On road to Boom

The status of CM (Chief Minister) city coupled with an extensive expansion and development programme, has brought Rohtak among the most promising cities in Haryana for investment in real estate.

Development of as many as 17 new sectors, including 11 residential sectors, is on the cards.

Though the residents here appear to be dissatisfied with the growth of the planned residential areas (sectors) in the city over the past few decades, it is perhaps the first time that the Haryana Urban Development Authority (HUDA), which has been the main agency for carving out such pockets in urban areas in Haryana, has announced its plan to develop as many as eight new sectors in the next couple of years.

The city has, at present, just five residential sectors, out of which four are inhabited, while the fifth is being developed, and plots have already been 
allotted there. The prices of property in the city and its adjoining areas have gone up manifold in nearly all the colonies due to an increased demand as the city is just about 60 km from Delhi, and investors anticipate good appreciation in property prices in the next few years, said an official of the district Town and Country Planning Department.

Admitting that the development of the residential colonies by private persons in the past few decades had been a matter of concern as many of these lack the basic facilities, including proper roads, sewerage, streetlights and space for parks, the officials have claimed that sectors developed by HUDA were equipped with the required amenities, and there was hardly any chance of violation of norms. The property market in the city picked momentum in late 2004 when real estate saw a nationwide boom. In 2005 when the Congress came to power in the state, Rohtak got the status of CM (Chief Minister) city and the much-needed boost on the economic front.

As a result property prices zoomed, said local realtor Ravinder Kumar. Though there has been a slight slump in the past 18 months, the overall trend has remained very positive and the rates have almost doubled in the past four years in the urban sectors developed by HUDA, he claims.

While this has helped those who had invested in property about five or six years back, the prices have been out of the reach of many new buyers. “This is perhaps due to the fact that there are very few residential sectors in Rohtak.

Only five sectors had been fully developed where a majority of plots have been occupied and resold already, said Rajesh, another property consultant. He said the sectors available here included Sectors 1, 2, 3, 4, 5 and 6, which had been under development, besides Sector 14, where very few vacant plots are available at present.

About the rates of the open market, he said these were between Rs 25,000 and Rs 30,000 per sq. yard in Sector-14, while in other sectors the rates were between Rs 15,000 and Rs 24,000, depending upon the location and size of the plots.

The surge in the rates in HUDA sectors had prompted some private players to develop their own sectors, but these had not been able to make much dent as the rates there were much lower — between Rs 8,000 and 12,000 at present. “Though a majority of the plots floated in these sectors developed by groups, including Suncity and Omaxe, have been sold, delay in handing over the possession and providing the required infrastructural development has forced many of the owners to resort to “distress” sale, claimed a local resident. He said recently several of the plot owners had staged a protest demonstration outside the office of one of the developers.

But a representative of one of the private developers claimed that there was better scope of returns if one invested in these sectors. He said while the rates had already hit the roof in the existing HUDA sectors, there would not be many who would invest in these sectors. They would look towards the areas having lower rates and the projects floated by private developers. The new proposed sectors of HUDA would be the centre of attraction for the investors.

The sectors meant for commercial use, include Sectors 18-A, 30 and 31-A, while Sectors 18 and 21-A will be transport zones. Sector 21 will be a Special Zone. The Joint Inspection Committee (JIC) of almost 11 new sectors has been done, while notice under Section 6 has been served for the creation of six more sectors soon.

These sectors have been planned to keep in mind the requirement of the city’s population by 2025, said the DTP, Sanjiv Mann.

He said the new Controlled Area of the district includes about 25 villages located in the vicinity of 10 to 15 km, and any construction activity will now require prior permission of the department.

TAX TIPS
CGT maze
S.C. Vasudeva

Q. I purchased a flat from a builder in October, 2005. The flat was under construction. The cost of the flat was 13.5 lakh. I applied and took loan of Rs 11.5 lakh from a bank and 2 lakh were to be paid by me.

The builder had offered possession in October 2007, but we didn’t take it, as there were minor faults in the flat. By October 2008, I had paid my 2 lakh and bank had paid Rs 8.25 lakh (out of 11.5 lakh). Due to the faults and other reasons, builder gave me the concession of the remaining amount of Rs 3.25 lakh. I returned the loan amount of Rs 8.25 lakh to the bank in December, 2008.  So the net cost amount of the flat to me was Rs 10.25 lakh.

In November 2008, (after a period of 3.1 yrs from purchase), I sold the flat to a third party for Rs 13.6 lakh and took the amount by cheque. The flat had not been registered in my name till that time. Even the third (purchasing) party has not got it registered till now and they intend to do it next month.

All the money I received (Rs 13.6 lakh), I invested in purchasing a new house in November 2008. My query is

n Is the difference in purchase and selling amount (Rs 13.6 - Rs 10.25= Rs 3.35 lakh), a long-term or short-term capital gain? If it is a long-term capital gain, then does further investing it in a new house invoke any tax liability?

n Can the Income Tax Department question as to how/ why the builder gave me a concession of Rs 3.25 lakh? If yes, then should I make a payment of Rs 3.25 lakh to the builder by cheque and take cash back? I can take this liberty as the third (purchasing) party has not yet got the flat registered in its name. I won’t prefer this but shall have to do it in case it is warranted. — Nikunj

A. Your queries are replied hereunder:

It seems from the fact given in the query that the possession of the flat was not taken by you. In such a case the capital gain arising on the sale of flat in November 2008, would be a long-term capital gain as you have sold a right to property and not the property itself. It may be added that in case you have taken the possession prior to November 2008, it would be a case of a short-term capital gain and the same would be added to your taxable income and the tax will have to be paid on the aggregate income at the normal slab rate.

It will be in your interest to obtain a certificate from the builder that he had given you a concession of Rs 3.25 lakh in respect of the flat for which a sum of Rs 13.6 lakh was payable and that the net cost of the flat was Rs 10.25 lakh. It would not advisable to enter into a transaction, which would involve the payment of cheque and then taking back the cash.

In case it is a case of long-term capital gain (as explained in point (i) above), the capital gain arising on the sale of the flat would be exempt from tax as the same has been utilised for the purchase of a residential house within the specified period of two years.

Gift to brother

Q. I gave interest–free loan (not time bound) of Rs 6 lakh to my elder brother during the financial years 2007-08 and 2008-09 for construction of house. I now want to gift this interest-free loan amount to my elder brother.

Kindly clarify the following:

n Is there any tax liability on this interest-free loan amount of Rs 6 lakh on either of us till my elder brother repays it to me?

n Can I now gift this interest-free loan amount of Rs 6 lakh to my elder brother without inviting any tax liability either on the donor or the donee? —Ankit Chopra

A. The answers to your queries are as under:

There is no tax liability on you with regard to the interest-free loan of Rs 6 lakh advanced to your brother provided you have not paid this amount from the funds borrowed from any source and/or are not paying any interest on the amount so borrowed out of which the amount has been advanced to him. You can gift the amount of interest-free loan to your brother. There is no tax liability on such gift either in the hands of donor or in the hands of donee. 

Rent arrears

Q. I have received arrears of rent in respect of a house, which had been let out. The tenant had not paid the rent for a period of almost five years. The amount of rent of Rs 6 lakh has been received in November 2009. How would the above amount be taxable in my hands? — Sunil Kumar

A. In accordance with the provisions of Section 25B of the Act, any amount received as arrears of rent from a property consisting of any building or land appurtenant thereto which has not been charged to income tax in any previous year shall be taxable in the previous year in which the same is received.

In view thereof, the amount of Rs 6 lakh received by you as arrears of rent would be taxable in the assessment year 2010-11. You would, however, be entitled to a statutory deduction of 30 per cent in respect of the amount so received. The amount would be taxable as income from house property as you are the owner of the house.

Forfeiture of earnest money

Q. I have entered into an agreement to sell a plot that had been acquired about 10 years back. In terms of agreement to sell I have received a sum of Rs 10 lakh as earnest money. The sale deed was to be executed by the end of April 2009.

However, the purchaser has been avoiding the execution of the sale deed and payment of the final consideration. The agreement to sell clearly provides that in case the sale deed is not executed by the end of April 2009, I shall have a right to forfeit of amount of Rs 10 lakh paid as earnest money. In case I forfeit the above amount what would be the consequences as far as my tax assessment is concerned. — K. Singh

A. The forfeiture of the amount of earnest money will have no bearing on your tax assessment. However, in computing the cost of acquisition of the plot which had been agreed to be sold, the earnest money received and forfeited by you would be deducted from the cost for which the plot was acquired or its fair market value as the case may be.

Accordingly, as and when the capital gain is computed, the cost or fair market value of the plot would stand reduced by Rs 10 lakh.

In tax net

Q. I had a residential plot that had been purchased during 1990-91 and it was sold during the financial year 2008-09. The amount received could not be deposited in the capital gains account with the bank and capital gain tax was not paid. However, the whole of the amount was deposited in bank as a fixed deposit. This amount was withdrawn and a residential plot was purchased during financial year 2009-10 (that is within the period of two years of the sale). Am I liable to pay Capital Gains Tax, considering that the whole of the amount was spent for purchasing a residential plot within two years even though it was not deposited in the capital gains account before filing of the return. —Som Dutt

A. On the basis of the facts given in the query, the capital gain arising on the sale of residential plot would be a long-term capital gain as you held the residential plot for more than three years. The exemption from tax under Section 54F of the Income-Tax Act 1961 (the Act) is available in respect of the long-term capital gain arising on the transfer of any long-term capital asset, not being a residential house if the net consideration received on transfer of a long-term capital asset other than the residential house, is invested in the acquisition of a residential house within a period of one year before or two years after the date of the transfer of such capital asset or in the construction of a residential house within a period of three years from the date of the transfer of such capital asset.

Since you have acquired a residential plot and not a residential house within a period of two years, it may not be possible for you to claim the exemption from tax in respect of the long-term capital gain arising on the sale of the residential plot. You have also not complied with the provisions of the Act by not depositing the amount of net consideration in the Capital Gains Scheme account before the due date of filing the return. The fixed deposit made by you would not be construed as a deposit under the Capital Gains Scheme account.

House used for business purposes

Q. I own a residential house property. It has been given as a rent free house to the General Manager of my company who looks after my business. The General Manager is being paid a salary of Rs 5 lakh a year. Will I be entitled to claim the exemption under Wealth Tax of the house as the same is being used for business purposes? — B.S. Kanir

A. A building occupied by a person for the purposes of any business or profession carried on by him is not an asset. This condition is also satisfied when a person who owns the premises makes it available to a firm in which he is a partner and such firm is carrying on a business or profession.

The house owned by you is a residential house. It is covered by the exception provided in Section 2(ea) of the Wealth Tax Act, 1957. Such a house will not be covered within the term “asset” and therefore would not be exigible to Wealth Tax. 

TREND MILL
The royal touch
Manisha Yadav

Guilded furniture — a well-treasured craft that has captured the imagination of highly skilled artisans and gave an exclusive touch to the interiors of many a palatial home — is making a comeback, thanks to its fusion with modern aesthetics. Furniture made of gold and silver, associated with wealth and grace, is fast gaining a place of prominence in modern homes, too.

The tradition of gilding/leafing in silver and gold goes back to the time of Louis XIV. Gilding with gold was an intrinsic part of Victorian, French and Roman craft, and it appealed to designers all over the world. The trend was lapped up by Indian royalty and ruled the interiors of royal abodes for several years. However, with contemporary styles setting into Indian homes, the gold-leaf work faced a minor setback. But the merging of modern straight-line furniture with classic gilding has brought a whiff of fresh air to the art form.

In the most recent trends, gold began to favour neo-classical and even the modern minimalist style, says Praveen Rao, MD, Dolphin Mart Ltd.

The element of the new luxury segment that has caught the fancy of buyers, includes textures in metallic designs like gold and silver leafing.

Earlier, if decorators used gold leafing they often looked overseas for expensive pieces that only a few could afford, but now this exclusively crafted furniture is available in India and the price range starts from Rs 25,000.

In this category Woodmart Exclusif’s has recreated a vast array of authentic French classical art for the living, dining and bedroom and a range of furniture accessories. The thin foil sheet of muted gold and silver leaf is applied by hand on the motifs, carving and molding.

GREEN HOUSE
Flower etiquette
Satish Narula

Different flowers signify different sentiments. So choose your bouquet carefully

Say it with flowers. Gone are the days when one used to visit an ailing patient with a basketful of fruits. A bunch of flowers also goes a long way in conveying best wishes. But to make full use of “flower power” it is very important to understand what different types of flowers convey. Now as we have started emulating the West by celebrating days like Valentine’s Day, Friendship Day, Mother’s Day, Father’s Day etc., it is all the more important to understand the significance of flowers.

Presenting different type of flowers can have different meanings. For example giving a rose flower to someone is a way of conveying romntic felings. However, the colour red means showing strong feelings for someone and also respect, courage and desire.

Similarly, the women love is conveyed through white carnation. Dark crimson roses are a symbol of mourning. Pink represents grace; elegance and gentleness and white roses stand for purity, reverence and humility.

For youngsters, roses without thorns represent love-at-first-sight, and two roses on a single stem represent engagement and imminent marriage.

Surprisingly, marigold, which is used the most in daily rituals in our country, has different meanings to convey — the French marigold conveys jealousy or sorrow, the African marigold means vulgar minds. The fragrant narcissus (nargis) signifies self-esteem and its bold sister strain — daffodil — is used to show regard.

Exchanging lilies means purity and stock means luxury. Pansy conveys the hidden meaning of giving thought to a subject or matter. The much desired message of the day, amiability, is aptly conveyed through jasmine.

Interestingly, our mythology and astrology also understood the significance of this “flower power”. Brahma, who thought lotus was the best, acknowledged the rose as being the king of all all flowers when he visited baikunth. A blue lotus is associated with Lord Vishnu and the white bushy bauhinia alba (white kachnar) represents Luxmi, the goddess of wealth. Similarly, the amaranthus represents Goddess Kali and hibiscus is offered to goddess Durga and Luxmi and Sarasvati (the Goddess of learning) adorns lotus bloom.

According to V.N. Singh, Nodal officer, Le Corbusier Museum Chandigarh, whoa hobbyist astrologer, lotus bud is a symbol of peace, serenity, power and growth. Buddha, too, was very fond of lotus flower due to such significance attatched to it.

This column appears fortnightly. The writer is a senior horticulturist at PAU and can be

reached at satishnarula@yahoo.co.in

Fortnightly Alert

keep an eye on cold wave and frost. If there is a forecast or you feel it could occur, water to your plants.

The plant tissues full of water are less prone to frost injury. Small plants could be covered with thatch etc. The nursery of plants could be covered overhead with poly cover, which should be removed in the morning. 

REALITY BYTES
3.6 lakh cr housing investments needed in five years

Mumbai: The country needs a whopping Rs 3.6-lakh crore investments over the next five years to construct an additional 2.65-crore housing units for six crore citizens, a top HDFC official said. “Over the next five years, we need 26.5 million additional housing units, investment requirements of over Rs 3,60,000 crore and need to re-house 62 million persons who live in urban slums,” HDFC joint manging director Renu Sud Karnad said in Mumbai recently.

Noting that real estate sector is a major contributor to national growth, at 8.86 per cent of GDP, Karnad said 8-10 real estate IPOs are expected to mop up around Rs 23,000 crore over the next one year.

The housing sector, if priced correctly, is expected to draw enormous demand in the period ahead, Karnad said, adding any saturation in the sector is unlikely in the foreseeable future.

“Given the acute housing shortage, it is unlikely that there will be any saturation in the market for a long time to come,” she said.

Observing that action in the real estate sector is decisively shifting from the metros to the smaller cities, Karnad called for increased commitment to the housing sector from the market 
participants.

“We have to seriously question ourselves about our commitment to housing. We are indeed faced with a series of great opportunities brilliantly disguised as impossible situations, but we should not give up,” she said. — PTI

Rs 1,500-cr IPO

Mumbai: Real estate company, BPTP Limited, plans to hit the capital market to raise funds through an Initial Public Offering (IPO). The Delhi-based company has filed its Draft Red Herring Prospectus (DRHP) with SEBI.

The public issue of equity shares of face value of Rs 10 each for a cash at a price band to be decided later aggregate to Rs 1,500-crore. The book running lead managers to the issue are IDFC– SSKI Ltd and JP Morgan Pvt Ltd. — PTI

Oberoi Udaivilas in Forbes list

New Delhi: Hospitality chain Oberoi Hotels & Resorts’ Udaipur property has been named amongst the world’s most exclusive hotels by the Forbes magazine’s online edition.

Forbes.com has included The Oberoi Udaivilas, Udaipur, among the 11 hotels in the list, Oberoi Hotels & Resorts said in a statement.

Hotels on the list are the Ritz in Paris, Four Seasons in Punta Mita (Mexico) and Jade Mountain in the tropical island of St Lucia.

Oberoi Hotels & Resorts operate 16 luxury hotels and resorts spread across India, Mauritius, Indonesia, Egypt and Saudi Arabia.— PTI

Sky Villa project

New Delhi: Real estate developing firm Kumar Urban Development Ltd will start construction work on its new project “Sky Villas” in Mumbai by January next year.

The Sky Villa project, a 270-mtr high tower called Kumar Couture, will have villas of 8,000 sqft carpet area each. “Construction on the project will begin in January and will be completed in four years,” Kumar Urban Development Chairman and Managing Director Lalit Kumar Jain said in a statement.We are offering triplexes and duplexes, in fact a plot in the air, he further said.

The company, which has recently filed draft paper for its proposed initial public offer (IPO) with market regulator Securities and Exchange Board of India (SEBI) to raise Rs 450 crore will also construct a 62-storyed building in Mumbai as part of redevelopment projects. — PTI

Godrej plans residential project

Chennai: Mumbai real estate developer Godrej Properties Monday said it will jointly develop a mid-market residential project near here in association with the city-based cutting manufacturer Addison. As per the deal, Godrej Properties has acquired the developmental rights on a 12.57-acre plot owned by Addison.

“We will promote a mid-market residential apartment project after getting the necessary approvals,” said Godrej Properties chief operating officer K.T. Jithendran. “As per the agreement, Addison will be entitled for 30 percent of the saleable constructed area and our share will be 70 percent,” Jithendran told reporters here.

Last year, Godrej and Addison had signed a deal to jointly develop commercial and residential buildings on 17.39 acres in Tiruvallur district near here.The Mumbai firm paid Rs.8 crore to Addison for its share of land, measuring around 8.75 acres.

According to Jithendran, Godrej Properties is looking at mid-market residential apartments in Chennai and Kolkata, apart from other cities. The company will hit the capital market Wednesday for raising around Rs.500 crore, to be used for acquisition of land development rights, construction and repayment of loans. —IANS

Real Talk
Decade of the tricity
Pradeep Sharma

Bhupinder Kumar Sanghi

President of the Haryana Group Housing Federation (HGHF) Bhupinder Kumar Sanghi is a realtor with wide experience, who has nurtured the vision of affordable housing for all.

Brain behind several state-of-the-art cooperative group housing ventures, including Haryana’s first all-women housing society at Mansa Devi Complex in Panchkula, Sanghi paints a rosy picture for real estate development in the country in general and in the tricity (Chandigarh, Mohali and Panchkula) in particular in the coming year.

Q. How do you rate tricity’s potential in real-estate development?

A. The second decade of the millennium belongs to the tricity. World-class living standards offered by Chandigarh, Mohali and Panchkula will spur construction activity in the years to come as a large number of persons, including politicians, bureaucrats and businessmen, want to settle in the tricity. However, there is need for coordinated efforts to develop the Chandigarh capital region in a holistic manner.

Q. A vast majority of Indian population is still without affordable housing. What is the way out?

A. Roti, kapda aur makaan are basis needs of man. The central and the state government should formulate special schemes for the lower strata of society, who cannot afford a house. Besides, a statutory provision compelling developers of real estate projects to have quota for the economically weaker section (EWS) in the existing projects must be inserted in the rules and regulations.

Q. Is the real estate boom for Chandigarh, as witnessed in the recent auction of residential sites, going to last?

A. In fact, the world-class infrastructure in Chandigarh is set to be complemented with the coming up of the IT Park, Metro and International airport projects. In the concrete jungle of metros, Chandigarh seems to be the only oasis of orderly development.

Given its strategic location, Chandigarh is city of the future which would catch the fancy of big realtors, investors — particularly NRIs and discerning end users.

Q. Are you satisfied with government rules and regulations concerning housing and real estate sector in India?

A. There is a need to set up National Housing Commission to have a uniform, transparent and well-documented national policy on housing to loosen the stranglehold of the bureaucracy on the real estate sector. An equal participation of the private sector and the NGOs to provide “housing for all” is the need of the hour.

Q Your forecast for real estate sector trends in 2010?

A. The 1980s focussed on Mumbai while 1990s saw the focus shift to the Delhi and the National Capital Region (NCR). Similarly, the first decade of the millennium 2000 focused on Bengaluru. The next decade (2010-20) would focus on the tricity and the emerging Tier-II cities. Since there is an acute shortage good housing in India, the real estate sector will grow by leaps and bounds. With per capita income growing, the investment in realty sector would touch all-time high in the 2010.

Q. What is the future of the cooperative housing sector?

A. Proper government patronage will make the cooperative housing sector fulfill the promises of providing affordable housing to millions of people in the country who dream of owning a house. In fact, autonomy for the cooperative sector is the buzzword, which would give the necessary fillip to the cooperative housing movement. —psharma@tribunemail.com