherence to a national building code of the Bureau of Indian Standards.

The guidelines of the National Building Code (NBC) are now becoming legally-bound for many states. States are now taking steps for building laws for their municipalities and municipal corporations.

The NBC 2005 under the Bureau of Indian Standard serves as a National guidelines document for local bodies, development authorities, construction departments and builders. It provide state-of-art design, construction and regulations for the earthquake and other natural calamities. The RBI has also advised banks to consider incorporating the NBC code in their loan policies in view of the importance of safety of buildings, especially against natural disasters.

The Citibank, which is one of the largest banks i terms of assets, is believed to be shutting down home loans units at small town branches. Citibank has found it unviable to keep these units afloat because interest rates on home loans are not keeping up with rising cost of funds.

Several other banks are believed to have become at least selective in giving home loans.

(The writer is a senior banker)



DuPont India forays into construction products biz

Services Company DuPont India has launched a business initiative to provide building solutions to the domestic construction industry and said it is eyeing a $ 20-25 million business by 2010 from its building and construction segment in India.

"Our new initiative 'DuPont Building Innovations' would provide solutions, products and innovations to the Indian construction industry and we would offer our services in major centres across the country," DuPont India Executive Director Jagdish Kumar said on sidelines of an International Trade Exhibition for Building, Construction and Interiors in New Delhi.

The company has identified the building and construction segment in India as a key sector that would drive its strategic growth in this country, he said.

"We would commence operations in southern cities and depending on the requirements of the construction industry take it to other parts of the country as well. By 2010 we are aiming at a business of 20-25 million dollars from our building and construction segment in India," Mr Kumar added.

The company is also looking for channel partners in the country and would provide training to industry workers through the partners.

"As the industry is localised, the needs are similar yet different and we are looking at partners who have a good networking and critical mass on the ground. We would be partnering with around 10 such players in the construction business and have also identified a few of them," he said without divulging further details.

Under the new initiative, Du Pont has launched new products keeping in mind the Indian construction methods and weather conditions, he said. — PTI



Parsvnath’s IPO to raise $220 million

Real estate firm Parsvnath Developers Ltd. has set a price band of Rs 250-300 a share for its revived initial public offering which could value the company at up to $1.2 billion, banking sources said recently.

The company, which is selling 33.24 million shares, or 18.3 percent of its post-issue capital, would raise up to Rs 9.97 billion ($220 million) if the IPO was priced at the top end of the band. Bidding for the offer will be open from November 6 to 10.

New Delhi-based Parsvnath has a green-shoe option of 3.09 million shares, which if exercised would take the issue size to 19.67 per cent of its post-issue capital.

Parsvnath had revenues of Rs 6.44 billion rupees for the year to March 2006, and a net profit of 1.06 billion. Its earnings per share for the year were Rs 7.21, according to the offer document, which has been previously filed to regulators.

The IPO would make Parsvnath the second most-valuable listed real estate firm in India after Unitech Ltd., which is valued at $7 billion. Although that ranking could be short-lived if DLF Ltd. were to revive its IPO plans, which if realised would have valued the real estate company at $27 billion.

DLF put off its IPO plans after an emerging markets ell-off in May, which sliced off about 30 per cent of the BSE’s main index and foiled many fund-raising plans, including Parsvnath’s.

The stock market has since recovered, with the main index hitting a record high last week.

Parsvnath said it has development rights for an estimated 102.11 million square feet of saleable area and is present in 37 cities across the country. — Reuters