-- V K Agarwal, Calcutta

Your bank officer is still in the era prior to 1985. GSR 1013(E) dt. 20.9.86 has replaced Rule 9 of PPF scheme. Obviously, the PPF passbook is old. I am amazed to find that this officer is totally ignorant of this amendment. This SBI branch is at Calcutta, a metropolitan city and surely must be handling a large number of accounts.

The officer does not know the government notification. SBI has gone to the extent of writing its own guide-book on PPF for the benefit oftheir PPF account offices. In spite of this, if your bank manager refuses to give you the withdrawal I wonder who can be held responsible for not only your sufferings, but also of others like you.

If the problem persists kindly give me the address of this SBI branch and your PPF account number to enable me take up the matter with SBI head office.

I am given to understand that, if my wife saves some money out of the amount I give her for looking after the day-to-day expenses, such savings are not treated as a gift. The income she earns from investments made from this pin money is taxed in her hands. My wife is a thrifty person and saves about Rs 15,000 per month. I hope the ITO will not object to her claiming title to this money.

-- Anil Paranjape, Pune

The department can treat this as a gift. Though gift tax has been abolished by FA98, the clubbing provisions are still applicable. Income earned by your wife out of investments of these savings will be treated as your income.

A closefriend of mine expired last year. After his death, the executors of his estate deposited Rs 52,700 into his PPF account. This year when the executors decided to close the account, the bank refused to pay any interest on this amount. The amount deposited was out of the income of the deceased person for that year. Your attention is drawn to Sec. 159 which states, ``Where a person dies, his legal representative should be liable to pay any sum which the deceased would have been liable to pay if he had not died, in the like manner and to the same extent as the deceased''. I feel the bank is making an error. Please comment.

-- A K Parikh, Vile Parle, Mumbai

The PPF account does not permit any contributions after death of the account holder. Therefore, such contributions are irregular. I wholeheartedly agree with you that it is injustice and inequity not to allow the executors to reduce the tax liability by making contributions to tax-saving schemes out of the income of the state. If an estate isliable to pay taxes, the same estate should be allowed to save taxes by being entitled to invest in tax saving avenues.

You remind me of the case of one Mrs Sukhia. Her husband had earned heavy capital gains, intended to deposit the sale proceeds in Capital Gains Unit Scheme of UTI to save taxes on the gains (under the then existing Sec. 80E), but passed away before he could purchase the units. On her behalf, I appealed to the ministry of finance and found that it was not necessary to do so. The rules permitted UTI to accept the deposit. The department granted the benefit to the estate. It is time the NSO undertook the exercise of having a close look at the rules and make necessary changes in accordance with the generally accepted practices of other investment avenues.

I am a karta of an HUF and our only son is settled in USA. The HUF has a PPF account with SBI and the nominee is my wife. In case of my death, will the proceedings of the account be handed over to my wife?

-- M K Jain, NewDelhi

When a karta passes away, the PPF does not expire. It is handled by the new karta. If the senior most person of the family, who normally takes the reigns is not capable of handling the affairs for reasons like old age, being abroad, or too busy with his own business, some other male member (or even a female) can take over the mantle. The only requirement is that the ITO has to be informed and his approval taken.

You have suggested earlier that there should be a provision of indexation on MEP-92. Going by your suggestion (Benefit of index may be claim on MEP-92), we made a claim before the authority. But they disallowed and put a demand. Please suggest what I should do.

-- P C Sharma, Agra

All that I had observed was that while carrying out large-scale amendments to the tax provisions on long-term capital gains, the authors of the legislation appear to have erred in not carrying consequential amendment to Sec. 45(6) dealing with instrument u/s 80CCB, inserted by FA90 anddiscontinued by FA92. The confusion prevalent in this area is so rampant that different ITOs can take different views. Some of my friends have been allowed the indexation but this fact cannot force your ITO to change his stance. You are just unlucky and have to accept the view taken by your ITO.