Unauthorised & overbooked

Residents feel duped as builders, who didn’t have permission to construct, overbooked flats. To top it, they are now returning truncated amount through cheques that bounce, Ravi S. Singh reports from Faridabad

A large number of investors, who booked apartments and penthouses in colonies to be set up by private builders, feel duped.

The area under deliberation is the transAgra canal/ Yamuna, which is billed to be the upcoming new Faridabad city area. It is a new place for the development activity and its perimeter towards the Uttar Pradesh side oversees Noida and Gautam Budh Nagar of UP.

A number of private builders had indulged in illegal pre-launch booking for the sale of flats just after the present government came to saddle about two and half years ago. The ugly development took place after the present government as a public policy included a major portion of the area in the “Residential Zone”(“R-Zone”). The area was once a forlorn and forgotten place.

A number of private builders started purchasing land, even before the area was declared R-Zone. Just before the builder lobby started showing interest in the area, the cost of land was about Rs 1.5 lakh per acre. By a strange coincidence, a good chunk of the land, which had been bought by the builders and other investors was included in the R-Zone by the government.

The upshot of including the area under R-Zone was that the prices skyrocketed to nearly Rs 1.5 crore per acre. A good number of investors became millionares overnight, while some kicked themselves for not being smart in speculations. The mad rush to purchase land from farmers by builder increased in Faridabad and a few big names went for pre-launch bookings of flats, villas and penthouses. According to a conservative report, thousands of persons, especially from Delhi, Gurgaon and other areas, made a beeline in response to the advertisements put up by the builders.

Investors now have now woken up to the rude reality that they have been duped by the builders. According to many, duping process started and perpetuated under the very nose of the authorities .

Also, there are certain commitments, which have to be given by the applicant-builders to safeguard the interests of the clients/customers. In Faridabad, the builders advertised setting up colonies and waded into pre-launch booking even when their application for the licence was under process or in some cases not applied for it at all. In one case, the builder did not even have required land but booked three times over. The brochure mentioned that the colony was meant for 4,000 flats/villas.

What now worries those who have booked the flats is that even basic construction work has not been undertaken with regards to the proposed colonies even though in some cases possession of flats should have been given by now.

A few builders have started returning the booking amount to the investors. But the catch is that the public is allegedly not getting the full money invested at the time of pre-launch.

The fraud could well be visualised by the fact that for more than two years individuals would have got interest on the money deposited in the banks and other institutions. Leave aside the interest amount, the investors are not even getting the full principal capital even though they are not at fault.

In a few cases, the fraud becomes doubly criminal in nature when the cheques of the truncated amount bounced.

Cases have also been registered in this connection. The reason for the ugly development is that the builders have either not got licence as yet or have overbooked. The general demand of the public is that these builders should be blacklisted from doing business not only in Haryana but pan-India.

Realtors dial for telecom licence

Surprised analysts question the move, says R. Suryamurthy

THE Department of Telecom witnessed a mad rush by top firms to secure licence. Interestingly, a majority of the participants are from the real estate sector.

DoT had set October 1 as the deadline for receiving the application for new telecom licences. And it was flooded with over 500 applications. The mad scramble saw several realty firms vying to get licence.

Realty firms, which have entered the fray include DLF, Omaxe, Unitech, Parsvnath, BPTP Properties, Avinija Properties, Indiabulls and Ansals, besides a diversified group, Hindujas.

“The recent trend clearly show that the telecom sector is growing at a fast pace and will be the main contributor both to the economic growth of the country and the financial welfare of the investors. We feel our experience and organisation will be as successful and valuable in the communication infrastructure as were our past records and achievements in the real estate sector. Our forward-looking policy and consumer friendly practices are bound to gel to produce a highly efficient service network. We are sure that although a late entrant in this field, we will join the leading pack very soon,” Rohtas Goel, CMD, Omaxe Ltd, says.

Parsvnath chairman Pradeep Jain said they would invest about $428 million to set up a telecom unit for selling wireless services in India. Telecom analyst in KPMG Romal Shetty said entry of so many players without any telecom experience is surprising. It seems that they are entering the arena for garnering spectrum, squatting over it and selling it at a premium.

On the realty firms joining the bandwagon, he said they could be eyeing the landline segment or the rural telephony. It is also possible that they may bring in new technology like wi-fi or wi-max.

With the lowest tariff rates in the world, in India, it is economies of scales, which is the only road to success and for that to happen so many players cannot be there in the field. Shetty said the government should clarify how it wants to go about it in giving license to the new players.

“There has been a flood of applications recently for the scarce resource of spectrum. We are concerned that these companies, which have no telecom background or are unheard of, are actually proxies for established telcos,” COAI director general TV Ramachandran said. 

Govt may revisit rent control Act

Demand and supply should govern the rentals, says R.P. Malhotra

Quashed on constitutional grounds, growth-oriented Rent Act notification, bringing UT tenants out of the ambit of the Rent Act protection still finds favour with the Chandigarh Administration. A move to re-notify the notification, through proper norms this time, shall be welcomed by all but a few keep vested interests above all.

Union Urban Development Ministry is planning to resurrect the Rent Control Act first in the Capital and thereafter, if the states are willing, in all major metros. Fixing different tariff bands for business and residential premises, a draft Rent Control Act is being prepared at the ministry level, which would act as a model for the entire nation.

Demand and supply forces should govern the rentals as even the tariffs of essentials like petrol and diesel are based on demand and supply. In the era of public–private participation, where even the infrastructure projects are carried out on BOT basis through user charges, the obsolete Rent Act protection to a small section of the society contributing a little towards growth has no logic to continue.

Controlling provisions in the Act are introduced under certain emergent conditions like war, natural calamity such as earthquakes when a large displacement of population takes place. The process of decontrolling should start as soon as the situation normalises.

Enacted during World War II in 1941, freezing rent rates of 1939- the East Punjab Rent Restricted Act, 1949, was extended to Punjab of independent India as a large displacement of population took place during Partition. Initially implemented for a five years period, the Act was never thought to be repealed for political vested interests.

The Act has turned out to be a source of misery for the owners and conflict in the society. The government while pursuing reformative and progressive policies has to counter the unjustified resentment of a section of society, the tenants. Their resentment, however, matches a very common human behavioural trait that a benefit being enjoyed by someone deserved or undeserved, if withdrawn draws flaks. In the case under reference, a privileged protection enjoyed by the tenants for the last three generations are being withdrawn; they have a very valid but unjustified reason to be worried.

Apart from the said anomaly, the Act has other ramifications too:

* There is wide disparity between the prevailing market rents and properties grabbed on old rents – a major reason of social imbalance and cause of conflict. Benefits of low rents are not transferred to the customer but cornered by a few individuals; rather the tenants paying present rents have to compete with the grabbers.

* A tendency to declare low-business turnover proportionate to the low rentals amounts to revenue loss to the state exchequer in the shape of indirect taxes, a major source of black money; more revenue through income tax from owners receiving market rents can be generated.

* Property-related crimes get encouraged by purchasing occupied properties on desperate sale by influential section of society and getting evicted with the help of underworld connections.

* Protective umbrella of rent control leads to the undersupply of accommodation, stalled growth and jacking up the rentals and landlord-tenant disputes. The Rent Control Act, compounded by the tenancy protection, dilutes the property rights of the owners and subsequently discourages the investors to offer accommodation on rent.

Tenants and owners are both vital organs of the society and supplement each other. Tenants, on one end, need an accommodation, the owners, on the other side, also look forward to a reasonable return on investments made.

The real estate sector, as a whole, needs a regulatory body to oversee and formulate measures like fixing rents justifying the demand and supply conditions from time to time. Let there be a level playing field for both tenants as well the owners. Model Act, better to be named as the Rent Regulation Act, should be provisioned to protect the rights of both, tenants as well as the owners.

Growth needs participation of one and all. Reformative measures like repealing of the Rent Control Act have resulted in considerable upward swing in the real estate market. Construction activity has picked up considerably generating ample employment opportunities as about more than 250 industries are directly related to the construction sector.

The rentals have come down considerably with urban India offering wider choices of accommodation.

— The writer heads an NGO

Affordable housing a challenge

Providing affordable housing to the burgeoning middle-class segment is one of the major challenges faced by the real estate industry, experts said.

"We (developers) are catering to the upper-middle class and middle income housing is not existing. The real challenge is to be able to provide mass housing," Unitech Managing Director Sanjay Chandra said at realty conference.

Pointing out that the skyrocketing land price was prohibiting development of such projects, Chandra said "the need of middle-class segments could be catered through public-private-partnership (PPP) mode".

Echoing his views, National Housing Bank Chairman and Managing Director S. Sridhar said affordability of housing to the common man and yet profitable to the developers was the big challenge. He also pointed out that the growth of mortgage debt was value and not volume-driven.

HDFC Executive Director Renu Sud Karnad felt prices of real estate have gone up and the concern was the affordability of real users.

She said the prices of land affects all sectors, be it housing, retail or commercial properties.

She noted that foreign funds have fuelled the real estate prices by over-valuation and said that they were entering into transactions in which domestic players were not interested.

K. Raheja Corp group president Neel Raheja said there was no threat of over-supply in the real estate market as projects were not getting delivered as per the announcements. — PTI

Singapore moots SEZs

Singapore has proposed to set up special economic zones in Tamil Nadu and Maharashtra through property developer Ascendas, bringing FDI from the SE Asian economic powerhouse into India.

The two countries have already formed a steering committee to carry forward the proposals, one of which relates to setting up a 2,500-acre multi-product SEZ in the south.

“The proposals were discussed at the first meeting of the steering committee, which will take them further with state governments and other authorities,” a senior commerce ministry official said. — PTI

The old order changeth...

Jupinderjit Singh writes how the humble kiryana-wallah is mutating to combat big-time retailers

A silent but rapid revolution is under way at the neighbourhood kiryana merchant’s shop and the long and trusted roadside stall of the vegetable vendor as multi-storeyed retail chains offer quality products at lower rates to attract consumers.

Not willing to be devoured by big fish, these small traders have become innovative to plug the outflow of consumers. If earlier, they harped on giving just a little discount or good credit limit to regular customers at wholesale rates, their charts now show comparison with big marts or shopping malls.

No longer are the foodgrains stacked in open wooden boxes or the folded sacks, all kept in a haphazard manner. The kiryana “seth” keeps them in a well-defined symmetrical manner. They may have lesser space than say, Subikhsa, Reliance, Vishal or the V-Mart but that does not mean they cannot have similar, albeit, very small and narrow rows of stacks. And yes, trolleys, too, line up the spruced stores.

Not content with this, kiryana merchant aims to catch on the facility not offered by big marts. Several such stores offer free home delivery of the monthly ration, besides catering to the SOS of a housewife, who calls the trader to get a pack of biscuits for unexpected guests.

Surbhi Ahuja’s vegetable vendor answers the madam’s call more politely these days, offering 10 per cent special discount and home delivery of chosen vegetables the moment she mentions the very name of Reliance Fresh, which, she says, sells better quality stuff at lower rates. “Earlier, the vendor did not allow us to choose good ones from a heap of vegetable. Now, he himself offers those.”

All this is aimed to bring customers back. Model town-based Khanna family used to get ration from nukaad kiryana store since last many years. He used to give one month’s credit. But for the latest products, Khanna family had to visit some big stores.

However, the whole family now feels comfortable shopping at one-stop store V-Mart, located on Ferozepore road, where, no doubt, one has to pay cash upfront but can get favourite items off the shelf. “We don’t have to wait for getting things packed and, moreover, there is always one or the other offer at the store due to which we get good discounts as well,” says Inderjeet Khanna, a retired employee, who had come to shop with his wife at the store.

Not only for kiryana stuff, even the Dugri -based family of Narinder Singh Chawla has stopped bargaining with the rehriwala vegetable seller. Satinder Kaur Chawla, his wife, says: “Now I feel comfortable in buying fresh stock from Subiksha or Reliance stores where I don’t have to waste time in bargaining and, moreover, everything is displayed on different shelves.”

These are not the cases for Dhingra and Chawla families but the city is running for a change in retail buying. With the opening of branded stores, shopping is no more a headache. No doubt with the change in scenario, small trader is feeling the heat as families choose a weekend to shop from the big stores and they wait for the days when the stores offer discount.

Says Balwant Rai of the famous Mani Ram Balwant Rai store: “After these stores opened, many of our customers shifted. But now they again have started returned once they compared the prices as we are giving them at lower rates.”

Sources, however, revealed that a few kiryana stores, in order to compete with the big stores, have lowered the prices of products further in order to sell more as done by Mani Ram Balwant Rai.

Suresh Kumar, a kiryana storeowner on Pakhowal road says: “Now, a majority of migrants are my customers. Still, a number of others, who want one-month credit, come to my shop. A little effect in sales is no doubt there. But now I have a fixed clientele of migrants and those who want credit.”

Amar Singh, a kiryana storeowner makes an interesting observation about the balancing of the trade between the bigger and smaller trader. “You see, people cannot go to big stores for buying one kg sugar or half a kg tea or say group of small items. There are so many small things required daily for which people cannot take the pain of going to the store, park a car, pay Rs 15 parking fee, wade through traffic…all that for shopping of, say Rs 100 or 200. As compared to them, I offer to send the stuff at home directly.”

He felt that big stores might bring a healthy change but small traders and shopkeepers would always remain.

GREEN HOUSE
Fabricate frames & shutters

Jagvir Goyal tells how to manage tenons and meshed doors

MOST of the house builders prefer to buy wood, get it seasoned and employ carpenters to fabricate frames and shutters at the site of work. Woodwork continues as a parallel activity to all other work and often becomes a hurdle in early finishing of the house.

A lot of botheration can be saved if the house builder is vigilant over certain aspects as timely checks can help in eliminating errors. Here are a few basic points, which should be used by the house builder for better workmanship and early completion of woodwork.

Work out the size

Like frames, work out the sizes of door, window and ventilator shutters carefully. For doors, the width of shutter shall be from rebate to rebate. Depth of door shutter shall be from top rebate to finished floor level minus 5 mm. For a door opening of 900 x 2,060 mm above floor level, if a frame of size 60 x 100 has been used and a rebate of 15 mm has been provided, the size of door will be 800 x 2,005 mm. For windows, the sizes should be taken from rebate to rebate both for width and depth.

Crosscheck

Crosscheck the worked out sizes of door, window and ventilator shutters at site. By the time, the shutter manufacturing is taken in hand, frames are already installed in position. Some error in manufacturing of frames, their fixing in plumb or some invisible warping can always take place. Success lies in making the door, window and ventilator shutters fit exactly to the sizes now available at site. Measure the top and bottom widths, left and right depths and the two diagonals for each shutter for this. For windows and ventilators, take this measurement from rebate to rebate. For doors, measure the width from rebate to rebate and the depth from top rebate to finished floor level. Now you have 6 dimensions available for each shutter. Some of these may slightly vary from the worked out sizes of shutters. This variation will tell you where the error has cropped up. Handover the actual sizes to your carpenter and let his skill come to the fore to eliminate that error and make the shutter exactly fit the openings for them. Keep an eye on those shutters where error in dimensions has been noted.

Joints

See that all stiles and rails of shutters are joined through mortise and tenon joints without any filling or wedging. A tenon should be about 3/8 inch thick and 2 inch wide. The tenons should enter the stiles by leaving a margin of 1.5 inch from top and bottom edges of the shutters. All shutters should first be prepared and assembled loose without gluing and stacked. Glue after opening out each frame just prior to hanging. Remove the members that have warped while kept stacked. Must check the diagonals of each shutter. Don’t allow a difference of more than 2 mm in the two diagonals.

Lock and bottom rails

Allow no jointing of wood pieces in lock rails and bottom rails. Generally, stiles and top rail are only 4 inch wide while lock rail and bottom rail are 7 to 12 inch wide. Therefore, chances of jointing two pieces in lock rail and bottom rail crop up. Always use single piece of wood each for lock rail and bottom rail. For lock and bottom rail, make two tenons on each side instead of one made for top rail. In shutters, let the rails have the tenons and stiles should have the mortises (grooves). Well apply an adhesive like Fevicol or synthetic resin to all tenons and grooves before making joints. Always keep the centreline of lock rail at a height of 80 mm from the bottom of shutter. This is the most convenient height for operating a lock.

Door panels

These may be of timber, veneered particleboard, plywood, block board, hard board or glass. Keep thickness of timber panels as 15 mm. Plywood used in door panels should be minimum 12 mm thick and ISI marked. Look for IS 303 mark. Also look for BWP grade. BWP means Boiling Water Proof. Veneered Particle Board if used should also be at least 12 mm thick and ISI marked. Look for IS 3097 mark. Look for BWP grade and see that the particleboard is bonded with BWP type synthetic resin adhesive. Ask for the bill and manufacturers’ certificate. If block board is preferred, check it to be at least 10 mm thick and IS 1659 marked. Further see that it is of exterior grade and Class I category. For hard board, check it to be 12 mm thick and IS 1658 marked.

Net doors

For all external doors, provide wire gauge doors, also called net doors. There is a tendency to save on these doors or to postpone their provision. Don’t do that and provide these doors in first instance. Wire mesh doors ensure enough lighting and ventilation of houses. Their availability permits keeping the panelled doors open. In the absence of wire mesh doors, panelled doors can’t be kept open all the time and privacy is also disturbed.

Wire mesh

See that the wire mesh you choose for net doors is woven of 22 gauge GI wire in 12 x 12 mesh. If you place a scale along a wire, you should find 12 squares or more falling in one inch. Lesser is the number of squares per inch, poorer is the wire mesh in quality as it will allow flies and mosquitoes to enter your house. Don’t allow any joint in wire mesh of each panel. It should be a single piece. Well stretch the wire mesh from rebate to rebate. It should be fully tight. Permit no slackness. See that enough number of blue nails is used to fix it into the rebate. Otherwise, wire mesh may come out of the rebate after sometime. Now fix ½ inch thick fillet type beading in the rebate in such a manner that the fillet projects by 1/8 inch (1 soot) from the surface of the door.

Provide hinges

Provide three hinges of 5-inch size to doors and 3-inch size to window shutters. Keep one hinge at the centre and the others two at 8-inch distance from top and bottom of shutter. Use 1.5-inch size screws. Take care that door and window hinges fixed on the frames (chowkhats) are sunk into the frames and not fixed on the surface of the frames. If the hinges are fixed without making recesses, shutters will not open fully. Ask the carpenters to make recesses in frames with depth equal to thickness of hinge plate so that hinge surface is flush with the frame surface. Similarly the second plate of a hinge should be sunk into the shutter to make it flush with shutter edge.

Happy building!

— The writer is SE (civil), PSEB. He can be reached through www.jagvirgoyal.com

DLF plans its very own metro

IN a bid to improve connectivity to township and malls, real estate giant DLF Ltd is planning to run its own metro rail in Gurgaon covering about four km at an estimated investment of up to Rs 375 crore.

DLF, the country's most valued real estate developer, plans to run own metro rail as feeder service to Delhi-Gurgaon metro line being constructed by Delhi Metro Rail Corporation for providing better connectivity.

"We have assigned RITES to undertake a feasibility report for providing feeder service between Sikandarpur Chowk and Sector-24 (Mall of India) of Gurgaon covering 3.7 km," DLF Advisor CBK Rao said.

The report is expected to be submitted by the end of October, Rao said, adding work on the project could start from January-February next year.

DLF's metro rail in Gurgaon would run on an elevated corridor and not pass through underground. The investment for entire 3.7 km stretch could be around Rs 350-375 crore with each km costing about Rs 95-100 crore.

The company also plans to develop and run metro rail in other parts of the country as well like Bangalore where it is developing townships.

DLF has sought permission from the Haryana government for use of road and also to cut trees wherever required. Besides, it has also written for tax concession for its metro project and providing electricity at no profit-no loss basis.

According to the plan, there would be four stations, all single-level, in the proposed metro rail by DLF. At the outset, the company would run four trains comprising three coaches each with a carrying capacity of about one lakh people a day.

DLF is planning to set up a metro rail, which would be fully automatic and not run by a driver. Besides, the height of elevated corridor would also be less compared to what is being constructed by Delhi Metro. The height of the road and the top of the train would not be more than 10 m. The length of the platform would also be kept shorter as per the plan. Service and maintenance would be outsourced. After studying the feasibility report of RITES and getting approvals from state government, DLF would probably float a tender to purchase railway equipment and coaches.

DLF has held some initial talks with leading railway equipment makers and rail automation solution firms in this regard. — PTI 

 

TAX tips By S.C. Vasudeva Agricultural land is not capital asset  as per rules

Q. I am a retired government pensioner. I settled in Ludhiana in February 2006 and had sold my share in inherited agricultural land at my native village falling in Sunam (Sangrur) subdivision. I sold it for Rs 9 lakh approximately and the payment was received through cheque. The land is purely agricultural and is far away from the limits of any municipality or commercial undertaking. I have the following queries:

(a) Is it compulsory for me to invest the above amount?

(b) If yes, in how much time period and what are the different options for me to invest?

(c ) Can I invest on purchasing a plot or house in Ludhiana, that too on the name of my son?

— Dalbir Singh

A. In case the agricultural land is situated in a village area and such land is not within the specified distance of municipality/municipal corporation/cantonment board etc; as specified in Section 2(14) of the Income-tax Act, 1961 (The Act), the capital gain arising on the sale of such land would not be taxable. This is because such an agricultural land is not considered to be a capital asset within the provisions of the aforesaid section. I would suggest that the agricultural land inherited is not so covered within the area specified by the government, may be confirmed by verifying this fact from the Notification No. 9447 dated January 6, 1994, issued by the Government of India in this regard. In case the capital gains tax is not leviable on account of the above facts, you can invest/spend the amount realised on the sale of your share in the agricultural land in the manner you would like to invest/spend.

Son as co-owner

Q. I purchased a plot in Jalandhar city for Rs 48,000 in June 1988 and constructed a house in 1989 by taking a loan of Rs 1,25,000 and additional loan of Rs 40,000. The house was not complete and I had to spend about Rs 2,00,000 towards woodwork and painting in the subsequent four to five years out of my salary savings and borrowings from friends and relatives. Now I intend to sell this house at an estimated cost of Rs.55 lakh and build a house at Mohali for my son who wants to settle there.

Since the cost of land at Mohali will be more than the sale proceeds of my house, additional funds will be required for construction of house. I, being a senior citizen and a pensioner will not be eligible to get home loan from a bank. Nor my son will be entitled to raise loan because the property will have to be purchased in my name to save capital gains tax. Can my son be made a co-owner in the plot to be purchased in my name so that he can raise home loan for construction? Please also advise in which account the sale proceeds of Jalandhar house should be parked till the time when the deal for purchase of plot at Mohali matures.

What will be my tax liability based on the above statements? I do not own any other house.

— H.P. Singh

A. The replies to your queries are as under:

1. Your son can become a co-owner of the plot provided he acquires a part of the plot by making a payment of funds for such acquisition from his own sources.

2. The capital gain arising on the sale of Jalandhar house is required to be deposited by you in a designated account under Capital Gains Deposit Scheme Account before the date of filing of the return of income. The proof of such deposit is required to be submitted along with return of income. The exemption from the levy of capital gains tax would be allowed on the basis of such proof of deposit.

3. In case you comply with the requirements specified in Section 54 of the Act i.e. deposit the amount of capital gain in the aforesaid designated account and invest such capital gain by making withdrawals from such account, in acquiring a residential house within a period of two years of the date of transfer of your Jalandhar house property or in constructing a residential house within three years of the date of transfer of your Jalandhar property, the capital gains tax shall not be leviable on the capital gain arising on the sale of your Jalandhar house property.

However, in case you do not comply with the aforesaid requirements, the capital gains tax would be leviable on the difference between the sale price and the indexed cost of the Jalandhar House Property plus any expenditure incurred wholly and exclusively in connection with such sale @ 20 per cent plus applicable surcharge and education cess. The amount of tax liability cannot be computed as the date of completion of the Jalandhar house property has not been indicated in the query.

Long-term gain

Q. I sold my only house for Rs 5 lakh and earned LTCG of Rs 4 lakh after indexation. I invested Rs 3 lakh in residential plot and claimed relief u/s 54 of LTCG on the value of plot purchased. Is it necessary to construct house at the plot with in time prescribed. What will happen if I do not start any construction with in period prescribed. What will happen if Income Tax Department discovers this matter?

— Ram Pal Singla, Barnala

A. Section 54 of the Act dealing with the exemption of capital gains tax provides that it case where capital gain arising on the sale of a residential house property is proposed to be invested in the acquisition or construction of a residential house within the specified period, such capital gain amount should be deposited in a designated account under capital gains deposit scheme account before the date of filing the income-tax return. The claim of exemption is, therefore, dependent upon such action. I hope the investment in the acquisition of a residential plot was made by you before the date of filing the return and the balance amount Rs.1 lakh was deposited under the above said scheme.

In case the above amount of Rs 1 lakh is not deposited, the amount not utilised shall be treated as a long-term capital gain of the previous year in which the period of three years from the date of transfer of original residential house expires.

Character of land

Q. This has reference to the query by. C.S. Malhi of Ludhiana. From the query, it would be gathered that besides other queries, which were responded to, the querist had also mentioned that the land though situated in a village falling outside the municipal limits, is not cultivable. This vital fact of the querist that the land is not cultivable seems to have been overlooked inadvertently while responding to the same, the treatment to the land in question has been given considering the same as agricultural land.

As per the querist himself, since the land is not cultivable, it clearly means that it is not agriculture land and if this being so, it very much falls within the ambit of ‘capital asset’ as defined in Section 2(14) of the Income-tax Act, 1961.

Consequently, the income arising from sale of such non-agricultural land attracts capital gains tax irrespective of the fact whether it falls within the municipal limits or beyond the municipal limits.

— Rattan Chand, Jalandhar

A. The query did mention that the land is not cultivable. However, while answering the query it was presumed that though the land was not cultivable it can be considered to be an agricultural land in view of the same being situated in a village and outside the notified limits. It is because there is no definition of the agricultural land given in the Act and as per various decisions the expression ‘agricultural land’ has a very wide significance.

The expression has been held to include land which had all along been barren but was otherwise capable of being cultivable so long as the land or lands had not been actually diverted to other purposes such as building sites or sports grounds or military grounds [Refer 31 ITR 480 (Bombay)]. For the purposes of land being agricultural land, actual agricultural operations for cultivation or tilling of the land is not necessary. What is to be seen is whether such land is capable of agricultural land operations being carried out thereon [Refer 138 ITR 783 (Calcutta)].

Therefore, even if the land had not been subjected to cultivation if looking to the conditions, had not been put to any use and even if there is a spontaneous growth of trees, the same can also be held to be an agricultural land (Refer 32 ITR 466 Supreme Court). The matter, therefore, will have to be decided on the facts and circumstances of each particular case. The important factors that should be considered to determine whether a piece of land can be considered to be agricultural land or not are:

(i) whether the land has been assessed to land revenue or not;

(ii) whether agricultural operations are carried on in the land;

(iii) whether the land is capable of agricultural operations;

(iv) the intention of the owner or the purpose for which he is retaining the land, such intention not being fluctuating or ambulatory;

(v) character of adjoining land; and

(vi) description of the land in the official records.

It may further be added that the query did not explain why it is not a cultivable and therefore, it was presumed that since it is situated within the village it must be capable of being cultivated.

The writer can be contacted at sc@scvasudeva.com

Date of completion

Q. I have a PUDA plot at Phagwara under the original allotment. It was allotted on January 19, 1999. Full payment was made but it is still lying vacant. I approached the PUDA authorities and asked them about the deadline of construction the plot. They told me verbally that you pay the extension fee and the last day of completing the construction is December 31, 2007 otherwise the plot will be resumed.

I cannot undertake construction in such a short period. Kindly let me know what is the last date of completion of the construction as per PUDA rules.

— Karnail Singh, Jalandhar

A. The period within which the construction is required to be completed is normally mentioned in the letter of allotment issued by the housing development agencies. I would, therefore, advise you to look up the allotment letter. In case the same is silent and/or the date has not expired it will be better to approach PUDA for letting you know in writing, the date up to which the construction has to be completed. Normally such agencies do have an enabling provision whereby the extension is granted for the construction of a house by payment of some nominal charges. It is not possible for me to give you the date up to which the construction is allowable. It would be better to get the information in writing from PUDA. This would be in your interest.

Buzz on Bourses
Deutsche pumps in $425 m FDI

Mumbai: In the single largest foreign direct investment (FDI) in real estate sector in India, Deutsche Bank, Singapore, has put in $425 million FDI in Mumbai-based real estate company Lodha group. The investment will fund Lodha group’s special purpose vehicle for the development of three of its Mumbai-based FDI compliant projects, said the company. A proportional stake of the projects will go to the investors. — UNI

In4Velocity-Omniyat pact

Bangalore: In4velocity System, real estate and property development software firm, has signed an agreement with Dubai-based Omniyat Properties, marking its foray into West Asia. The licencing and services is initially valued at over Rs 1 crore and expected to cross Rs 3 crore by the end of this year. “We see West Asia as a major market with a lot of possibilities for expansion. In our estimate, it is worth over $50 million in terms of licensing sales and services as the real estate sector is still booming here,” In4velocity System CEO Rahul Chawla said. — PTI

IRB files prospectus with SEBI

Mumbai: IRB Infrastructure Developers has filed its draft red herring prospectus with the Securities and Exchange Board of India (SEBI) to enter the capital market. An infrastructure development and construction company, which has also diversified into real estate development, IRB proposes to come out with a public issue of 51,057,666 equity shares through a book-building process. Deutsche Equities India is the sole global coordinator and BRLM for the issue and Kotak Mahindra Capital Company is the co-BRLM for the issue, a press note stated. — PTI

Sobha joint venture for Haryana

New Delhi: India’s leading real estate and construction company Sobha Developers Limited (SDL), has entered into a joint development agreement with QVC Realty and Chintels India Ltd., the flagship company of the Chintels Group having large land banks in NCR to develop a 192-acre township in Gurgaon. The integrated township will be strategically located in sectors 106- 109 and is extremely well connected with Delhi and Gurgaon by two proposed sector roads and 150m wide road from Dwarka to Reliance SEZ/ NH -8. — TNS

Chandigarh on IHHR roadmap

New Delhi: Ananda - In the Himalayas, which has been voted as world number one spa destination by Conde Nast Traveller for the third consecutive year, plans to set up Ista business hotels in Amritsar and Chandigarh. IHHR Hospitality, which own Ananda, plans to invest Rs 1,360 crore over the next three years to set up two more spa retreats in India and expand its hotel venture, a company statement said. Hotels in Nagpur and Coimbatore are slated for early next year and Chandigarh by September 2008. — TNS

Shriram’s IT SEZ

Chennai: Shriram Properties Ltd has announced the launch of IT SEZ, The Gateway, being developed at an investment of Rs 1,400 crore near Tambaram on the outskirts of the city. Spread over four million square feet, the zone is being developed in four phases. The SEZ would comprise a mall and serviced apartments, chief operating officer R Murugesan said here. The first phase, comprising one million square feet, would be completed by February 2008, he said, adding that 3.5 lakh square feet of space would be completed every quarter. The mall would be fully functional by 2009, he added. — PTI

Muthoot to construct hotel

Kochi: Kerala-based Muthoot Group proposes to set up a Rs 150 crore five-star hotel in Kochi, Kerala’s commercial hub. The construction work for the hotel, that will have 300- plus rooms, will begin next year, group’s Managing Director George Alexander Muthoot told reporters. The Muthoot group was one among the few to identify the vast potential offered by the hospitality and tourism industry of Kerala, he said. — PTI

Kulkarni forays into US

Mumbai: At a time when the real estate players in the country are highly bullish on the sector, here in one developer who has dared to foray into the US where the housing sector woes are continuing. It is the Pune-based D S Kulkarni Developers which has smelt a business potential in the US and has become the first organised sector real estate player from India to make a foray in the US market. Kulkarni Developers has floated a fully-owned subsidiary in Delaware, USA, to develop residential and commercial projects. — PTI

Shipra to raise $200 m

Mumbai: Real estate developer Shipra Group has said it is in talks with private equity players to raise up to $200 million. “We are talking to lots of overseas private equity players to raise $200 million,” Shipra Group managing director Mohit Singh said. Shipra Group is a Ghaziabad-headquartered company. “In the next three months, we would have raised $125 million,” he said. — PTI

ABI plans 4 projects

Chennai: With a land bank of nearly 150 acre, real estate major ABI Construction Group would be launching four projects costing about Rs 150 crore. Talking to reporters, ABI Group CEO S. Elango said the projects include 26 individual homes on a 1.44 acre area at Singaperumalkoil near the Mahindra World City, 500 plots each in two phases at Wallajahbad on 100 acre and a beach resort with 500 plots on about 40 acre on the ECR. — UNI