All big players are here

Hoteliers look at Amritsar as a safe investment spot, say Sanjay Bumbroo & Ashok Sethi

Reputed international branded chains, including Marriot, Radisson, Taj, Holiday Inn, Best Weston, and Country Inn, are scouting for joint ventures to cash in on the booming tourist and hospitality industry in this Holy City.

The real estate boom, witnessed by the Holy City a few years ago, seems to have settled down and the hotel chains are vying to get the best property for setting up hotels to lend a modern dimension to the present hotel segment.

Latest statistics provided by the airport authority here has confirmed the assessment of hotel chains that more than 6 lakh passengers, a majority of whom are international travellers, use Rajasansi International Airport annually with an estimated annual growth rate of 30 per cent. This may, eventually, turn the city into a hotspot in the non-metro segment after New Delhi.

Golden Temple occupies the centrestage as around two lakh pilgrims and tourists from across the globe pay obeisance daily. This huge inflow has brought international focus on this glorious shrine.

The most significant development, which has added a new dynamism, is the interest shown by NRI groups, who had been scouting for prime properties in posh surroundings like the Mall Road, Albert Road, Queens Road, Court Road and also the walled city, besides the upcoming Ajnala-Airport Road. The latter has seen a massive construction activity with a large number of real estate builders going full-steam ahead on commercial buildings, multiplexes and hotels.

Radisson Hotel has already started the construction to build a quality star hotel while the Taj is in the final stages to clinch a joint venture deal on the airport road. Other major groups, including Omaxe Terminal and Ansals, are constructing commercial buildings to meet the growing airport traffic due to tremendous spur in international and domestic flights from the Rajasansi International Airport.

It is pertinent to mention here that a spokesperson of a leading group of chain had predicted that the Holy City would emerge as a leading tourist destination one day. The signs are ominous that Amritsar would be a leading tourist hub. According to a survey by a leading international TV channel, the city ranks sixth most sought-after destination across the globe. This has given a new impetus to the growing tourist industry.

President of Amritsar CII Gunbir Singh, on an optimistic note, said he would welcome the advent of branded star hotel chains, which was needed to meet the requirement of high-end visitors to the Holy City. He said, at present, there are 1,700 quality rooms with just two 4-star hotels and according to an estimate, some 1,500 star quality rooms are required to cope with international travellers and rich NRI Indian diaspora spread across the globe.

He said the government must accord an investor- friendly policy to welcome huge investment in the tourism and hospitality sector. It should provide for single-window clearance to all big hotel industries in the city and the surrounding areas.

He said, at present, some 350 to 400 rooms by leading chains were being proposed and that more investment would be forthcoming over the next few years.

General secretary of Hotel and Restaurant Association APS Chatha said the present hotel investment rush was totally superfluous as the city was brimming with moderate-to-good quality 3,000-rooms presently offering economical fares to budget tourism. He said new investments would derail highly competitive hotel line as the cutting edge of new chains would eat into the economic viability of the present hotel industry.

Chatha said the government must come up with special comprehensive economic package for this fast-growing industry and rationalise the taxation structure to bring in fresh investment and technology to provide hospitality at reasonable rates. He said the richy-rich tourist segment must be given attractive packages for overnight stay in the city. He welcomed large hotel chains entering the fray, which would improve quality service.

The hotel industry is facing the biggest trained manpower crunch. Chatha said the government must set up good hotel institutions to meet the growing demand for tourist and hospital services.

Mayor Shwet Malik said they were preparing new guidelines and byelaws for the hotels in the city and that the corporations would enforce strict norms for emergencies. He welcomed the stepping in of big chains and said they would change the face of the city.



Farmers’ loss is realtors’ gain

Migrant labour now prefers construction site to agricultural field, says Jupinderjit Singh

Manoj Mishra, aka Mishraji, had come to Punjab as an agricultural labourer nine years ago. Tired of being unemployed after the end of sowing and harvesting season, he chose to diversify. Today, he is a building contractor. He brings contract labour from Uttar Pradesh and Bihar to cater to the huge demand of construction labour in Punjab.

His is not just an isolated case. More and more migrant labourers are shunning farm work in pursuit of more regular and better paying construction work, thanks to huge employment opportunities available in the state, owing to coming up of malls, plazas and multiplexes.

A mall and two multiplexes have already become functional after the construction went on for more than two years. Ample employment is available with as many as 18 more mega buildings under construction.

There is no problem of any vacuum created in the agriculture labour due to the paradigm shift of the labour interest. New group of labourers are filling up the available space.

Raju alias Raj Kumar, an electric fitting contractor is an apt example. He had started off as an agricultural labour seven years ago. “I found people in construction work were earning more and got employment on far more days than farm labourers like me.”

Raju does not possess any degree, diploma of working as an electrician, “ I learnt it from another electrician. After working under him for five years, I learnt the nuances of the trade. Now, I take work on contract and my about 10 employees do it.”

The real estate boom that brought more labourers may have suffered a slump. But the construction activity that began in good times continues to attract them in droves. Gone are the days when agriculture work was the mainstay for the labourers. Now they come directly as construction labourers. Thousands get easy employment, along with families, in the mega projects.

“The migrant labour is cheap and easy to handle,” says Anil Kumar Sharma, a Sirhind-based builder undertaking construction work in Ludhiana and Chandigarh. He said the migrant labour is employed through their group contractor, which is missing in the local labour. “ We just hire one person and they hire workers further”

“The migrant labour is available between Rs 110 and Rs 130 whereas the local Punjabi labour works at Rs 150 per day. That too adamantly,” he said.

He has many workers who have learnt paintwork, carpentry and masonry after leaving agriculture work. “Once a migrant comes to Punjab, he not only decides to stay but also brings his family, relatives and friends. Farmwork provides seasonal employment only whereas construction work is available almost round the year.”

Ajaib Singh, another contractor said earlier he used to employ local labourers but of late migrant labourers have taken over all jobs. “They are more willing to work over time where local labourer starts insisting on leaving on time to reach villages.”

He says still there are a number of persons who trust local labour only. “I have noticed that people prefer local labour over migrants when it comes to say, adding a new room to the existing house or for renovation, but for construction if business establishments, they have no problem with the migrants.



Builders go shopping at Sriperumbudur

Dealers rush in after govt shortlists the town for constructing airport & SEZ, writes Arup Chanda

Sriperumbudur, a small village, 70 km from Chennai, is the most sought-after town by property developers this day. Till 1991, its name was unknown but on May 21, 1991, it became internationally ‘infamous’ as a suicide bomber assassinated Rajiv Gandhi.

Sriperumbudur not only became a household name after building the Rajiv Gandhi memorial but was also promoted as an industrial hub with MNCs setting up manufacturing units. Carmaker Hyundai, mobile giant Nokia and glass manufacturer Saint Gobain have Indian operations there.

With Tamil Nadu government announcing the construction of a new airport at Sriperumbudur and setting up of SEZs to attract more foreign investments in and around the area, there has been a mad rush to grab land, particularly by property dealers.

The state government plans to construct a greenfield airport on 4,820 acres of land at Sriperumbudur. With the growing number of industries in the area, the upcoming airport and good roads, which makes travel easy to reach Chennai within 45 minutes, land has become one of the best investments in the area.

According to a real estate agent who operates from the area: “Over the past few months, there have been many who want to invest in Sriperumbudur. The reason behind this could be the fact that leading MNCs are present here and also because SEZs are slated to come up.

An executive of a property website said: “We have been observing that there has been an upward trend in the land prices. The other thing is that there has also been a 30 to 40 per cent rise in the number of persons who have been requesting information about land in Sriperumbudur.”

While real estate developers maintain that the land prices in the area are on a rise, one can expect a quantum jump once the details about the airport are announced.

“The current price of land per ground (2,400 sq ft) is around Rs 12 to 14 lakh, which shows an increase of about 2 to 4 lakh,” says an executive of City Square, which is coming up with a project in Sriperumbudur.

However, a majority of persons showing interest in the area are focusing on land and commercial properties. Their aim is to invest and make a good kill once the prices shoot up with the construction of the airport.

“Since the government has not given any detail on when the airport will be completed, people are just waiting to see how they can calculate prices and book profit. That is why it is better to buy land now and later develop it. Once these announcements come, land prices will increase further,” says Pankaj Shah, a real estate developer.

“The other reason behind this is that infrastructure development in Sriperumbudur is yet to begin. Once basic things like good roads, electricity and water supply are completed, it will automatically boost the price of land,” he said.



Loan switching

Change the bank and loan terms if the amount exceeds Rs 3 lakh and there is a rate change of 1 per cent, S.C. Dhall advises loan takers

Getting a new loan against the exiting one at a reduced rate is not always easy. However, savings can be substantial and hence the trouble is worth it. According to a city-based chartered accountant, if the reduction in interest rate is more than 1 per cent and the loan amount is in excess of Rs 3 lakh, it is worthwhile to go for loan switching.

Almost every bank is coming out with a new scheme or reduction in the rate of interest. That too for new clients only. It would be a good opportunity for the existing housing loan borrowers to take a chance to switchover to another bank whose rate of interest is down by over 1 per cent.

If you have taken a 15-year home loan from a bank in the last year, then you must be worrying now, as the rate of interest has come down to 10 per cent from 11.50 per cent a year ago. Naturally, you would want to switch your higher cost loan to a low cost one.

Rs 1 lakh loan taken at the then prevailing rate of 11.50 per cent and switch over to new bank at 10 per cent rate will save at least Rs 120 per month in EMI (equated monthly instalment). Total savings works out to the tune of Rs 20,160 per lakh on the rest of the loan amount.

Any cost you incur, such as prepayment charges or fresh processing fee or the effort that you put in terms of getting a fresh loan sanctioned from a new bank, obtaining documents from the existing lender, has to be seen in the light of this saving to judge whether the effort is worthwhile.

First of all you must revert to the existing lender and request him to reduce the interest rate in the line with what is being charged on new clients. For this, switch over. The bank may charge you a fee on the outstanding loan amount. However, you should exercise this option only if your existing lender has a competitive current interest rates. If your existing lender refuses to reduce the interest rate, you may need to look at alternative lenders to switch loan.

The good news is that most of banks are willing to take over an existing loan from a lender, provided you have a good repayment track record and satisfy credit requirements.

But the process of switching to new loan from an old one is relatively hasslesome. Switching over from one bank to another will require some documentation such as salary slip, IT returns and bank statements. You will also need a letter from your existing lender, listing the documents that had been banded over as security for your existing loan. Along with loan statement account and copies of documents submitted at the time of taking loan will also be needed.

Existing lenders also take some time to release the documents even if the amount of loan is repaid fully. Sometimes, the new lender takes a power of attorney to enable the lender take the documents from the existing lender after paying the loan amount directly.

This is the right time/opportunity for the clients as banks are not getting good borrowers despite the rate cut and still counters are waiting for the borrowers not only in public sector but private sector banks too.

Dr. Y.V. Reddy, Governor, RBI, on October 30 while announcing mid-term credit policy review said there has been a lot of criticism against banks while fixing and revising interest rates on housing loans.

If substantial improvement is not seen in the next few months or if complaints continue, the RBI should move decisively to discipline banks.

The banking regulator has asked banks to become more “ fair and transparent”. The RBI has taken cognizance of practices allegedly adopted by some banks. Home loan borrowers have faced a double whammy, with cost of homes escalating due to higher prices for steel and cement and rising interest rates on their existing borrowings.

In particular, people who borrowed funds on a floating rate of interest have been hurt by rising rates. Over the last couple of years, the rate have been revised by 4 per cent.

Clearly, the RBI fears default in repayment of home loans could emerge as a problem if outstanding loans are not repriced as interest rates soften. It is likely that borrowers may get some relief on the move of the RBI. Reddy said “we have got certain complaints about non-transparent and non-fair pricing. That is why we want banks to assure us that are not the case. Even fixed rates apparently have a clause, which says it may be changed if something happens.” So, the so-called fixed rate is not all that fixed. Bank cannot increase the rate but there has to be some reasonableness. That is what RBI wants.

— The writer is a senior banker



Mayor Toilet designs loo-shaped house

Sim Jae-Duck was born in a restroom and now he plans to live and die in one — a $1.6 million toilet-shaped house designed to promote his tireless campaign for cleaner loos worldwide.

Sim will open what is billed as the world’s one and only toilet house on November 11 to mark the launch of his World Toilet Association.

The 419-square-metre (4,508-sq-foot) concrete and glass structure is rising on the site of Sim’s former home in his native city of Suweon, 40 km south of Seoul.

Before he moves in, anyone who is flush with funds can rent it for $50,000 a day — with proceeds going to his campaign to provide poor countries with proper sanitary facilities.

Apart from two bedrooms, two guestrooms and other rooms, the two-storey house — of course — features three deluxe toilets. Unlike the giant toilet in which they are located, they will not be see-through affairs.

“A showcase bathroom screened by a glass wall is located in its centre, while other toilets have elegant fittings or water conservation devices,” Sim told AFP.

The showcase loo will feature a device producing a mist to make users feel secure. An electronic sensor will raise the lid automatically when people enter, and there will also be music for patrons.

The house, complete with a stream and small garden in front, is named Haewoojae, meaning “a place of sanctuary where one can solve one’s worries”.

Sim’s campaign began during his term as Suweon mayor from 1995 to 2002. His drive to transform toilets into “clean and beautiful resting places imbued with culture” earned him the nickname, Mayor Toilet. Indeed, he hopes his toilet house will highlight the global need for better sanitation. — AFP



Tabletop gardens

Miniature landscaping is the latest fad, says Satish Narula

It was a compulsion of space constraint that resulted in the creation of nature in miniature. People learnt the art of fitting trees onto trays called the craft of bonsai creation. Making and maintaining a bonsai is not everyone’s cup of tea. It needs a lot of patience and professional precision. Then there are those who want to create a full-scale landscape on the tabletop, creating gardens in miniature form.

Man learnt the art of landscaping from Mother Nature - flowing water, waterfall, natural pathways, trees, skyline inclusive. The visual vastness of the nature could not be matched within the confines of shrinking dwelling units. There is also a limit to the number of plants that could be kept within a house. One cannot make house a conservatory. Man learnt to give shape to imagination. This resulted in the creation of miniature gardens and landscaping. This could be in a trough, tub, sink, bottle, on the tabletop or on the ground. For creating miniature gardens one has to totally depend on visual observations. Everything depends upon what type of landscape or a garden can be created - a flowing river, a home garden, a lake using dwarfing plants at the back or a beach with no skyline. “It is a continuous process that keeps me busy,” says Parkash Garewal, whose latest adventure is the creation of a full-fledged hill station on a tray. For Parkash, who is in her seventies, it is an excellent hobby and she can spend hours together, looking at her creations, adding another feature at the end of the day.

Her latest creation is a hill station with a moving train and lights, all complete with a tunnel. For this feature, she has used hill flora, the conifers, both artificial and original, keeping them in shape by repeated clipping. A loner, she finds it a perfect pastime to vent out her imagination.

The basic requirement for making such a garden is a deep thought on what a bird would see from the sky. Once you start doing it, you keep on adding features one by one making space for other. The right selection of plants is very important. They add colour to the feature. The plants have to be dwarf in nature or same effect has to be given by clipping repeatedly.

Use of artificial plants is also not forbidden and one gets a wide array of perfect plants that can pass off as original. When you go shopping for such vegetation, you may also come across miniature lotus that can be grown in a shallow ‘pond’ that runs just a few millimeters deep.

— The writer is a senior horticulturist at PAU. His email id is



Auction scales new high

Top realtors try to outbid each other in Andhra Pradesh, says Ramesh Kandula

The real estate boom in cyber-savvy Hyderabad has reached a new high despite recent reports of impending slump.

The latest indication of land rates hitting the stratosphere was available during the government-held auction of 24.352 acres at Kukatpally in the city, which fetched Rs 507.52 crore.

This means that an acre of land was sold for Rs 22 crore. It surpassed an earlier record of Rs 8 crore per acre of land at Kokapet on the city outskirts.

The auction was conducted by the Andhra Pradesh Housing Board (APHB) for two blocks at Eden Square in Kukatpally, a bustling residential-cum-commercial area, on Monday.

The accruals far exceeded the expectations as the upset price was fixed at Rs 12.9 crore per acre. Two real estate firms from Bangalore and Mumbai purchased the land by placing the highest-ever bid in the city.

One of the plots, measuring 12.9 acres, was taken by Mumbai-based company Lodha Healthy Constructions and Developers for Rs 255 crore. Another block, measuring 11.452 acres, went to Bangalore-based Millennium Properties which quoted 22.014 crore per acre.

The APHB had launched the auctioning programme to fund its future projects.

While the first phase of auction, involving two of the total four plots, was conducted recently, the second phase was cancelled following allegations that the bidders had formed a syndicate.

The remaining two blocks cover an area of 18.75 acres, carrying a price of Rs 9 crore per acre.

However, the auction was cancelled after Delhi-based Hruday Construction Company quoted just Rs 9.61 crore per acre to purchase the entire extent of land.

The other three bidders, Lodha Construction of New Delhi, Hyderabad-based VK Construction and Satyavani Constructions, quoted much lower prices, though officials had expected that the bidding would be around Rs 13 crore per acre.

Earlier in July last year, the Hyderabad Urban Development Authority (HUDA) had auctioned a 65-acre piece of land at Kokapet, 20 km from the city, which fetched a record Rs 703 crore.

Located about 6 km from the campus of IT majors in Gacchibowli, each of the 15 plots spread over three sites in Gold Mile layout fetched Rs 10 to 14 crore per acre during the auction held HUDA which had set the minimum upset price at Rs.4.5 crore per acre.

The city is witnessing a boom due to construction of a new international airport, the $3 billion silicon chips manufacturing facility, Fab City, and a string of new IT and ITeS companies setting up shops here.

The 160 km proposed outer ring road, satellite townships, new IT parks and infrastructure projects all have further jacked up real estate values.



HOME Decor
Radiance in the room

Devendra Malik discloses how to lend luminous effect to the interiors

Lighting includes both artificial light source such as lamps and natural daylight illumination. Lighting represents a major component of energy consumption, accounting for a significant part of all energy consumed worldwide. Artificial lighting is provided by electric lamps though previously it was by gas, candles or oil lamps.

Proper lighting can enhance task performance or aesthetics. Indoor lighting is a form of fixture or furnishing and a key part of interior design.

The illumination intensities and colour itself can vary from different gradations to shades, respectively. However, the main light colour is white and yellow.

While there are various ways of lighting, there are larger numbers of lamps that can be used for these purposes. Different styles of lamps available are:

1. Hanging/suspend lamps

2. Spot and task light

3. Down lighters

4. Up lighters

5. Free standing Lamps

A pendant or hanging light is the most common type of ceiling light. The intensity depends on the height, at which the light is hung, and the type of shade used. The larger the shade, softer and more diffused the light is. Light pendants provide good general light, but they flatten shadows, and often look obtrusive.

Spotting are used to accent or highlight specific areas or objects, and can be used to play with light and shadow, define space, create atmosphere and illuminate small areas. The simplest spot contains a reflector fitting for the bulb; special spots have internal silvered reflectors for intensity. The most expensive ones have low voltage transformers inside the spot that casts narrow beams onto small objects or specific areas. Task lights should be adjustable so that the fall of the light can be altered

Down lighter are square or round mattel casters, recessed or semi-recessed into ceiling, so that they cast pools of light onto the surface below. Being unobtrusive, they can add drama, since the fixtures are not seen. Down lighters can be fitted with spots or floodlights.

Used normally for accent lighting, up lighter can be paired with down lighters to import ambience to a space. They can be placed on pedestal on the floors or hung on walls at various angles.

Freestanding lamps can serve both decorative and functional purposes. If adjustable, they can double as task lights, providing directional light. They can be fitted with spots to substitute wall-mounted tracks. The kind of shade used, affects the intensity of light shed. It can be used for both indoor and outdoor purposes.


Lighting are categorised into three main types:

1. Ambient lighting

2. Accent lighting

3. Task lighting

Ambient lighting is the primary source for any room, and preferably has no recognisable cause. Usually, light fitting is concealed to hide the source of light.

Accent lighting should be used with restraint, unless it is for a space with gigantic proportion, as too much accent light can make a space look smaller. Every space is composed of few things that need to be highlighted. Specific down lighter, spotlights or halogens can be used to produce glow or focus on these objects of importance purely for aesthetic purposes.

Task lighting is that it allows one to see the task, but at the same time, does not shine into the eyes. Task lighting, if utilised well, can improve the way one works and at the same time, add character to the space.

Light can be classified under two main headings - indoor and outdoor

Indoor lighting includes lighting for both public and private spaces. While public spaces, needs brighter and attractive lights, and lights that suits masses: the private spaces can be more specific in their nature. The public spaces for which lighting plays a major role are theatres, facility centres, malls, hotels, restaurants, discos, auditoriums, schools, museums, bank and hospitals. Private spaces for which the lighting plays an important factor are offices, residences and studios.

Street lighting, highway lighting and compound lighting are also as important and needs strict design.

Outdoor lighting further constitutes spaces like both public and private gardens/parks, facade of a building, recreation areas, parking lots, road signage etc.

New concept

Fibre optic, cold cathode and colour wash lightings are the latest concepts in field of lighting and ones that may replace traditional lighting systems. These are practical for areas like swimming pools and spas where electricity needs to be separated from light museums, where the requirement is for light sources that do not generate heat and ultraviolet rays-for decorative properties in the showrooms, displays and exhibition halls-in discotheques for special lighting effects where colour change and strobes can provide dazzling effects on ceilings.

These days, planning specialists try to maximise the use of natural light by keeping in mind the position of buildings to be designed. Architects rely on atriums, skylights, louvers and glass, and reflective window coatings to bring in and control natural light.

— The writer is a New-Delhi based interior designer. His email id



TAX tips
A house inherited with mortgage
by S.C. Vasudeva

Q. My father had mortgaged the residential house during his lifetime for obtaining certain funds for the marriage of my sister. I have inherited the residential house with the mortgage. What would be the position of mortgage amount? Will it be treated as part of the cost of acquisition for the purpose of computing capital gains tax?

— Rajiv Kumar, Panipat

A. The Supreme Court has held that where a mortgage was created by the previous owner during his lifetime and the same is subsisting on the date of his death, the successor obtains only the mortgagor’s interest in the property. Thus, by discharging the mortgage debt, he acquires mortgagee’s interest in the property and, therefore, the amount paid to clear off the mortgage is the cost of acquisition of the mortgagee’s interest in the property which is deductible as cost of acquisition under Section 48 - (VSMR Jagdish Chandran v. CIT) [1997] 93 Taxman 389 (SC).

Gains as FD

Q. I had a residential plot allotted from PUDA for last more than three years. I sold the letter of intent (for which 25 per cent was already paid by me to the authority) for Rs 2 lakh in April 2007. Due to ignorance, this amount was not deposited in the capital gains account. However, this amount was deposited in a savings bank account (solely for this purpose) as fixed deposit. This whole fixed deposit was encashed in October 2007 and, further, paid whole amount for making payment of instalment towards purchasing a flat (under construction). My question is have I fulfilled the requirements for exemption from tax arising on the sale of letter of intent or defaulted.

— Satwinder Singh, Ferozepore

A. The right to allotment of a property would be construed as a capital asset and since it was held for more than three years, the same would be a long-term capital asset. The provisions of Section 54F of the IT Act, 1961, (the Act) requires that the amount of net consideration arising on the sale of a long-term capital asset which is not appropriated by the assessee towards the purchase of a residential house within one year before the date on which the transfer of a long-term capital asset took place or which is not utilised for the purchase or construction of a residential house before the date of furnishing the return of income under Sub Section (1) of Section 139 of the Act, shall be deposited before the said date in an account in any bank or institution as may be specified and utilised in accordance with any scheme which the Centre may frame by notification in the official gazette.

You have not indicated the due date for the filing of return of income in your case. In case the due date was July 31, 2007, you have not fulfilled the condition required under Section 54F of the Act and, therefore, you may not be able to claim the exemption in respect of the capital gain arising on the sale of allotment right. In case the due date of filing the return in your case was November 2, 2007, or November 15, 2007, and the amount of consideration of Rs 2 lakh has been paid before such date for the purchase of a residential flat, you would be entitled to claim the exemption from capital gains tax in respect of capital gain arising on the sale of the allotment right.


Q. I purchased a ready-built flat located in Ghaziabad (construction completed in 1991) from DLF Universal Ltd. in 1997-98 against down payment of Rs 3,37,500. Due to a dispute regarding interest on delay in down payment with DLF Universal Ltd., I got it registered in my name in 1999-2000, when some portion of interest on delayed down payment was waived off and the same was reduced to Rs 21,000 (paid in financial year 1999-2000). It was clearly mentioned by DLF Universal Ltd in sale deed that payment was received in FY 1997-98 indicating receipt details. Stamp Duty Rs 38,800 on basic sale price of Rs 3,37,500 and legal charges of Rs 900 (i.e. total Rs 39,700) were charged by DLF Universal Ltd. as registration charges in 1999-2000. Besides that DLF Universal Ltd. also charged before registration/sale deed Rs 7,780 towards electrification charges only for wiring and electrical switches etc. (No electric connection or meter was provided by DLF Universal Ltd.) and Rs 784 towards water and sanitation charges only for taps and sanitary fittings. But, these two amounts were not included for registration/ sale deed.

I sold this flat on October 18, 2007, for Rs 7,50,000.

Kindly advise me whether I can take the benefit of indexation, taking into account index for FY 1997-98 for payment of basic sale price of flat Rs 3,37,500 and index for FY 1999-2000 for payment of registration charges Rs 39,700, electrification charges Rs 7,780 and water & sanitation charges Rs 784.

I understand I cannot take any benefit on interest on delayed payment, as it was a penalty.

Can I use capital gain up to six months for investment in FD etc. before investment in REC bonds? If I use the gain up to six months for investment in FD, is it necessary to pay ‘advance/ self-assessment income tax’ in December 2007 and, thereafter, claim ‘refund’ in my IT return.

— Balkrishan Agarwal, Naya Nangal

A. The replies to your queries are:

You would be entitled to the benefit of indexation in respect of basic sale price of Rs 3,37,500 as well as for the registration charges of Rs 39,700. The electrification charges and water sanitation charges can be taken into account for indexation only if the same are in the nature of capital expenditure or have been made to improve the title of the property.

The investment in the acquisition of tax saving bonds has to be made within six months of the date of transfer of the capital asset. In your case the tax saving bonds will have to be purchased before April 18, 2008. There is no restriction on the use of the amount of the capital gain within the said period of six months. In fact, there need not be a live link between the capital gain and the investment.

The interest earned on fixed deposit made before the purchase of REC bonds will be taxable. The advance tax is paid on the basis of total income, which will be inclusive of the interest earned on both FD as well as REC bonds.

Tax on rent

Q. There are five co-owners of this commercial property situated in Delhi and inherited under a will. The property has been rented out to a nationalised bank. The rent prior to March 31, 2007, was received in the name of the executrix of the will and she used to distribute it to the co-owners. From April 1, 2007, the rent will be received directly in the names of five co-owners even though there is only one lease agreement. The total annual rental income of each owner is less than Rs 8 lakh. But the total annual rent received from the property exceeds Rs 8 lakh.

1. Is the service tax payable on the rent received from a property or on the rental income of an individual?

2. In the above case, are each of the five co-owners individually liable to pay service tax?

— Paramjit Singh

A. Under sub-clause (zzzz) of Section 65(105) of the Finance Act, 1994, the taxable service is defined as service provided or to be provided to any person, by any other person, in relation to renting of immovable property for use in the course of furtherance of business or commerce. The word ‘person’ has not been defined by the above Act. Under Section 3(42) of the General Clauses Act, person shall include any company, or association or body of individuals whether incorporated oar not. Thus a person will generally include a natural person, partnership firms, HUF, body of individuals, corporate bodies, charitable institutions, government undertakings, cooperative societies etc.

In the case cited in the query, it seems the service provider was the deceased because the rent was being received in the name of the executrix. It is, however, not clear as to whether the inheritance has been recognised by the court and it is on the basis that the rent is to be paid to the legal heirs. If the ownership of the legal heirs has been recognised and the payment of rent is to be made individually on the said basis, it may then be possible to claim the limit of Rs 8 lakh by each of the co-owners. This opinion is based on the premises that the service is being provided by each of the co-owners for the identified share of property leased to the bank.

The writer can be contacted at