My question is regarding interest paid on education loan of my son. My wife is also employed and we both would like to pay interest amount separately into the education loan account of our son who is doing MS Course in USA. Whether both of us can claim independently the amount of interest actually paid by us during this financial year? The loan was taken jointly by my son and myself having furnished the necessary collateral security in the form of my house.

?S.Raju

Yes, both the parents can claim the benefit separately to the extent the interest is paid by them individually. However, in your case, your wife appears not to have taken any loan and therefore, she would not be in a position to claim the benefit. It can be claimed by you and by your son, to the extent of your respective shares in the loan.

My wife is doing MBA on a full time basis. I have been paying her tuition fee by taking education loan from Union Bank Of India. Am I eligible for rebate on income tax?

?Balraj Singh

As per Sec. 80E, — interest paid out of income chargeable to tax on loan taken by an individual from a bank, a notified financial institution, or any approved charitable institution u/s 10(23C) or 80G(2a) for higher education is deductible for eight successive years starting from the financial year (FY) in which the assessee starts repaying the interest. In other words, the loan repayment is not eligible but the interest payment eligibility has no ceiling. The benefit is available on loans taken by the student himself as well as for the benefit of spouse and children. The recent FA09 has simplified the definition of higher education to mean all fields of studies (including vocational studies) pursued after Senior Secondary Examination.

Since you pass all the tests mentioned above, you should be able to claim the benefit of deduction under this section.

I am an NRI based in the US and request you to please advise me on the following points:

1) I own a flat in Kolkata for more than 30 years. I want to sell it now to a friend in Kolkata. Please advise if I had to take a permission letter from the RBI.

2) Also please advise whether I can put the entire money in government securities to save capital gains tax.

3) How much will be capital gain tax based on the following data:

a) Purchased in the year 1976 for a sum of Rs 100,500.

b) I expect to sell it for a sum of Rs.54,00,000 in a few weeks as negotiations are going on.

?B.C.Mathu

In the case of assets, acquired prior to April 1, 1981, the option of substituting the fair market value (FMV) as assessed by a chartered valuer in place of original cost is open to the investor. In other words, if the actual cost of acquisition is lower than FMV as on 1.4.81, the investor may adopt the FMV to be his cost of acquisition. On the other hand, if the actual cost of acquisition is greater than the FMV as on April 1, 1981, the investor may adopt such cost. The CII based on 1981-82 only will be taken into account, whatever is the choice of the investor.

The CII for 2009-10 is 632. Even if we take the cost as Rs. 100,500 the indexed cost will be Rs. 635,160 (=100500*632/100). The indexed capital gains will be (Rs 54 lakh less Rs. 635,160=) Rs 47,64,840. Since the amount to be invested has to be in multiples of Rs. 10,000 you will have to invest Rs. 47.65 lakh.

You will do well by obtaining the FMV on 1.4.81 from a chartered valuer from your home town.

I had purchased a flat along with my father i.e. both of us are co-owners. For this purpose, I had taken a loan, the EMI for which is Rs 3,515 per month. Recently in August 2009, I have purchased another flat where I am the co-owner with my wife. For this I have taken another housing loan, the EMI for which is Rs 9,311. The first flat is in the custody of my father, second flat is occupied by me. Now can I claim deduction of loan installments for both flats, as well as the notional interest for both the flats.

?S S Arole

In the case of joint holding, if one of the holders has paid 100% of the purchase consideration and the other joint holder is included only for convenience, the person who has paid the entire consideration is treated as the holder of the house for tax purposes. The same rule can be applied in respect of housing loans.

On the other hand, where a house is jointly owned by more than one person and the share of each one can be separately ascertained, each co-owner is to be separately assessed in respect of the portion of the income from the house. Each owner can claim the benefit u/s 24 for interest on loans and u/s 80C for capital repayment against the loans taken individually. In the case of joint loans, it is necessary that the share in the loan of each one is separately ascertainable and the exemption is available in the ratio of the liability in the loan.

Where a capital asset is jointly owned by more than one person and the share of each one can be separately ascertained, each co-owner is to be separately assessed in respect of the portion of the capital gains arising from the transfer of asset ? C. G. Ghanshamdas v CIT (1979) 116ITR212 (Mad.). The same rule can be applied in respect of deductions u/s 24 for interest on loans and u/s 80C for capital repayment

?The authors may be contacted at wonderlandconsultants@yahoo.com