Tax Related Issues From

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Tax Related Issues from "The Hindu"
The Hindu Monday 12th February 2007 Interest from NR(E) deposits and RF a!!ounts !ontinues to be e"empt My son is having a Non-resident External Account NR(E and !oreign "urrency onresident #e$osits (!"NR % &esides Resident !oreign "urrency Account (R!" ' I am under the im$ression that interest income from these are exem$t% since my son continues to &e a non-resident' (ut I am sur$rised to find from (usiness )ine dated !e&ruary *% ($age +, that such exem$tion has &een discontinued -ith effect from March ,+% .//*' 0lease confirm -hether it is so' Exem$tions for interest for NR(E and !"NR de$osits are availa&le under 1ec' +/(2 and Resident !oreign "urrency Account under 1ec' +/(+* (iv (fa ' The exem$tions -ere sought to &e -ithdra-n -ith effect from A$ril +% .//* &y the !inance (No'. Act% .//2% &ut a su&se3uent amendment &y the !inance Act% .//* has restored the exem$tion -ith effect from the same date% that is% A$ril +% .//* indefinitely' The (oard in "ircular No', of .//4% dated !e&ruary .5% .//4 (.//4 .6+ ITR (1t' ... at ..5 has also clarified this $osition of la- restoring the exem$tions' The reader is% therefore% right in his inference that the exem$tion is not lost' 1' RA7ARATNAM The HIN#$ 12th February 2007 T#% in the !ase of property &oss I am an em$loyee of a $u&lic sector com$any' I have loss in res$ect of my income from a $ro$erty -hich I had let out' I made a declaration of such loss to the #is&ursing 8fficer' Ho-ever% my ##8 has declined to ta9e into consideration the loss on the ground that such loss cannot &e admitted in res$ect of let out $ro$erty' 1ec' +:.(.( only &ars any ad;ustment for loss "other than loss under the head income from house $ro$erty for the same financial year"' )oss from $ro$erty can% therefore% &e ta9en into consideration for tax deduction from salary income in 1ec' +:. of the Act' No distinction is made &et-een the loss on account of let out $ro$erty and selfoccu$ied $ro$erty' Instructions are issued in the matter of T#1 from salary &y the "entral (oard of #irect Taxes year after year' "ircular No'+. of .//4 dated Novem&er .5% .//4 (.//4 .65 ITR (1t' +./ clearly &rings out this $osition ma9ing no distinction &et-een let out and self-occu$ied $ro$erty' Exam$les 5 and 6 annexed to the "ircular -ould re3uire loss from $ro$erty income to &e ta9en into consideration' Though these illustrations have ta9en into account loss from self-occu$ied $ro$erty% it does not mean that loss alone is to &e ta9en into account' There are many such instances% -here there is excess deduction of tax due to the reluctance of the ##8s to ta9e any decision' 1uch excess deduction is not uncommon% so that there is -or9 all-round% for the deductor to deduct -hen there may &e no lia&ility and file statements% em$loyees to file timely refund claims and for the Incometax #e$artment to issue the refund' The very o&;ect of T#1 $rovision is to match tax deduction -ith lia&ility' <hile the Income-tax #e$artment ta9es action% -here tax has &een failed to &e deducted% it does not try to educate deductors to avoid -rong deduction% -here it is unnecessarily deducted' 1' RA7ARATNAM The Hindu 12th February 2007

%hare of a member of H$F on partition I am the 9arta of a Hindu =ndivided !amily (H=! % since my father>s demise on May +:65' He did not leave any <ill' Ex$enses on marriage of my &rother and sister &esides household ex$enses of the ;oint family -ere met from my individual income% since the income from the hereditary $ro$erty -as meagre' In the event of $artition% I understand that all of us -ill &e entitled to e3ual share' Am I entitled to reim&urse myself the amount s$ent &y me &y -ay of a larger share? 0lease advise in your column' If the reader has maintained accounts in ;oint family -ith his contri&ution sho-n as loan to H=!% he -ould &e entitled to recover the same at the time of $artition' At any rate% such accounts% if maintained% are only matters of evidence' If there is a consensus among the family mem&ers at the time of $artition to give a larger share to anyone for -hatever reason% there could &e no o&;ection' In fact% $artition to &e valid need not &e e3ual' If there is no such agreement% the res$ective shares as on date of $artition -ould &e governed &y the la-% so that any claim for ad;ustment for any ex$enses incurred &y any mem&er for the ;oint family at the &elated stage of $artition may -ell de$end on the consent of the other mem&ers' 1' RA7ARATNAM %TT paid on &on' term !apita& 'ains is ta" e"empt The Hindu 0()02)2007 I had on #ecem&er .:% +::* invested Rs' +/ la9h in @othari 0ioneer Tax 1hield :4% an e3uity lin9ed savings scheme' 8n redem$tion of the units on March ,+% .//4% I -as $aid Rs' 65%*,/% out of -hich 1ecurities Transaction Tax (1TT of Rs' +5* -as recovered &y !ran9lin Tem$leton' 1ince 1TT -as $aid% is the long-term ca$ital gain of Rs' 55%*,/ exem$t under 1ec' +/(,6 % although the redem$tion cannot &e said to have &een transacted through a recognised stoc9 exchange' I may em$hasise that in the case of its ne- Tem$leton India E3uity Income !und% it has &een clarified that no long-term ca$ital gains tax is chargea&le on redem$tion of the units% since investors are lia&le to $ay 1TT' 1ec' +/(,6 exem$ts long-term ca$ital gains on transfer of e3uity share in a com$any or a unit of an e3uity oriented fund% if such transaction is chargea&le to 1TT' 1ince the amount received is on redem$tion of units in e3uity lin9ed savings scheme% the assessee should &e eligi&le for exem$tion of long-term ca$ital gains' It is true that 1TT is $aya&le for all transactions through recognised stoc9 exchanges' In the reader>s case% the relevant &onds are units of an e3uity-oriented fund -ithin the Ex$lanation to 1ec' +/(,6 ' The reader is a$$arently an investor and not a trader ac3uiring shares and such &onds as stoc9-in-trade merely for resale% so that the sur$lus is not from transfer of long-term ca$ital asset -ithin the meaning of ca$ital asset under 1ec' .(+2 % -hich excludes assets held for &usiness' 1ec' +/(,6 infers the only other condition% that such transaction should have &een chargea&le to 1TT' <here the !und has $aid 1TT as certified &y it% it is clear it -as $ut through a recognised stoc9 exchange' At any rate% the fact that the transaction has suffered 1TT s$ares tax on the long-term ca$ital gains on sale or redem$tion of the units' A share or unit is a long-term ca$ital asset% if held% for more than a year' Ho* are !apita& 'ains !omputed+ The Hindu 0()02)2007 I $urchased a flat in 1e$tem&er .//, for Rs' 4',/ la9h and sold this during Novem&er .//4' <hile $urchasing this $ro$erty% I too9 a &an9 loan of Rs' 2 la9h' I closed this loan out of the sale $roceeds% to the extent of Rs' +'6. la9h to retrieve the original sale deed &ac9' No- can I deduct this loan re$ayment out of the sale $roceeds and calculate

ca$ital gains on the net consideration? (esides I incurred stam$ duty% registration charges% and architect and advocate>s fees% -hile $urchasing this $ro$erty' !urther I incurred &ro9erage fees -hile $urchasing and selling' (ut the recei$ts are hard to o&tain from them' "an I claim -ithout $ro$er recei$ts? Not only that% I $aid for com$ound fencing% electricity de$osit% se-erage de$osits etc' "an I add these $ayments in my cost &efore the -or9 out of cost inflation index? According to 1ec' *2 of IT Act% the exem$tion can &e claimed only -hen the sale $roceeds are 9e$t in ""a$ital Aains Account 1cheme"' Is it necessary the entire sale $roceeds are to &e 9e$t in the a&ove scheme or only the ca$ital gain $ortion? #oes it vary in its a$$lication -hen 1ec' *2E" is a$$lied? <hat is allo-ed as a deduction in com$utation of ca$ital gains is the cost of the asset and the cost of im$rovement% if any' Though the $ro$erty sold might have &een charged &y -ay of loan to &an9 or others% the amount $aid to have the $ro$erty released -ould not &e cost of the $ro$erty% since the loan is self-created% as held &y the 1u$reme "ourt in 7agadishchandran (B'1'M'R' v "IT (+::5 ..5 ITR .2/ (1" ' The amount incurred at the time of $urchase for the $ur$oses of stam$ duty% registration charges or advocate>s fees -ill &e $art of the cost' (ro9erage $aid at the time of $urchase -ill also &e cost% -hile &ro9erage $aid at the time of sale -ill reduce the sale consideration' 8rdinarily ex$enses claimed are ex$ected to &e $roved% not necessarily -ith reference to recei$ts for the $ayees% &ut -ith credi&le evidence% that such ex$enses -ere actually incurred' 1ince the reader has held the $ro$erty for more than three years% it is a long-term ca$ital asset% so that the cost can &e indexed' It has &een stated that the assessee has incurred cost on fencing' 1uch cost may not &e ca$a&le of &eing claimed as cost of im$rovement% since such ex$ense may not &e construed as on ca$ital account' If it is only of ca$ital nature% it can &e treated as cost of im$rovement' If a com$ound -all has &een erected instead of fencing% it might have added to the cost' #e$osit for electricity and se-erage -ill not &e ta9en as cost% &ut if the de$osits are endorsed in favour of the $urchaser -ithout extra charge for the sale% it may go to reduce the sale consideration' The reader is right in inferring that if the sale $roceeds could not &e utilised for ac3uiring another $ro$erty &efore the due date for filing return relevant for the year of ca$ital gains% such ca$ital gains -ill have to &e invested under "a$ital Aains Accounts 1cheme for availing the &enefit of reinvestment in another residential $ro$erty -ithin the s$ecified $eriod' !or $ur$oses of relief under 1ec' *2% -here the ca$ital gains arise on sale of residential $ro$erty% it is sufficient% if ca$ital gains alone are invested' If -hat is sold is any other asset% the amount to &e invested for ac3uiring another residential $ro$erty is the entire net sale consideration for getting full exem$tion' In either case% -here the amount is invested is less than ca$ital gains C sale $roceeds% relief -ill &e $ro$ortionate to the amount de$osited C utilised' It is $ossi&le for a tax$ayer to get the &enefit of reinvestment in residential house $ro$erty under 1ec' *2C*2! either along -ith relief under 1ec' *2E" or solely on investments in notified &onds' (ut% there are no notified &onds no- availa&le' 1ince the com$utation is com$lex and there are rigid time limits for availing reliefs% it is &etter that those lia&le get timely $rofessional advice' It is seen from a num&er of letters received in res$ect of ca$ital gains that most $eo$le try to get advice from all and sundry' Ne-s$a$er columns are also no su&stitute% since facts of the case are more relevant' Tele$honic re3uests and self-addressed covers continued to &e received for getting such advice' They are not entertained% since these -ill not su&stitute $rofessional advice after eliciting all relevant facts from the tax$ayer' It is advice $rior to sale% -hich is li9ely to &e useful for com$lying -ith tax o&ligations and availing tax reliefs' 1' RA7ARATNAM

Ta" dedu!tion at sour!e on sa&e of &abe&&ed 'oods The Hindu 2,-01-2007 8nly a contract for su$$ly of any article or a thing as $er $rescri&ed s$ecifications -ould &e a contract for -or9' There is some confusion as to the treatment of sale of goods containing the logo or the la&el of the customer' 1uch contracts are &eing treated as -or9s contract% &ecause of the im$rint of customer>s identity% though they should &e mere sale not lia&le for tax deduction at source as -or9s contracts' "ircular No' +, of .//4 dated #ecem&er +,% .//4 -hich reiterates the $rinci$le that sale is different from -or9s contract does not really indicate -hether the vie- ta9en &y some of the de$artmental officers in this regard is correct' @indly clarify' The Income-tax #e$artment is $rone to treat su$$ly of $ac9ing material and goods $re$ared -ith la&els or logos as -or9s contract and not merely sale of goods' The Tri&unal had &een ta9ing the vie- that a sale does not &ecome a -or9s contract merely &ecause a la&el or logo or any other mar9 is attached or $rinted on the &asis of the materials furnished &y the customer% it does not cease to &e a contract for sale' The (om&ay High "ourt in (#A )td' v IT8 (T#1 (.//4 .6+ ITR 6: ((om held so% -here the assessee su$$lied -ra$$er la&els for &ottles containing li3uor sold &y the client' The cost of the la&els on the -ra$$er -as &orne &y the customer' The High "ourt after considering the $recedents under excise and sales tax la- concluded that it -as a contract of a sale and not a -or9s contract' A similar vie- -as ta9en &y the #elhi High "ourt in "IT v #a&ur India )td' (.//4 .6, ITR +:5 (#el in the case of su$$ly of corrugated &oxes -ith la&els &earing assessee>s logo $rinted on such &oxes' It -as held to &e a sale and not -or9s contract &asing its conclusion on the decision of the 1u$reme "ourt in a sales-tax case in 1tate of Himachal 0radesh v Associated Hotels of India )td' (+:5. .: 1T" 252' It distinguished the decision of the Madras High "ourt in 1tate of Tamil Nadu v Anandam Bis-anathan (+:6: 5, 1T" +% -hich dealt -ith a case% -here the contract related to $rinting of university 3uestion $a$ers% the consideration for -hich -as more for confidentiality of the -or9 than one of sale on $rinted 3uestion $a$ers' Ans-er to Duestion No' +* in "ircular No' 5+* dated August 6% +::* (+::* .+* ITR (1t' +. considered that the su$$ly of $rinted material -ould &e -or9s contract covered &y 1ec' +:2"' It -as this clarification% -hich had caused some confusion' This clarification &esides &eing too general also runs contrary to "ircular No' 46+ dated March 6% +::2 (+::2 ./4 ITR (1t' .:: in 0aragra$h 5(vi % -hich had ta9en the viethat contract for su$$ly of goods -ould not &e governed &y 1ec' +:2"' It is -ith the $ur$orted o&;ective of reconciling these "irculars% "ircular No' +, of .//4 dated #ecem&er +,% .//4 has no- &een issued' It $oints out that the inference in "ircular No' 5+* dated August 6% +::* has to &e considered along -ith the $rinci$les laid do-n in "ircular No' 46+ dated March 6' +::2' It $roceeds to state that it -ould &e necessary to examine each contract for an ans-er to the 3uestion% -hether it is a contract for -or9 or a contract for sale' 8nly a contract for su$$ly of any article or a thing as $er $rescri&ed s$ecifications -ould &e a contract for -or9' This clarification is -elcome' It -ould have &een more a$$ro$riate if the decisions of the (om&ay and #elhi High "ourts had &een noticed and the reasoning therein acce$ted% so as to &ring a&out greater clarity' It is a$$arent that the "ircular is intended to guide the assessing officers to acce$t such reasoning' Tax conse3uence of an unregistered sale The Hindu 22nd .anuary 2007 I entered into an agreement for sale in -riting and received full consideration% &ut the sale -as not registered' I had only executed a 0o-er of Attorney in favour of a real

estate dealer% -ho $urchased the flat from me' Till date it is not registered' I am certain that the dealer is going to register the sale through my 0o-er of Attorney for a much larger amount due to the rising $rices of $ro$erty' <ill I &e called u$on to $ay ca$ital gains on the value of the $ro$erty on registered sale? The 3uery does not mention anything a&out the $ossession' <hen full consideration had &een received% the $ossession in all $ro&a&ility should have &een handed over to the real estate dealer% -ho had $urchased the flat' The sale is deemed to &e com$lete -ith $ossession% if such $ossession had &een given in $ursuance of an agreement of sale in -riting on the doctrine of $art-$erformance under 1ec' *,A of the Transfer of 0ro$erty Act% +66.' In the light of the 0o-er of Attorney already executed% and evidence of handing over $ossession% it should &e $ossi&le for the assessee to ex$lain to the assessing officer that he -ill not &e lia&le for the consideration received &y the dealer' The difference as &et-een the consideration $aid &y the dealer and the amount received &y him as 0o-er of Attorney holder -ill &e taxa&le only in the hands of the dealer as his &usiness $rofits' If this factual $osition is confirmed &y the dealer% there may not &e any hassles for the reader to file the return for the assessment year .//5-/6 and convince the assessing officer% that his lia&ility is limited to consideration received &y him' The attention of the readers is dra-n to the amendments made &y the Registration and 8ther Related )a-s (Amendment Act% .//+ amending 1ec' *,A of Transfer of 0ro$erty Act% +66. and 1ec' +5 of the Registration Act% +:/6% re3uiring even on agreement for sale covered &y 1ec' *,A to get registered -ith effect from 1e$tem&er .2% .//+' The legal effect of the same may not affect the com$utation of tax lia&ility in the hands of the reader% since an assessee cannot &e lia&le on consideration more than -hat he has actually received' 1ec' */"% ho-ever% -ould foist lia&ility for ca$ital gains &y deeming guidelines value as sale $rice% if it ha$$ens to &e more than the $rice admitted as consideration in the sale deed% su&;ect to assessee>s right to $rove that% -hat is received% is fair mar9et value' In the reader>s case% sale has not &een registered' There is no $rovision for invo9ing 1ec' */" on such deemed sale -ith reference to guidelines value as on such date' There may not &e any com$lication even for the dealer under 1ec' */"% &ecause the section a$$lies only to the case of registered sale of ca$ital asset' In the dealer>s case% he is selling only his stoc9-in-trade' 1' RA7ARATNAM T#% on /ehi!&e hire The Hindu 22-01-2007 Eou had indicated that even $ayment for hiring of vehicles -ould no- re3uire tax deduction at source under 1ec' +:2-I% -hich -as hitherto limited to immova&le $ro$erty' (ut I may dra- your attention to the clarification issued in "ircular No'**6 dated March .6% +::/ (+::/ +6, ITR (1t' +*6% -herein the (oard has conceded that -here a vehicle is given on hire along -ith the $rovision of a driver and a conductor -ith the remuneration for use &eing fixed for the num&er of hours such vehicle is made availa&le% it is a service contract for carrying out the -or9% so that it -ill &e covered under 1ec' +:2"' It -ill% therefore% a$$ear that 1ec' +:2-I% -hich -ill no- cover amount of rent or any other $ayment for the use of any $lant% machinery or e3ui$ment -hich -ill no dou&t include vehicles% should &e treated as confined to a case -here vehicle alone is given on hire and not -here service &y running the vehicle is made availa&le' The circular referred to &y the reader is one issued $rior to the amendment to 1ec' +:2I -ith effect from 7uly +2% .//4% s$ecifically ma9ing any rent or hire or any other

com$ensation for use of $lant% machinery or e3ui$ment for tax deduction under 1ec' +:2-I' The issue is -hether it is a case of hiring out a vehicle or rendering a service &y ma9ing availa&le the vehicle' These are t-o distinct contracts' There is% therefore% ;ustification for reader>s inference that% -here the vehicle is made availa&le as a matter of service% the (oard>s "ircular No'**6 dated March .:% +::/ (+::/ +6, ITR (1t' +*6 -ould continue to have a$$lication' The "ircular has not &een revo9ed' At any rate% the reasoning in the "ircular -ould indicate that the inference dra-n therein does not get su$erseded &y the amendment% -hich cannot cover -hat is s3uarely a service contract for -or9 so that in such cases tax deduction should continue to &e governed &y 1ec' +:2" and not under 1ec' +:2-I' It may also &e noticed that Ex$lanation III inserted under 1ec' +:2"(. deems -or9 to include "carriage of goods and $assengers &y any mode of trans$ort other than &y rail-ays"' This amendment made -ith effect from 7uly +% +::*% -hich is su&se3uent to the "ircular% su$$orts the "ircular and &uttresses the reader>s inference' 1uch trans$ort contract and not mere contract of vehicle can &e understood as &eing governed &y 1ec' +:2"(. Ex$lanation III% -hich &eing a s$ecial clause should override 1ec' +:2-I' 1' RA7ARATNAM %e!- (0E shou&d be brou'ht ba!1 to &ife The Hindu 1(-01-2007 Than9s to your column in The Hindu Tax !orum informing us that relief under 1ec' *2E" may not al-ays &e availa&le' Earlier -e -ere com$lacent that -e could al-ays invest sur$lus funds arising out of ca$ital gains &y selling $ro$erty in &onds and avoid tax' I am one of those contem$lating selling a $ro$erty and -ould not li9e to find myself in a situation% -here I have to $ay hefty ca$ital gains tax and lose -hatever &enefit arising out of the sale of $ro$erty' Eou have rightly suggested further notification of other underta9ings' I have a suggestion -hich I feel is &etter' As the ca$acity of underta9ings to use funds is limited% the government may have to issue fre3uent notifications from time to time after identifying deserving underta9ings' Nationalised &an9s may &e authorised to issue s$ecial ca$ital gains &onds% -hich -ill naturally &e at a lo-er rate of interest than for fixed de$osits in &an9s' 8nly funds got out of sale of $ro$erty may &e $ermitted investment in these &onds' These &onds can have fixed loc9-in $eriod of four years% -ith no facility for $remature encashment' I re3uest you to give $u&licity to this suggestion of mine in your columns% as I feel a letter to the !inance Ministry may not receive any attention% -hereas if the suggestion receives $u&licity in your column% it is li9ely to receive consideration of the authorities' The Hindu has received a num&er of letters suggesting restoration of life for 1ec' *2E" &y further notifications of eligi&le &onds' The reader>s suggestion is one% -hich avoids the necessity of fre3uent notifications as and -hen the current &onds are oversu&scri&ed -ith uncertainty as to the availa&ility in vie- of the ceiling% -hich is &eing $laced for any such notified &onds' 0ress Note dated #ecem&er .5% .//4 noticing the "hardshi$ caused to tax$ayers &ecause of non-availa&ility of the &onds" states that another notification has &een issued ma9ing availa&le &onds for an aggregate amount of Rs' ,%*// crore for the &onds to &e issued &y Rural Electrification "or$oration and National Housing Authority of India' Extension of time limit for investment has &een allo-ed u$ to March ,+% .//5 for those -ho have transferred assets as &et-een 1e$tem&er .:% .//* and 1e$tem&er ,/% .//4 (&oth dates inclusive ' A ceiling of Rs' */ la9h has &een $laced for any single assessee for such investments under 1ec' *2E"' The amount is

measly considering the num&er of assessees see9ing to avail the &enefit% a$art from the fact that it caters only to a fe- $ersons among assessees similarly $laced' The nelimit is &ound to &e exhausted even &efore it is $u&licised' In vie- of the $ressing need for infrastructure develo$ment% the suggestion from the reader H' R' 1rinivasan of Mysore should &e -elcomed% since the revenue loss &y such concession -ould &e more than offset &y the advantage of finance channelised for infrastructural needs of the government and $u&lic sector $ro;ects' The multi$lier effect of such investments on em$loyment and gro-th should &e much more re-arding than the revenue loss' 1elective dilution of relief under 1ec' *2E"% -hich only authorises s$ecification of the &onds and not dilution of the statutory relief itself% is not sound fiscal $olicy' 8ne does not ex$ect the "(#T to over-ride the mandate of 0arliament' 1' RA7ARATNAM Ta" !onse2uen!e of an unre'istered sa&e The Hindu3 Monday3 04 .anuary 2005 I entered into an agreement for sale in -riting and received full consideration% &ut the sale -as not registered' I had only executed a 0o-er of Attorney in favour of a real estate dealer% -ho $urchased the flat from me' Till date it is not registered' I am certain that the dealer is going to register the sale through my 0o-er of Attorney for a much larger amount due to the rising $rices of $ro$erty' <ill I &e called u$on to $ay ca$ital gains tax on the value of the $ro$erty on registered sale? The 3uery does not mention anything a&out the $ossession' <hen full consideration had &een received% the $ossession in all $ro&a&ility should have &een handed over to the real estate dealer% -ho had $urchased the flat' The sale is deemed to &e com$lete -ith $ossession% if such $ossession had &een given in $ursuance of an agreement of sale in -riting on the doctrine of $art-$erformance under 1ec' *,A of the Transfer of 0ro$erty Act% +66.' In the light of the 0o-er of Attorney already executed% and evidence of handing over $ossession% it should &e $ossi&le for the assessee to ex$lain to the assessing officer that he -ill not &e lia&le for the consideration received &y the dealer' The difference as &et-een the consideration $aid &y the dealer and the amount received &y him as 0o-er of Attorney holder -ill &e taxa&le only in the hands of the dealer as his &usiness $rofits' If this factual $osition is confirmed &y the dealer there may not &e any hassles for the reader to file the retur the AE .//5-/6 and convince the assessing officer that his lia&ility is limited to consideration received &y him' The attention of the readers is dra-n to the amendments made &y Registration and 8ther Related )a-s (Amendment Act% .//+ amending 1ec' *,A of Transfer of 0ro$erty Act% +66. and 1ec' +5 of the Registration Act% +:/6% re3uiring even on agreement for sale covered &y 1ec' *,A to get registered -ith effect from 1e$tem&er .2% .//+' The legal effect of the same may not affect the com$utation of tax lia&ility in the hands of the reader' 1ec' */" -ould foist lia&ility for ca$ital gains &y deeming guidelines value as sale $rice% if it ha$$ens to &e more than the $rice admitted as consideration in the sale deed% su&;ect to assessee>s right to $rove that% -hat is received% is fair mar9et value' In the reader>s case% sale has not &een registered' There is no $rovision for invo9ing 1ec' */" on such deemed sale -ith reference to guidelines value as on such date' There may not &e any com$lication even for the dealer under 1ec' */"% &ecause the section a$$lies only to the case of registered sale of ca$ital asset' In the dealer>s case% he is selling only his stoc9-in-trade' 1' RA7ARATNAM 6mendment to Hindu %u!!ession 6!t Hindu %u!!ession (6mendment) 6!t 200( ) #au'hter7s ri'ht as !opar!enor The Hindu 01-01-2007

8n and from the commencement of the Hindu 1uccession (Amendment Act% .//*% in a 7oint Hindu family governed &y the Mita9shara la-% the daughter of a co$arcener shall% (a &y &irth &ecome a co$arcener in her o-n right in the same manner as the sonF (& have the same rights in the co$arcenary $ro$erty as she -ould have had if she had &een a sonF (c &e su&;ect to the same lia&ilities in res$ect of the said co$arcenary $ro$erty as that of a son% and any reference to a Hindu Mita9shara co$arcener shall &e deemed to include a reference to a daughter of a co$arcenerG" HIt re$eats the same -ording of TN Andhra and @arnata9a ActsI It actually creates a legal fiction of a daughter &ecoming a son' <e have to a$$ly the $rinci$le that -hen you are &idden to imagine a state of affairs you cannot allo- your mind to &oggle' I feel that t-o conse3uences directly follo-' !irst% daughters &eing co$arceners% they -ill &ecome 9artas of the $ro$erty -hich devolves &y survivorshi$ on them' This is &ecause only $ro$erty devolving &y succession -ill &ecome a&solute $ro$erties and $ro$erties devolving &y survivorshi$ -ill have the cloud on the title &y the shado- of the survivors and co$arceners arriving on the scene &y &irth and second% death of a co$arcener does not mean an actual $artition &ut only a notional $artition to ascertain his share% -hich devolves &y succession' Therefore% the other co$arceners continue to remain as H=!' Another 3uestionG the senior-most co$arcener &ecomes the 9arta J -ill the daughter &eing the eldest &ecome the 9arta of the surviving H=!? I also feel that any co$arcener can leave a -ill &e3ueathing his share to the H=! so that the H=! is $er$etuated' 1ince the Hindu la- is &eing distorted &eyond recognition it is the least -e can do to $reserve the H=! as a uni3ue Hindu institution'" The a&ove comment from 7ustice T' N' "' Rangara;an on the issue ""an -omen &e co$arceners" is interesting and innovative and does not call for any comment% as $ossi&le vie-s on the su&;ect' 1till dual ca$acity for a daughter on a $ar -ith her &rother and the right of eldest daughter to &e the 9arta are $ro&a&ly conce$ts too radical to follo- from the amendments' The vie- that a co$arcener can leave a -ill vesting his legacy -ith ;oint family character and &y doing so $er$etuate the Hindu 7oint !amily is non-controversial% &ut &y doing so the right of female heirs cannot $ro&a&ly &e defeated' The amendments do not force $artition% &ut only demarcate and confer the right to a daughter on deemed $artition' 1urvival of H=! de$ends solely on the family ties% so that reform in Hindu la- to meet the felt needs of the society cannot $ossi&ly &e &lamed for the -ea9ening of ;oint family system' 1' RA7ARATNAM

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