Reality Check
Sarangpur’s sour dreams
Pradeep Sharma

Sarangpur, a sleepy village on the Chandigarh-Punjab border, which was touted to be a potential tourist hub of the northern India in the backdrop of several mega projects proposed by the Chandigarh Administration till last year, seems to have fallen on bad days.

With the Chandigarh Administration scrapping the Film City project, and the other mega project of an Amusement Park running into rough weather, Sarangpur's date with fame and fortune seems to be shortlived.

"These developments have given a big jolt to the dream of the Administration and real estate giants to turn this strategic area into a centre of entertainment, and a tourism destination", said a senior official of the Administration.

The authorities had grand plans of developing the institutional area as an integrated township with state-of-the-art housing and supporting infrastructure.

With that end in mind the Engineering Wing of the Administration had undertaken the development works, including the laying of roads, provision of streetlights and other related works. However, the work has virtually come to a standstill and crores of rupees spent on the development works have gone down the drain.

Planning for the future, the authorities had even proposed a corridor of its upcoming Metro project from Sarangpur to Maheshpur (Panchkula) to cater to the future needs of the commuters in the area. This was particularly important in view of the newly-opened Chandigarh-Baddi road link and the development of the Mullanpur Urban Estate in the vicinity of Sarangpur.

In fact, the area seemed to have caught the fancy of the big realtors with Film City, the Education City, the Amusement Park, the Equestrian Academy and the state-level Energy Park proposed for the Institutional Area.

As of now, the Film City project has been scrapped . The Administration and the promoter Parsvnath have levelled serious allegations and counter-allegations against each other. The Central Bureau of Investigation (CBI) is probing the case of Amusement Park for alleged irregularities in the allotment of land to Unitech group.

While the Education City project seems to be the only saving grace for the Administration so far, the officials are apparently going slow on the Energy Park and Equestrian Academy projects, too.

Even as the controversies take a toll on the two mega projects besides derailing others, the investors are a worried lot. "This would send a wrong signal to potential investors in the tricity, who would think twice before investing here. In a way this would hurt the tourism and employment potential of the region," complained Sunil Singh, a senior executive with a Delhi-based real estate firm.

Officials informed that it would take a long time to plan alternative projects for the earmarked sites due to the ongoing controversies. Since the land had already been acquired, a broad consensus would have to be worked before finalising other projects at the site.

Off-track projects 

Film City: Proposed to be developed over an area of 30 acres, and being executed by real estate giant Parsvnath, the information-cum-entertainment centre was to have a multiplex, entertainment and gaming facilities for visitors. However, in the wake of a tug-of-war between the Chandigarh Administration and the promoter, the Rs 191-crore project had been scrapped dealing a severe blow to the emergence of Chandigarh as the next cinematic destination.

Amusement park: A Disneyland-type project of Unitech spread over 73 acres, the project was to have, among other things, hotels, high-end rides, a mini mono-rail and cycling tracks for the entertainment of visitors. It was intended to promote Chandigarh as a tourist destination. Currently, the CBI is probing the project for alleged irregularities.

The wait is on
There is a virtual drought of deals in the real-estate market in Punjab as buyers and sellers both wait to make a “kill”, writes Varinder Singh

Over the past one-and-a-half-years the real-estate situation in Punjab has turned into a sort of battle of wits as the sellers and the buyers both seem to be testing each other’s patience by not going in for major deals. Everyone seems to be waiting to reap rich profits.

The hopes of big players in the real-estate sector in Punjab have virtually got bulldozed as things are not looking up for commercial and residential property even after a yearlong tyrannical “correction” or dip in the market. While the prices have registered a considerable dip, buyers are ready to wait for some more time to get cheaper deals. As a result not much capital is flowing into the sector leading to stagnation of sorts.

The NRI moolah, which has always kept the real estate market buoyant in the state, too, has not been flowing in freely around this time. The general claims of the real-estate players notwithstanding, the prices of commercial and residential properties in major cities in the state like Amritsar, Jalandhar, Ludhiana, Patiala and Bathinda have already witnessed a dip ranging between 10 to 30 per cent depending upon the location. However, the prices of property in prime locations in all these cities have not witnessed any major change since early 2008. Both residential and commercial properties in the central hubs of major cities are still in demand and are attracting serious and genuine buyers.

The sub-urban projects and those along the highways have taken the maximum hit. “The state is hardly witnessing any major property liquidation or sale. Though there are a lot of queries in this regard, there is an acute shortage of serious buyers. There is hardly any investor now, unlike two years ago when almost everyone was ready to invest in property to make a fast buck. But now only those wanting to take the benefit of low home-loan rates are buying residential property. So the market is attracting need-based buyers rather than investors,” said Ashwani Gupta, Director of the State Bank of Patiala.

Commenting on the dwindling NRI interest in the realty sector, he said, “Recession is to be blamed here as not much NRI money is flowing into the real-estate sector now. With property prices crashing all over the world, the NRIs with surplus funds are preferring to make purchases in North America where property prices have crashed by a huge 40 to 50 per cent over the past 18 months.” However, while agreeing to the fact that the Doaba-belt had seen much less investment by the NRIs this year, Harmol Singh of Jalandhar-based South City Enclave said he had been able to register sale of plots worth more than Rs 2 crore to NRI clients genuinely interested in setting up homes back in Punjab.

Amritsar-based property dealer and owner of Sangam Properties, Kuldip Ramma opined that the sale of property in the periphery of the holy city had come to a virtual standstill even as the business was going on almost as usual in the city.

Trade sources pointed out that properties along the highways in the state were also not attracting any buyers these days unlike in the past and hence, the prices had come down.

While during the “boom” period almost every big investor had put in his money to purchase property along the highways even at highly jacked up prices, now only small plots along the highways seem to be attracting buyers intending to start their own businesses. “On the whole, the investors are preferring to stay away from the market amid hopes that the sector will bounce back in the next quarter,” said Amanbir Singh Marwaha, a leading exporter and owner of Unison Industries. The senior vice-president of the Punjab Chamber of Small Exporters Ashwani Kohli said if the buyers were not purchasing in the anticipation of a further crash in property prices, the seller was armed with the retention capacity and was not selling his holdings in the hope that the golden days would return once again.

“In fact, the property prices in Punjab and elsewhere had got bloated beyond imagination on the basis of false hopes, so this ‘correction’ was bound to happen. And if this situation persists for another six months the common man will get benefited as he will be able to lay his hands on properties that had zoomed out of his reach about three years back,” said Ashwani Gupta.

Green House
Small wonders
Satish Narula

Loneliness is a companion that everyone wants to avoid, especially in the old age. Whether one is battling the empty-nest syndrome or coping with slowed down physical faculties, life can become a dull drag in the twilight years. Even when the families live together, the younger members are mostly busy due to cut-throat competition in all spheres of life and have very less time to spend with their elders. Thus the biggest problem with the senior citizens is how to “kill” time.

Some find solace in social service, but this is possible only till their health allows. For others religious activities or baby-sitting is the usual pastime, but all these leave the elders with little enthusiasm and sense of satisfaction. But those who involve themselves in gardening derive extreme satisfaction from being close to nature. If space is a constraint or going around a big garden to look after plants is tiring, then creating miniature gardens is the answer for our elderly friends.

Parkash Garewal, an octogeranean who lives alone in Chandigarh, is one such person who has hit “miniature” big time and her example can be worth emulating for many others like her. Most of her time is spent in planning and creating a garden in the corner of her lawn in a two-kanal house. Space is not a constraint for her, but developing miniature landscapes keeps her busy. Though the art of creating miniatures is not new as is evident from the creation of bonsais or tray gardens, creating miniature landscape on the ground is a novel idea.

Ask her if she has taken some formal training in this art, and she says, “I did not know anything about creating miniature landscape till the time I actually created one. So if you call it some kind of an art then it was inherent in me”. And when asked as to how she imagines making landscape features on the ground, her reply is “whenever I go to the market my eyes keep looking for ‘something’, which I am also not aware of. It may be a toy, a hut, stones, pebbles, plants, miniature models of things like bridges, benches, pots, bulbs, shades, bird house, animal figures, a bird house or bird bath and so on. Thinking and planning process begins once I bring such objects home and each is given its place in the miniature landscape.”

She also gets objects like light poles, small fountains, toys, etc from her daughter who lives in the US. The neighbours also feel pleasure in parting with a plant or two that they know will be well utilised.

Apart from fertile imagination, one has to keep the idea of balance in mind so that each feature, whether it is a river, road or hill slope, looks perfectly placed and very much a part of the overall look of the miniature garden. For her “creation” she brought a drift wood piece and got it drilled at three places put soil in it and grew plants. She has used plants like duranta and made miniature topiaries to create ‘trees’. Various alternanthra species have also been used freely to give borders and hedges. These add colour to the feature.

These plants have to be given repeated cuttings to maintain their miniature form and thickness. Haworthias and small mamillarias planted in miniature pots, too, fit well in the landscape. Pebbles can be coloured to give different effects and marble chips of different hues and sizes can be used to make the things look real. So one can let creative juices flow and tend the plants with care and love to see these small wonders flourish with pride.

As for Prakash, there is no end to this passion as she has developed a “hill station”, all complete with a toy train that chugs in through a tunnel with lights on. The next on her agenda is a “carnival” with tastefully done landscape and the idea of creating a miniature replica of a typical Punjab village, too, left her excited.

This column appears fortnightly. The writer is a senior horticulturist at PAU and can be reached at satishnarula@yahoo.co.in

Fortnightly Alert

Winter is the time when citrus plants can be rid of dead and drying wood from the terminals. Allowed to remain there, it will affect bearing. Remove all the dead wood and also the drying wood taking a bit of healthy plant part along with it. Dispose off the wood.

Shaky IPOs

Mumbai: A couple of real estate IPOs may falter from around 15 lined up over the next few months if the issues are not reasonably priced, a realty consultant said.

“Around 15 real estate IPOs have been lined up. They plan to raise in excess of $ 6 billion. I don’t think that all of them are going to have a smooth journey. One or two may falter,” Jones Lang LaSalle Meghraj Chairman Anuj Puri said.

Puri said unlike previously, when investors lapped up issues at any price, this time, investors would like to see the pricing, the credibility of the developers and their ability to execute the proposed projects, before subscribing.

“This time, the market will differentiate on three factors — what’s the price, credibility of the developer and the delivery capacity of the developer.” Investors would like to see how transparent the developer is, the level of corporate governance in the company, the brand, the pricing of the issues and how much is left for the investors to be benefited, Puri said.

“The capacity of the developers is going to be viewed under the microscope. If one says that he is going to develop 50 million square feet and has completed only five million, investors are not ready,” Puri said.

The market also, he said, does not have the appetite for $ 6 billion real estate IPOs as the problem of liquidity still persists with the real-estate sector, which had been badly hit by the economic slowdown.

“There is no liquidity problem as such in the market. But, it is a problem for the real estate sector. The market does not have appetite for so much,” he said.

Among the upcoming public issues, Sahara plans to raise Rs 3,450 crore, Lodha Developers Rs 3,000 crore, Godrej Properties Rs 600 crore, DB Realty Rs 1,500 crore and Kumar Builders Rs 450 crore, among others. — PTI

Trend Mill
Green Wave
Sahil Makkar

The green building concept is swiftly catching up in the country partly because of government sops and partly because of the marketing strategy of real estate developers to get customers —and everyone is now busy linking it to climate change.

According to figures available with the Indian Green Building Council (IGBC), part of the Confederation of Indian Industry (CII)-Godrej Green Building Council, in 2008 India had only 18 certified green buildings and 328 projects in the pipeline. In 2009, the figure of certified green buildings rose to 52. The number of future projects also went up to 436. IGBC has representation from corporate, government, architects, product manufacturers and other institutions.

”In the last five years the trend of green buildings has really caught on in India. It is because of globalisation and westernisation as many new companies have entered the country to start their businesses,” said Shreshth Nagpal, technical head of Spectral Service Consultants Private Ltd.

”The developers are finding these buildings cost beneficial and easy to woo the customers. For them green buildings have become a marketing tool. And at the same time governments are promoting green buildings to cut wastage of energy and carbon emissions,” Nagpal said.

A green building is one which uses less water, optimises energy use, conserves natural resources, generates less waste and provides healthier spaces for occupants. The CII-Sohrabji Godrej Green Business Centre in Hyderabad, ITC Green Centre and Wipro Technologies in Gurgaon, Hiranandani BG Building in Mumbai and ABN Amro Central Enterprise Services Pvt Ltd in Chennai are a few among the certified green buildings in the country. According to some estimates, buildings account for 39 per cent of primary energy consumption and 38 per cent of greenhouse gas emissions across the world. It also uses 12 per cent of the world’s fresh water. “A green building looks just the same as a conventional building. The difference is that the initial cost of green buildings are 5-30 per cent more but the cost pays off in the long run because of cut in the energy consumption,” said P.K. Banerjee, one of the directors at Forum Projects, which designed Kolkata’s first green certified building, Technopolis.

”Also these buildings are more employee-friendly and help increase their productivity. Other features include use of renewable energy and use of renewable recycled materials,” he added. Technopolis emits 7,500 tonnes less carbon dioxide every year, compared to a conventional building of the same size. Green buildings are particularly important for Asia, home to the world’s most rapid economic growth. 

“Asia’s share of global energy consumption has doubled in the past 30 years, and its buildings’ share of energy use is growing at similar rates, with China and India alone constructing more than half of all the world’s new floor space,” Mark Clifford, executive director of the Asia Business Council, wrote in a recent article. Kolkata’s Mayor Bikash Ranjan Bhattacharya said the city produces around 4,000 tonnes of waste every day.

“We have to consider this waste as wealth and devise ways to reduce carbon emissions. We have put a new policy in place to promote green buildings in the state. Some relaxations and tax benefits are being given to the developers to build green homes and buildings in the city,” said Bhattacharya. — IANS

Tax tips
Tax liability
S.C. Vasudeva

Q. I am an employee of a government undertaking and have been allotted a residential flat on self-finance scheme basis at Rs 40 lakh by the Chandigarh Housing Board to be constructed by them within two to three years. I am planning to meet the cost of above flat partly from my family savings and partly with the sale proceeds of about Rs 14 lakh of a residential plot which had been purchased by me in December 2004 for Rs 5 lakh in Ropar, and through the likely sale proceeds of Rs 18 lakh from a residential plot at Ropar which had been purchased by my father for Rs 7 lakh in January 2006. This plot had been gifted to me by my father immediately after purchase. Please guide if:

n The above action is permissible under taxation laws.

n Any tax liability on account of capital gain involved will be there and if yes, what tax is to be payable. — Shanti Sarup Sharma

A. Your queries are replied hereunder:

The utilisation of sale proceeds of plots towards the payment of consideration for the allotment of a residential flat on self-financing scheme by Chandigarh Housing Board is permissible under the provisions of the Income-tax Act, 1961, (the Act).

The utilisation of net consideration (full value of consideration received or accruing on sale of plots less expenditure incurred wholly and exclusively in connection with such sale) for this purpose, would enable you to save income tax chargeable on the profit arising on sale of plots. Such profit would be a long term capital gain as the plots were held by you/your father for a period of more than three years

The following steps should be taken to save the tax on the long term capital gain arising on the sale of plots. The net consideration accruing over the transfer of plots should be deposited in a bank account under capital gain scheme account before the due date of filing the income-tax return.

The payment towards the consideration for the residential flat should be made by withdrawing the amounts from such an account.

The possession of the residential flat should be handed over to you within three years of the date of sale of plots. It has been clarified in Circular No. 471 (dated October 15, 1986) and Circular No. 667 (dated October 18, 1993) that the allotment of a residential flat on self financing scheme is akin to the construction of a residential house as the construction is taken up on behalf of the allottee.

On the basis of facts given in the query, the net consideration accruing on sale of plots is less than the amount of consideration for the residential flat allotted to you. There would be no tax liability in case the net consideration is utilized in its entirety for the purpose stated in the query in the manner suggested above.

No permission needed

Q. I am an NRI based in the UK. I own a flat in Mumbai, which was purchased somewhere in 1970s. There is no possibility of my coming back to India and therefore I would like to sell it. Do I need any permission from any authority in this regard? I am informed that the sale would result in a capital gain on which I am liable to pay tax in India. How would the capital gain be computed as I am not aware of the intricacies of the tax laws in India. — S.K. Kapoor

A. It seems you had acquired the flat prior to 01.04.1981. You have an option to substitute the fair market value of the flat as on 01.04.1981 instead of the cost incurred by you.

In case the cost is higher than such fair market value, you can adopt the cost incurred for the purchase of a plot as the base for calculating capital gain. The cost, or the fair market value as on 01.04.1981 would be indexed on the basis of the cost inflation indexed notified by the government.

The cost inflation index for the financial year 2009-10 is 632. The amount of indexed cost computed on the basis of the said index would be deducted from the consideration accruing on the sale of the flat and the balance amount would be the long-term capital gain arising on the sale of such flat.

In case you have incurred any expenditure wholly and exclusively for the purposes of selling the flat, the same would also be deductible for the purpose of computing the long-term capital gain.

The long-term capital gain so arrived at shall be taxable at the rate of 20 per cent plus education cess of 3 per cent thereon. These rates are applicable for the assessment year 2010-11 (year ending March 31, 2010). You do not have to seek permission from any authority for the sale of a residential flat.

You can also remit the amount of sale proceed less taxes to the UK through banking channels without any problem.

Can daughters claim a share?

Q. We are six brothers and three sisters. All are married. We have the ancestral property. My father’s father died at a very young age and my father was brought up by his grandfather. His grandfather purchased some property along with his brother in Himachal. After the death of my father’s grandfather, this property was divided between my father and father’s cousins. My father made a Will for that property stipulating that the property should be divided between his sons and no share should be given to the three daughters as he had spent money on their marriages. My father died in 1996.  Now one of my nephews has made guesthouse in one of the bangalows. I want to know:

n Whether we three sisters can claim our share in the property?
n Could my father make a will for ancestral property?
n How can we ask for our share?

The said property has not been divided between my brothers as yet. — Gauri

A. It seems the property, which was divided between your father and your father’s cousin was self-acquired property of your father’s grandfather. On this basis, the property as received by your father would not be treated as ancestral property in view of a Supreme Court decision on the subject. Your father, therefore, had a right to make a Will in respect of such property, which was inherited by him in his own right. According to the provisions of the Indian Succession Act 1925, a Will, which is obtained by fraud or coercion can be contested in the Court. In case you have evidence that the Will, as executed by your father, was obtained on account of the aforesaid reasons, you can challenge the Will in the court.

Computing capital gain

Q. I entered into a contract to purchase a residential plot in December, 2002 and made full payment of Rs 1.50 lakh by DD from my account and taken the possession of plot. As the plot was in the name of a deceased unmarried person (death not confirmed), so the registration of plot was to be done after completion of seven years from the date when the owner had gone missing (in 2006). I started construction of a house on the said plot. in January 2003, and spent Rs 9 lakh on it (Rs 4.65 lakh from my personal account and the rest from my wife’s account) and shifted into the house in June 2004, after getting electricity and water connections.

In 2006 I requested the legal heir of the plot owner (i.e. his mother) to get the registration done in my favour but she refused to get it registered at the old rate as the price of land had increased to three to four times, so I made a court case against her and court decided the case in my favour. On the basis of the court order the plot was registered in June 2006 in consideration of Rs 1.50 lakh in my name.

In May 2007, I applied for a house loan from my bank for finishing/furnishing of house and the bank sanctioned a loan of Rs 6 lakh in June 2007, and I spent Rs 50,000 from my own source and bank loan amount in August 2007 for finishing/furnishing like joinery work, bathroom fittings, cabinets, modular kitchen, paint etc. Now I intend to sell the house in year 2009-10 which may fetch Rs 25-26 lakh. Now kindly let me know the capital gain i.e. whether it will be STCG or LTCG and how much? — Kumar S

A.The capital gain arising from the sale of house property would be a long-term capital gain. The long-term capital gain would work out as under:-

Sale Consideration 25,00,000

Indexed Cost of Acquisition of Land (1,50,000/447 X 632) 2,12,081

Indexed Cost of Construction of House (9,00,000/447 X 632) 12,72,483

Indexed Cost of Improvement (6,50,000/551 X 632) 7,45,554  22,30,118

2,69,882

The long-term capital gain would be taxable at the rate of 20 per cent plus the education cess @ 3 per cent thereon. The computation has been made on the presumption that the amount of Rs 4,35,000 spent from your wife’s account towards the cost of construction of the house is a loan received from her.