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G P Khungar
My father became a member of a house building cooperative society in 1959 and was allotted a 800 sq mt plot of land in South Delhi in 1971 on which he built a multi-storeyed dwelling unit in 1975. At the time of joining the society, he declared my mother his nominee. However, during his lifetime he nominated me as an additional nominee without assigning any specific percentage of interest in the property. The society, however, did not officially give effect to this nomination by asking him to ratify the nomination in the nomination register.
Pursuant to my father's death earlier this year, his will has come into effect by virtue of which the entire property has devolved in equal measure unto my brother and myself. Accordingly, my mother being the registered nominee of my father, wrote to the president of the society and requested that in order to give effect to her husband's last will and testament, their two sons may be enrolled as members of the society or at least be noted as nominees in the recordsof the society.
The society has now replied to my mother and advised her that she should apply for enrollment as a member first and once she has been enrolled, her request to include the names of her sons as nominees would be considered by the society at the appropriate time.
If the society's advice is adhered to, obviously the title of the property cannot pass on to the sons during our mother's lifetime and as such our late father's will shall remain unexecuted. Could you kindly guide us as to how we should proceed further in the matter.
-- Ashok Kapur, Delhi
As a first step you should apply to the Delhi Development Authority (DDA), the lessors of the land to the society of which your father by virtue of the allotment of the plot of land in 1971 became a sub-lessee to mutate the property in your and your brother's joint name as per the provisions of your late father's last will and testament. For this purpose, your application in the prescribed format should be duly supported by a copy ofthe death certificate, a certified copy of the last will and testament and a no- objection letter from your mother on non-judicial stamp paper of appropriate value and any other members of your family who are legally entitled to claim a share in the property.
As a sequel to the above action, your mother should reply to the society's letter and send them a copy of your application to the DDA (along with enclosures mentioned therein) and point out that acceptance of membership of the society by her would be in violation of the letter and spirit of her late husband's last will and testament and a negation of the NOC that she has already given to the DDA to enable the mutation of property jointly in her sons' name. She should therefore request the society to jointly offer the membership to you and your brother.
In the event the society fails to act upon this request within a reasonable period of time after mutation of the property jointly in your brother's name and yours, you will be well within your rightsto seek the intervention of the Registrar of Cooperative Societies who is fully competent and empowered to give suitable directions to the society. Meanwhile, you would also be well advised to approach the Municipal Corporation of Delhi (MCD) to mutate your brother's name and yours in their records as the rightful owners of the property in question.
So far I have been living in company accommodation but am due to retire on March 31, 1999. In order to meet my accommodation needs, I have invested Rs 10 lakh for the purchase of a small apartment in Bangalore. For the same, I've taken a loan of Rs 3 lakh from Citibank on an interest rate of 15.50 per cent. What income-tax benefits can be claimed by me in my tax returns?
-- C Chalapati Rao, Belgaum
The interest paid by you to Citibank for the purchase of a home intended for self occupation is exempt from payment of income tax to the extent of Rs 30,000 per annum. You are permitted to claim this as a deduction from your taxable income as long asthe interest paid by you during the previous year is Rs 30,000 or more. In the event that the actual interest paid by you is less than Rs 30,000, you will be entitled to claim deduction of the actual amount of interest paid by you. This is under Section 24(1)(vi) of the Income Tax Act.
In addition to the interest, you are also entitled to claim a deduction up to Rs 10,000 annually under Section 88 of the Income Tax Act so long as you are repaying the principal amount of loan availed by you in installments and the amount paid on this account during the previous year is Rs 10,000 or more. In the event the installment amount paid by you is less then Rs 10,000, only the actual amount paid by you towards loan repayment can be claimed as deduction under this proviso.
In addition to the above, you will also be able to claim deduction on account of property taxes that you may have paid to the Municipal Corporation of Bangalore during the previous year.
As you are aware, the provisions of the Income Tax Act aresubject to an annual review by Parliament and the policy delineated herein above is as applicable for the assessment year 1999-2000. It would, therefore, be in your interest to keep abreast of the taxation provisions on a year to year basis in future.
G P Khungar is a real estate consultant and a former director (corporate affairs) of Ansals Ltd
(Readers are requested to send in their queries to the Associate Editor, The Financial Express, Fortune Towers, 2nd Floor, 198/2/1, Ramesh Market, Near Sapna Cinema, East of Kailash, New Delhi-110 065)
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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