There is no dividend distribution tax payable by an equity-oriented fund

•If I am the sole earning member of my family and I trade stocks on my wife’s name, then will the income resulting from this trading be clubbed with my income for taxation purpose; or will it be treated separately as her income, not in any way related to mine??Vineet Dubey

As per the provisions of Sec 64, the income resulting from trading in your wife’s name will indeed be clubbed in your hands for tax purposes.

•There was a recent ITAT ruling wherein the assessee had taken an interest free loan and the assessing officer deemed the same taxable under Sec 56 as a gift received from a non-relative. The ITAT ruled in favour of the assessee and it was held that the presence of interest need not be a pre-requisite in the case of a loan transaction. Given this, I am confused – from now on, would an interest free loan attract gift tax or not??Bhide

Yes. Initially the assessing officer did bring the loan to tax as if it were a gift. The assessee had to challenge this and the ITAT, considering the circumstances of the case and having regard to the arguments put forth by the assessee’s counsel, ruled in his favour. Therefore, a ruling of the ITAT is case specific and cannot be construed as the law. At best it is of persuasive value. The next time an assessing officer comes across an interest free loan situation, depending upon his discretion, he may pass it or he may challenge it and then it will once again come down to the assessee to prove otherwise.

•I am a senior citizen and looking forward to file returns on ITR-2 form. I have several fixed deposits in banks and I am taking quarterly/monthly interest payments. However, there is a provision of only two columns for 16A details in ITR-2. I have several 16A forms and each form has several quarterly TDS payments. Secondly, there is a column No 8 of UTN added in ITR-2 for AY 2009-10. Please tell me about it. ?Mukesh Sharma

1. Wherever the space provided is inadequate, you may supply the overflow information by attaching additional sheet/s.

2. With a view to enabling the matching of information relating to pre-paid taxes furnished by the tax payers, the Income Tax Department has created a system of Unique Transaction Number (UTN) and Challan Identification Number (CIN). You will find these numbers on the TDS Certificates received by you.

•Are dividends received under arbitrage schemes of mutual funds tax free in the hands of investors? ?Kapadia

Arbitrage funds are normally equity oriented. However, they are risk free since they take a reverse position to their equity exposure in the derivatives market. However, this depends upon the presence of arbitrage opportunities in the market. Since these funds cannot hold open equity positions, in the absence of arbitrage opportunities, the funds are invested in debt and money market instruments. Therefore, it is possible that in a given period, due to lack of suitable opportunities, the equity exposure of the fund is below 65%, thereby making it a non equity-oriented fund. So the answer to your question would be while all dividends received are tax-free in the hands of the investors, if these are received from a non-equity fund, a dividend distribution tax of 14.1625% is deductible at source, whereas there is no dividend distribution tax payable by an equity-oriented fund.

•1. My question is regarding the tax treatment for the pension given to a late freedom fighters spouse – whether it is taxable or not. My mother receives freedom fighters pension given by the State of Karnataka as my late father was a freedom fighter.2. In case of bank deposits in joint names, the interest is to be apportioned to all the depositors or only to first named depositor? ?TN Ramakrishna

U/s 10(17A), the pension given to freedom fighters is tax-free. The pension passed on to the spouse (widow or widower) is also tax-free. The fixed deposit belongs to the first named depositor (if adult) and the interest is taxable in the hands of the first named depositor. If the depositors are an association of persons (AOP), the interest is taxable in the hands of the AOP.

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