I had long-term gain from sale of shares in April , I don’t have a property . To save gain I purchased residential property in April 2009 and now I want to further purchase residential property in February 2010. Whether it would violate the conditions laid out in Sec. 54F. What if I let out the first property and purchase second house property. What if I treat the second house property as my office on records?

?Manish Jaju

The long-term capital gains arising from sale of shares on a recognised stock exchange in India are free from tax. We presume you have sold the shares in an off market transaction. In that case?Exemptions from tax on long-term capital gains arising from transfer of a residential house are available u/s 54 and 54F if the assessee purchases or constructs ?a? residential house within stipulated periods. The villain causing the confusion is the article ?a? used before ?residential house?. It seems to imply that the exemption is available only against purchase of one residential house and not two, or more. In other words, when an assessee invests the capital gains u/s 54 or the net sale proceeds u/s 54F in purchasing or constructing two residential houses, only one of these, as opted for by the assessee, will be allowed for the tax concession.

In the case of Fulwanti C Rathod v ITO, ITAT Mumbai Bench ?E? (ITA 1092/Mum./1995), dt 3.5.02, the learned judge observed, ?The word ?a? can be equivalent to the word ?any?. Also as per the General Clauses Act, singular includes plural.? The judge referred to the principle of interpretation that when there was a doubt as to its meaning, it had to be understood in the same sense it harmonised with the objective of the enactment. Referring to the Wealth-tax Act and the Estate Duty Act, the words used therein were, ?one house? as against the words ?a house? used in the Income-tax Act.

On the other hand, in the case of Mrs Gulshanbanoo R Mukhi v Joint CIT Appeal #3369 (BOM) of 2000 [AY 96-97] dt 16.1.02 ITD 649 (Mum) ITAT Mumbai Bench ?C?, it was held that ?a? can be ?any? but ?any? cannot be ?many?.

It is unfortunate, but true, that in practice the Department uses the interpretation which is beneficial to the revenue.

I want to know whether dividend income, which is exempt in the hands of the recipient on which dividend distribution tax is paid, will be treated as dividend income in case of a trust.

?Amit N. Shingi

The definition of income of a trust has an entirely different connotation from what is normally understood as income. In the case of dividends, whether DDT has been paid or not, dividends paid by some specified companies is not considered as income whereas it is treated as income when received from other companies.

If the trust is for charitable purposes the definition of income to be excluded is different from the definition of income to be excluded as applicable to trusts for private religious purposes or for a class of beneficiaries.

I request your advise on my PPF a/c which I opened in 89-90 in a post office at Delhi and operated it for three years. Thereafter in continuity, I opened a PPF a/c in SBI Delhi after change of residence and have been continuing it for last 17 years. After 15 years (3+12), I requested another five years of continuity at SBI.

I withdrew part of PPF as authorised in rules in 96-97 from Post Office after advising them amounts deposited subsequently in SBI Delhi Interest payments have been duly entered in Post office and SBI pass books.

I wish to know, if this constitutes two PPF accounts and have I done any thing wrong. If so what would be the remedy as I wish to withdraw PPF money now.

?Air Marshal B S Bedi

D. G. Posts letter No. 1-23/75-SB dt 8.2.79 states??An individual can open only one account in his name either in the post office or in the bank and he has to declare this in application form for opening the account. Persons having a PPF account in the bank cannot open other account in the post office and vice-versa.?

If two accounts are opened by the subscriber in his name by mistake, the second account will be treated as irregular account and will not carry any interest unless the two accounts are amalgamated with the approval of the ministry of finance (DEA). For this purpose the subscriber will have to write to the under secretary (Budget) MoF (DEA), New Delhi-1 through the Accounts Office giving detail of each account.

A subscriber may apply for transfer of his account from one accounts office to another.

If the investor fails to subscribe even the minimum Rs 500, the account is considered as discontinued. Loans and withdrawals are not available on such accounts. At the end of the term, the investor will be paid the balance with accrued interest for the full term. It is possible to revive the old account by contributing Rs 500 with a penalty of Rs 50 per year.

A new account cannot be opened, even if the existing one gets discontinued since it can be revived, irrespective of the years of default.

It appears that the officers handling your PPF accounts are not aware of the rules.

The best you can do in this case is to close your first PPF account which has overshot the term of 15 years. Since you have not made any contributions, you will be able to close it anytime. Similarly, close the second account at its maturity and open a new PPF account.

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