Can GPA be made in advance?

S. C. Vasudeva

Q. An NRI friend of mine has booked a flat in Noida and I am forwarding all payments from his account to the developer. My friend wants to appoint me as his GPA to take possession and get the conveyance deed done in his name and subsequently manage the property. My query is:

Can my friend execute GPA in respect of this property during his visit to India in December, when neither the possession would have been given to him nor the conveyance deed would have been executed with the developer. The possession is likely to be given in next year. — H. L. Uppal

A.Your friend can execute a General Power of Attorney in your favour during his visit to India. Such GPA will be valid for taking possession of the property as and when the same is ready. The GPA is valid till it is withdrawn by the executant.

Can I claim rebate on interest?

Q.I had availed of a housing loan in April 2008 and the construction of the house for which this loan had been taken was completed in FY 2008-2009. The interest for the pre-construction period on such a loan should have been claimed from the year 2009-10 and onwards for five years. However, I forgot to claim such interest in the five year ending March 2014. Can I claim the entire interest for the pre-construction period while filing the return for the assessment year 2015-16? — Rajinder Kumar

A.There is no provision in the Act that allows you to claim the entire amount of interest for the pre-construction period in one year. It should have been claimed in the respective years. At best, you can file a revised return for the assessment year 2013-14 (year ended March 31, 2013) and for the assessment year 2014-15 (year ended March 31, 2014). The return for the assessment year 2013-14 can be revised up to March 31, 2015 and that of assessment year 2014-15 by March 31, 2016. Proportionate interest allocable for these two years can be claimed in the revised returns.

Should a senior citizen pay advance tax?

Q.I am a retired government officer. My father had purchased some land in a village in 1975. Now I want to sell my one third share. (We are three brothers). Kindly let me know:

• Which value is to be taken for calculating capital gain i.e. whether actual sale value or value as per stamp value authority?
• For senior citizens, whether the income tax on capital gain to be deposited as advance tax or as self assessment tax at the time of filing of income tax return?
• What is the procedure/instructions for depositing income tax on capital gain without any interest/penalty? — J.R. Goyal

A. Your queries are replied hereunder:

• The value to be adopted for the purpose of computing capital gain shall be that which is applicable for the purpose of payment of stamp duty on the transfer of the land.
• A senior citizen is not liable to pay advance tax in case he does not have any income chargeable under the head "profits or gains of business or profession". Therefore, a senior citizen can pay the tax chargeable on the amount of capital gain at the time of filing the tax return under self-assessment provisions.
• No interest would be leviable in case the amount of tax on the amount of capital gain is deposited by a senior citizen, before the due date of filing of the income-tax return in case he satisfies the condition specified in (b) above.

What will be my wife’s share in capital gain?

Q.I sold my house which was in joint name (with my wife) and bought a flat in Panchkula. As per rules of the housing society the flat cannot be transferred to both of us. So, the flat has been transferred in my name only. What should we do about my wife’s share of capital gain.

Can the share of my wife be put in FD without clubbing it with my income. She has her separate PAN. — Vijay Kumar

A. You have not indicated in your query whether the amount for purchase of land and the construction of the house had been spent by both you and your wife. In other words, whether your wife had separate source of income and the funds available with your wife for the purchase of land and construction of house were out of her source(s) of income. This would be a decisive factor for coming to a conclusion whether the amount of capital gain arising on the sale of the house will pertain to both of you in the ratio in which the amount for the acquisition of the house property was spent.

It has been presumed, for this reply that your wife did not have any source of income and the amount for the acquisition of house property came entirely from your sources. In such a case the issue with regard to share capital gain of your wife would not arise. Further, there would be no necessity to deposit the amount in her name. If the amount on sale of the house property is gifted to her, any income arising from such gifted amount shall have to be clubbed with your total income.

Loan rebate rules for possession after three years

Q. I have taken loan from a public entity (first installment got in February, 2012 and last in September, 2012) under construction plan. Thereafter, I have paid from my own sources. The possession is not expected before March 31, 2015, i.e. I may not be able to satisfy the condition three years’ period to get possession of the flat, from the end of the year in which home-loan was sanctioned. Please elaborate on the provisions to claim rebate of interest on home-loan under Section 24 and payment of principal amount under Section 80C, where the possession is given after three years.

Further, what is the difference between

• Claiming rebate of interest on home loan under Section 24 as loss of property (Col. 2 of ITR) and
• Under Section 80EE of Chapter VI A (Col. of ITR)? — Munish Kumar Mittal

A. Your queries are replied hereunder:

Section 24 of the Income Tax Act 1961 (The Act) deals with deductions from income from house property. This Section allows deduction in respect of interest on the amount borrowed for the construction of a house against the income from house property. Such deduction in respect of a self-occupied property is limited to Rs 30,000. However, a proviso to the said Section gives a benefit to an assessee that in case the amount borrowed is on or after February 1, 1999 and the construction is completed within three years from the end of the financial year in which the amount was borrowed, deduction for interest on amount borrowed for construction of a house would be allowable to the extent of Rs 1,50,000. This amount of Rs1,50,000 has been increased to Rs2,00,000 by the Finance (No. 2) Act, 2014 w.e.f. assessment year 2015-16. In case you are not able to get the possession within the aforesaid period of three years, the admissible deduction in respect of interest paid/payable for the amount borrowed for the construction of a house would be Rs30,000 in case of a self-occupied house. However, if the house is let out, the aforesaid restriction would not be applicable and deduction would be admissible for any higher amount paid/payable as interest on the amount borrowed for the construction of a house.

Section 80C of the Act provides for the deduction of principal amount repaid to the specified institution from whom the amount had been borrowed for purchase or construction of house the income of which is chargeable to tax under head "income from house property" or which would have been so chargeable if the same had not been used for assessee's own residence. This deduction is covered within the over all limit of Rs1,00,000 (raised to Rs1.50,000 from assessment year 2015-16) in respect of amounts specified in the said Section.

Deduction under Section 24 of the Act is allowable from “income from house property” and in case the amount of interest paid/payable exceeds the annual letting value of the property, loss is adjustable against any other income. In case the same is not set off in the same year, the same can be carried forward for a period of eight assessment years. As against this, deduction under section 80EE of the Act is allowable to the extent of Rs1,00,000 in respect of interest payable on loan taken by an assessee from any financial institution for the purpose of acquisition of a residential house property subject to certain conditions specified in the aforesaid Section. Such deduction was admissible for the assessment year 2014-15 for a total sum of Rs1,00,000 for said assessment year and in case the amount of deduction allowed for the said assessment year was less than Rs1,00,000, deduction for the balance amount (i.e. Rs 1,00,000 minus amount allowed for assessment year 2014-15) is admissible for assessment year 2015-16.

Following are the main differences between the deduction allowable under the two sections:

i)Deduction under Section 24 of the Act is allowable in respect of any house property i.e. residential or commercial.

ii)Deduction under Section 80EE of the Act is allowable from the total income in respect of interest payable on the amount borrowed for the acquisition or construction of a residential house property.

iii) Deduction under Section 80EE of the Act is allowable to the extent of Rs1,00,000 for the two assessment years referred to in (c ) above. Deduction under Section 24 of the Act subject to the limits explained in (a) above.

Where a deduction under Section 80EE of the Act is allowed for any interest referred to in the said Section, deduction shall not be allowed in respect of such interest under any other provisions of the Act for the same or any other assessment year.

Declare sale proceeds in IT return

Q. I had sold my HUDA plot in 2013 and deposited the sale proceeds in bank for six months. Now I have purchased a flat from a private builder in 2014 and am paying the installments. I have not shown the plot sale deed in my IT return. Is there any capital gain on the amount that I have received? — Anand Kumar

A.You are liable to pay tax on the capital gain arising on the sale of plot in the year 2013. You could have saved tax on the amount of capital gain in case the amount of net consideration (full value of consideration of sale as reduced by any expenditure incurred wholly and exclusively in connection with such sale) had been deposited in a bank under capital gain scheme account before the due date of filing return for assessment year 2013-14. It seems that such deposit has not been made by you, and therefore, you were liable to declare the capital gain earned on such sale in the income tax return for the year ended March 31, 2013 relevant to the assessment year 2013-14 and pay the tax due on such amount of capital gain. You can file the return for the assessment year 2013-14 by March 31, 2015 by declaring therein the amount of capital gain. You will have to make the payment of tax along with the interest under the applicable provisions of the income tax Act 1961 (the Act).

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