Mobile tower & income from it

Q. Kindly clear my doubts regarding  these two points:

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• Rental income from house property is 30 per cent exempted from income tax . Whether rental income from mobile towers is also included in this or not?
• According to Section 64, a daughter-in-law if gifted some property, any income from that would be deemed to be the income of transferor. If a woman gets a building as a gift from her mother-in-law and she is receiving the rent now, would it be deemed income of mother-in-law? If yes, suppose after three years the total income is Rs 4 lakh, which is to be clubbed, it would be clubbed in only one year or in three years to which it relates.— Radhey Shyam

A.Your queries are replied here under: 

• The income from house property is taxable in respect of property consisting of any buildings or land appurtenant thereto. The deduction of 30 per cent is allowed in respect of income from property.  It is presumed that your query is in respect of mobile towers, which are installed on rooftop of a residential building. Such income should be treated as an income from house property and therefore the deduction of 30 per cent should be allowed.  Refer to the decision of Hon'ble Delhi Tribunal in the case of Manpreet Singh vs. ITO-Ward-33(3) New Delhi (53 taxman.com 244) (Delhi - Trib.).
• Income arising for the year in respect of property, which has been gifted to the daughter-in-law shall be clubbed with the total income of the donor. Income of Rs 3 lakh which is for three years should be clubbed every year i.e. Rs 1,00,000 per year. It cannot be clubbed in one year. 

Do I have an equal right on property?

Q. My father died about 20 year back when he was about 55 years of age. After his death, property remained in his name.  The property consists of a residential house and two plots. These were acquired by my father out of his earnings. We are four brothers and one sister. In the passing years, my elder brother got the intakaal only on the name of four brothers. As a sister, I was not mentioned in the intakaal. Just recently (one month ago) the brother's got the intakaal done on their names without asking for my consent. Am I entitled to a share of my father's property or not? I got married on my own and hence did not take any dowry. I got widowed one year after my marriage (was 24-year-old the, now 45-year-old) and did not remarry. Can I ask for a share in these plots and the house constructed by my father? There are no registries of these properties, only the intakaal papers mentioning my four brothers as legal heirs, which I suspect was deliberately done by my eldest brother.  Was it illegal on his part to not have mentioned me too as an legal heir? — Sukanya

A. Your queries are replied hereunder: 

• As per the provisions of the Hindu Succession Act 1956, you are entitled to a share in your father's property. On the basis of facts in the query, you would be one of the legal heirs in respect of your father's property. This is in accordance with section 6 of the aforesaid Act. 
• Presuming that your father had not executed a will in favour of your four brothers, his property should have been mutated in the name of your brothers and yourself. You should thus be entitled to a share in the house property as well as plots in accordance with the provisions of the aforesaid Act. In case your brothers do not agree to this proposition you may have to take a legal action for division of the house property in the name of five legal heirs.
• This being a civil law matter, you should also consult a lawyer for the purpose. 

No municipality, no tax on sale of land

Q. I am a retired bank official and settled in Karnal. I have sold my share of an agricultural land situated in my native village. The land was being used by the family for agricultural purposes and is situated far away from the limits of any municipality. Is the amount realised on sale taxable? — Purshottam Lal 

A. In case, the agricultural land is not situated within the specified distance of the municipality/ municipal corporation/ cantonment board etc., such agricultural land is not considered to be a capital asset and therefore the capital gain arising on the sale of such land is not taxable. It is suggested that the fact of the agricultural land being far away from the municipality/ municipal corporation/ cantonment board etc; may be verified taking into account the following norms specified by section 2(1A) of the Income-tax Act 1961 (The Act).

Agricultural land situated in any area within the distance, measured aerially —

• Not being more than two kms, from the local limits  of any municipality, or cantonment board referred to in item (a) and which has a population of more than Rs 10,000 but not exceeding one lakh; or
• Not being more than six kms, from the local limits  of any municipality, or cantonment board referred to in item (a) and which has a population of more than one lakh but not exceeding Rs 10 lakh; or
• Not being more than eight kilometers from the local limits  of any municipality, or cantonment board referred to in item (a) and which has a population of more than Rs 10 lakh."

In case the agricultural land, which has been sold by you is situated beyond the limits specified herein above, the capital gain arising on sale of such land would not be taxable. 

Register sale deed at actual price

Q.I intend selling my house. The agreed price would be around Rs 70 lakh. The maximum amount acceptable to buyers for registering the deed with the tehsildar is Rs 20 lakh. The price fixed by the authorities for minimum registration is Rs 6000 pr sq.yd. I do not want to be burdened with the balance unaccounted money for which I have no need. With the proceeds, I intend buying a flat in Dehradun where a cheque is acceptable to the builders. There was only one offer where the buyer agreed to registry worth Rs 20 lacs and pay me the balance amount by cheque. How do I account for this cheque amount of Rs 50 lacs? How could I safeguard my interests?  

— Raj Kumar Gupta

A. It would be advisable to get the sale deed registered at the prevailing market price so as to steer clear of any problems arising out of any unaccounted transaction. You have not indicated the purpose for which the buyer is going to make the additional payment of Rs 50 lakh by cheque. It is presumed that the amount is being paid towards the sale price. As stated above, it would be in your interest to get the sale deed registered at the full amount of Rs 70 lakh, this being the prevailing market price of the property.  

Worth of an old property

Q. I am an NRI based in the UK. I own a flat in Mumbai, which was purchased in the 1970s. There is no possibility of my coming back to India and therefore I would like to sell it. Do I need any permission from any authority in this regard? I am informed that the sale would result into a capital gain on which I am liable to pay tax in India. How would the capital gain be computed as I am not aware of the intricacies of the tax laws in India. 

— Vinod Khosla

A. It seems you had acquired the flat prior to 01.04.1981. You have an option to substitute the fair market value of the flat as on 01.04.1981 instead of the cost incurred by you. In case such fair market value is higher than the cost,  you can substitute such fair value for the cost price of a plot as the basis for calculating capital gain. The cost or the fair market value as on 01.04.1981 would be indexed on the basis of the cost inflation index notified by the Government. The cost inflation index for financial year 2016-17 is 1,125. The amount of indexed cost computed on the basis of said index would be deducted from the consideration accruing on the sale of the flat and balance amount would be treated as a long-term capital gain arising on the sale of such flat. In case you have incurred any expenditure wholly and exclusively for the purposes of selling the flat, the same would also be deductible for the purpose of computing the long-term capital gain. The long-term capital gain so arrived at shall be taxable at 20 per cent plus education cess of three per cent thereon. These rates are applicable for the assessment year 2017-18 (year ending 31st march 2017). You do not have to seek permission from any authority for the sale of a residential flat. You can also remit the amount of sale proceed less taxes to UK through banking channels without any problem. 

How do I save tax on sale of plots?

Q.I am an employee of a government undertaking and have been allotted a residential flat on self-finance scheme basis by Chandigarh Housing Board to be constructed by them in two-three year period. I am planning to meet the cost of above flat partly from my family savings etc., and partly (1) with the sale proceeds of a residential plot which had been purchased by me about 10 years back for Rs five lakh in Ropar, and partly with the likely sale proceeds of a residential plot at Ropar, which had been purchased by my father for Rs. seven lakh a few years back which had been gifted to me in the preceding years. Please guide if the above action is permissible under taxation laws. — Anil Kumar

A.Your queries are replied hereunder: 

• The utilisation of sale proceeds of plots towards the payment of consideration for the allotment of a residential flat on self-financing scheme by Chandigarh Housing Board is permissible under the provisions of the Act. The utilisation of net consideration (full value of consideration received or accruing on sale of plots less expenditure incurred wholly and exclusively in connection with such sale) for this purpose, would enable you to save income tax chargeable on the profit arising on sale of plots. Such profit would be a long term capital gain as the plots were held by you/your father for a period of more than three years.

The following steps should be taken to save the tax on the long-term capital gain arising on the sale of plots. 

(i) The net consideration accruing on the transfer of plots should be deposited in a bank account under capital gain scheme account before the due date of filing the income-tax return for the year in which the capital gain arose. 

(ii) The payment towards the consideration for the residential flat should be made by withdrawing the amounts from such an account. 

(iii) The possession of the residential flat should be handed over to you within three years after the date of sale of plots. It has been clarified in Circular No. 471 dated  October 15, 1986 and Circular No. 667 dated October 18, 1993 that the allotment of a residential flat on self-financing scheme is akin to construction of a residential house as the construction is taken up on behalf of the allottee.

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