Indiabulls rejects Bharat Mill ‘stop-sale’ request

INDIABULLS Real Estate has declined to give any commitment to the Appellate Authority for Industrial and Financial Reconstruction (AAIFR) that it will not promote or sell apartments at the proposed residential project on the Bharat Mill property. Indiabulls’ purchase of the mill has been contested by its rival, Lodha Group, two people familiar with the matter said.  The attorneys representing Indiabulls turned down a “request” from the authority to refrain from selling till it disposes of the case, the two people said. Both the companies declined to comment for the story. Lodha Group is contesting that rules for the bid for the mill property which was owned by National Textiles Corporation were not completely disclosed because of which it had lost the bid. The bidders were not told that they could sell proposed buildings even before paying up for the property.  NTC sold the eight-acre Bharat Mill property at Worli, Mumbai, to Indiabulls in August for 1,505 crore since it was the highest bidder. Lodha was the second highest with a bid that was 2 crore less than Indiabulls’. Lodha is seeking a re-bid for the project with a level-playing field and has offered to pay 1,602 crore for the property. Indiabulls, which had last week paid the first installment of 989.5 crore for the purchase of both the Poddar and Bharat Mill properties, had received bookings for over 40 apartments at the proposed residential tower on the Bharat Mill property. The apartments were offered for 18,000 to 23,000 per sq ft, a company official had said earlier. 

New property tax scheme under dispute

Kolkata

With the city poised for a change in the property tax assessment procedure, the civic headquarters at S N Banerjee Road is flooded with queries from citizens over the parameters that have divided Kolkata into seven zones (A to G) based on the level of development that is likely to determine the tax for each locality.

For instance, a host of citizens have questioned KMC’s decision to club Southern Avenue, a posh locality in south Kolkata, with neighbouring localities such as Sadananda Road or Pratapaditya Road under Category C, when the latter are no match for Southern Avenue, if real estate prices are anything to go by.

“How can a posh locality, namely Southern Avenue, be treated on a par with Pratapaditya Road, when residents of the former have better amenities than those residing at the neighbouring areas?” questioned Suman Chatterjee, a resident of Pratapaditya Place. Chatterjee has sent his objection to the KMC authorities. Similar objections have reached the KMC headquarters from residents of Sadananda Road, urging the civic body to either upgrade Southern Avenue to Category B, or place Sadananda Road under Category D.

Similar objections and suggestions are coming from 3,000 property owners across the city after KMC invited suggestions from citizens before it makes amends to its draft proposal. Some, however, have urged KMC to come clear on the parameters that were used to categorise the seven tax zones that civic authorities in other metros made public before introducing the new system.

According to a member of the seven-member municipal valuation committee, that has devised the parameters, necessary changes would be made in the assessment procedure, taking into account the objections and suggestions from citizens.

The huge response has prompted the civic authorities to arrange for “special hearing” sessions for citizens before the change-over to the new assessment method. “We have arranged for such special hearings at each corporation borough from the last week of November. This is the primary level. Later, we plan to arrange for a hearing session at Town Hall, where citizens can air their suggestions or grievances. The interaction will help us make the necessary amendments before we embrace the unit-area based assessment,” a senior official of KMC’s assessment department said.

KMC has sent all the suggestions in this regard to the three-member review committee set up to examine the suggestions and address anomalies. The committee — of which economist Avirup Sarkar is a member — will scan citizens’ feedback before it recommends changes.

The Trinamool Congress-run KMC board is in no hurry to introduce the UAA method for determination of property tax. Though Trinamool chief Mamata Banerjee wants mayor Sovan Chatterjee to adopt the new area-wise method, Chatterjee is waiting for feedback from experts before announcing the switchover.

MMiC Debabrata Majumder, who’s a member of the review committee, however, felt it was too early to introduce the new method. He said that though the city had been divided into seven zones and prices fixed for each zone, the entire exercise might undergo a change after receiving citizens’ feedback.

Compiled by Mr. Ulaganathan

You may soon check legal status of land

Mumbai:

Property buyers dreading the antecedents of the land they are planning to buy have reason to rejoice. If the Bombay high court has its way, property records will have to carry additional information on whether the plots are under litigation.

A division bench of Justice B H Marlapalle and Justice U D Salvi has recommended that legal liabilities of a land find mention in the 7/12 extracts (property records).

TOI in its edition dated October 21, 2010 had reported about the high court dismissing a petition challenging the decision of the Nashik collector to start including details of the legal disputes of land in the 7/ 12 extracts.

“We suggest that all the district collectors in Maharashtra issue such circulars,” the judges have now advised.

The court said that the intention was to alert property buyers as well as government officials. “It is intended to ensure that the pendency of the suit with respect to the properties sought to be transferred by any means is brought on record, while effecting an entry in the 7/12 and other rights extracts,” said the high court. The judges added that the Nashik collector’s decision did not put any restriction on the transfer of properties under litigation. “It is intended only to alert the revenue officers and particularly those who are responsible for mutating the revenue entries regarding the rights of the parties.”

The court was hearing a petition filed by a Nashik resident who had challenged the local collector’s circular to revenue authorities to reflect pendency of court cases in the property records. The petitioner’s lawyers claimed that the decision had placed “unreasonable restrictions and caused prejudice” to his rights to dispose of the suit property.

The government’s lawyer Molina Thakur countered this argument by saying that the the ultimate objective of the circular was to safeguard the rights of the public. “When a buyer of a property puts in his hard-earned money to purchase a piece of land, he should be made aware whether the land is involved in litigation,” said the advocate. The court agreed with the government’s contention.

However, it remains to be seen if the government accepts the high court’s suggestion.

Consumer activists have welcomed the order, saying that property buyers would be able to verify readily from the records if the land they are planning to buy has any legal encumbrances.

Income from house liable to tax

Income earned from a house is taxable under a separate head - ‘Income from House Property’. The relevant provisions related to tax under this head are provided under Section 22 to Section 27 of the Income Tax Act. In order to be taxable, an assessee must be the owner of the property. Further, the property should consist of buildings or land adjacent. The property should not be used for the purpose of any business or profession by the assessee. It is to be noted that the property must either be used for or capable of being used for renting out and deriving a rental income. In case of a house, it is the annual value of the property and not the actual rent that is taxable. There is a specified procedure to determine the annual value of the property. Annual value means the capacity of the property to earn an income that may be more than the actual rent received by the owner of the property.

The highest of municipal value or fair rental value of a similar property in a similar locality is treated as taxable income. However, in case the higher of the two exceeds the standard rent of the property, determined in accordance with the Rent Control Act, the standard rent will be treated as taxable rental value of the property.

In respect of let-out properties, the annual value is determined as highest of:

Municipal rental value of the property Fair rental value of a similar property in a similar locality Rent actually received by the assessee for the property in a given previous year However, if the Rent Control Act is applicable in the locality where the property is situated, the taxable value cannot exceed the standard rent fixed in accordance with the Rent Control Act, except where the rent actually received exceeds the standard rent. From the gross annual value, certain deductions are available to an assessee to arrive at the net annual value.

These include Under Section 23

The municipal taxes paid by the owner of the property are allowed as a deduction from the annual value.

Under Section 24

These expenses are allowed as deductions from the amount arrived at after deducting municipal taxes from the annual rental value: Repairs and collection charges: 30 percent of the net adjusted annual rental value. This is irrespective of whether the assessee has actually incurred the expenses or not. However, if the repairs are borne by the tenant, this deduction is not allowed to the owner of the property.

Interest on borrowings: Interest paid or payable on money borrowed for purchase, construction, repair, renewal or reconstruction of a house is allowed as a deduction. In case of a self-occupied property treated as such, the maximum deduction will be restricted to Rs 30,000. If borrowings are for the acquisition or construction of a house after April 1, 1999, Rs 1.5 lakhs will be deductible. If the house has been acquired or constructed with borrowed money, the interest for the period prior to the previous year in which the property had been acquired or constructed will be deductible in five equal annual instalments starting from the previous year in which the house has been acquired or constructed. There are no other deductions towards ‘income from house property’.

Self-occupied property

In case an individual or Hindu Undivided Family (HUF) has only one self-occupied residential property, that property will be treated as selfoccupied. There will be no taxable income in respect of such a property. The condition is that the owner should not have let-out the property for any time during the year, nor earned any benefits from the property . In case the assessee owns more than one property, the exemption applies to only one self-occupied house. The owner has the discretion to choose any of the properties as selfoccupied. The deemed income from all other properties is taxable, even if they are self-occupied and no rental income is being derived from them. Although not actually let-out, they will be deemed to be let-out, and notional rental value will be treated as taxable income in the hands of the owner.

In respect of let-out properties, the annual value is determined as highest of:

Municipal rental value of the property Fair rental value of a similar property in a similar locality Rent actually received by the assessee for the property in a given previous year However, if the Rent Control Act is applicable in the locality where the property is situated, the taxable value cannot exceed the standard rent fixed in accordance with the Rent Control Act, except where the rent actually received exceeds the standard rent. From the gross annual value, certain deductions are available to an assessee to arrive at the net annual value.

These include Under Section 23

The municipal taxes paid by the owner of the property are allowed as a deduction from the annual value.

Under Section 24

These expenses are allowed as deductions from the amount arrived at after deducting municipal taxes from the annual rental value: Repairs and collection charges: 30 percent of the net adjusted annual rental value. This is irrespective of whether the assessee has actually incurred the expenses or not. However, if the repairs are borne by the tenant, this deduction is not allowed to the owner of the property.

Interest on borrowings: Interest paid or payable on money borrowed for purchase, construction, repair, renewal or reconstruction of a house is allowed as a deduction. In case of a self-occupied property treated as such, the maximum deduction will be restricted to Rs 30,000. If borrowings are for the acquisition or construction of a house after April 1, 1999, Rs 1.5 lakhs will be deductible. If the house has been acquired or constructed with borrowed money, the interest for the period prior to the previous year in which the property had been acquired or constructed will be deductible in five equal annual instalments starting from the previous year in which the house has been acquired or constructed. There are no other deductions towards ‘income from house property’.

Self-occupied property

In case an individual or Hindu Undivided Family (HUF) has only one self-occupied residential property, that property will be treated as selfoccupied. There will be no taxable income in respect of such a property. The condition is that the owner should not have let-out the property for any time during the year, nor earned any benefits from the property . In case the assessee owns more than one property, the exemption applies to only one self-occupied house. The owner has the discretion to choose any of the properties as selfoccupied. The deemed income from all other properties is taxable, even if they are self-occupied and no rental income is being derived from them. Although not actually let-out, they will be deemed to be let-out, and notional rental value will be treated as taxable income in the hands of the owner.

Guardianship

By: Bhaskar M.R.

The Hindu Minority and Guardianship Act, 1956 is an Act to amend and codify the law relating to minority and guardianship among Hindus. Under the Indian Majority Act, 1875, a person attains majority on his completing 18 years age but before the completion of that age. That Act applies to all persons including Hindus but an exception is made with respect to the capacity of any persons to act in the matter of marriage, dower, divorce, and adoption.

Guardians may be divided into three classes, namely:

• Natural guardians
• Testamentary guardians
• Guardians appointed under the Guardians and Wards Act, 1890.

Who is a Minor?

Minor is a person who has not completed the age of 18 years. So, a minor attains majority on completion of 18 years of age and not on reaching the eighteenth year of age. Previously, the minors for whom guardians were appointed by the court, the prescribed age for attaining majority was after the completion of 21 years of age. This has been amended now and all minors attain majority on completion of eighteen years of age.

Who is a Guardian?

Guardian is person, who takes care of the minor person or acts as caretaker to his property or both person and property, since a minor cannot enter into any contract. The Guardian should act in the best interests of the minor. The Guardian should be a major.

Guardians are of different types:

• Natural guardian = Guardian appointed, by will by the parents of the minor, who are called testamentary guardians.
• Guardian appointed by the court = Persons empowered to act as guardians by an enactment relating to any court of wards

Natural guardians of a Hindu minor are his father and mother; Father is the natural guardian of boy or an unmarried girl. In the absence of the father, the mother will be the natural guardian. But in case of minors who have not completed five years of age, mother will be the custodian.

In case of an illegimate boy or illegimate unmarried girl, the mother would be the natural guardian and thereafter, the father. Illegimate means, children born to unmarried parents. In the case of a married girl, the husband would be the natural guardian.

But such instances are very rare, since child marriage is prohibited. Stepmother and stepfather cannot be natural guardians. Similarly, a person who has converted to any other religion, or one who has become a sanyasi or renounced the world cannot be a natural guardian.

What is the position of the mother, if the father appoints a guardian to a minor person, property, by Will?

Father may appoint a guardian by Will to the person and property of his minor child. However such appointment of a guardian by Will does not have any effect if the father dies living behind his wife (mother of the minor child) who is the natural guardian of the minor child.

The mother, (natural guardian) will succeed as guardian and not the person appointed by Will of the father. She may appoint a different guardian by her Will; who will succeed as guardian, on the death of the mother.

In case, she does not appoint any guardian, by Will, the guardian appointed by the father by Will, will succeed as guardian of minor on the death of the mother. The guardian will act only until the minor completes eighteen years of age.

Can a guardian be appointed to the minor’s undivided interest in joint family property?

The Kartha is head of the Hindu joint family who is empowered to manage the property. In such cases no guardian shall be appointed. The Kartha takes care of the person and the property of the minor who is the coparcener. However, the competent court may appoint a guardian for undivided share of the minor in the joint family property also.

Who is the natural guardian of an adopted son?

The adoptive father, and after the adoptive father, the adoptive mother would be the natural guardians of an adopted minor son. The original parents of the son given in adoption will not be natural guardians.