I own a house from which I get an annual income of R1.80 lakh. I wish to convert this house into a property of an HUF. What will be the tax implication?

? Ranjeet Sharma

As per Section 64 (2) of the Income Tax Act, where an individual who is a member of the HUF converts his separate property as the property of the HUF, or throws the property into the common stock of the family, or transfers his individual property to the family, otherwise than for adequate consideration, then the income from such property shall continue to be included in the total income of the individual. In your case, although the income shall now be received by the HUF, it shall be deemed to be the income in your hand and included in computation of your total income under the head, income from house property.

Recently, I earned capital gains on sale of some jewellery purchased five years ago. Are there any reinvestment benefits available under the I-T laws?

? Sanjeev Prasad

The reinvestment benefit available under Section 54EC is relevant in your case. Under this Section, any long-term capital gain on sale of any capital asset shall be exempt if this gain is invested within six months of the transfer in specified bonds issued by NHAI or REC, redeemable after three years. The investment made in such bonds during the FY should not exceed R50 lakh.

I have been holding shares of a closely held company since 2009. I received certain bonus shares in year 2010. I intend to sell all them. What will be the tax implication?

? Kala Vijay

As per Section 55(2)(aa) of the Income Tax Act, the cost of acquisition of bonus shares shall be taken as nil. Since the bonus share has been held for more than 12 months, it will be treated as a long-term capital asset and capital gain arising on transfer of such asset will be treated as long-term capital gain. There is no use of benefit of indexation in the present case as the cost of acquisition is nil. Therefore, the entire net proceeds from sale of bonus shares shall be treated as long-term capital gain @ 20.60%. Further, you can avail the exemption by investing in specified bonds as prescribed under Section 54EC of the Income Tax Act.

I am a salaried employee with an annual income of R10 lakh. I have not yet filed the return of income for AY 2011-12. Can I file the return of income now?

Shruti Verma

Yes. As per Section 139(4), if an assessee has not submitted his return of income on or before the due date mentioned under Section 139(1) (i.e., July 31, 2011), he can still file the return of before the expiry of one year from the end of relevant AY (i.e., March 31, 2013) or before the completion of the assessment, whichever is earlier. Therefore, in your case, you have time to file your return till March 31, 2013. However, penalty of R 5,000 may be levied under Section 271F, if return is filed on or after April 1, 2012.

The writer is founder, RSM Astute Consulting Group

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