Caught in a LEGAL tangle
Shariq Majeed

Sangrur may be a sleepy town in Punjab, but it is not lagging behind in the march to urbanisation. A large number of residential colonies have come up in the area over the past few years, revealing the desire of the residents of the area to live in a fully organised and developed environment, away from the haphazard life of the old towns of the state.

Though the number of colonies is substantial, and a large number of developers are involved in buying and selling of houses and plots, the picture is not as rosy as it should have been. So all those who already have property in and around Sangrur, or are planning to park their funds there, have to tread cautiously. A document prepared by the municipal council suggests that there are 44 illegal colonies in the area, a majority of which are believed to have come up after 2008.

Even as buyers try to save money by buying land in the unapproved colonies where the prices are comparatively less than in the approved ones, they forget that such colonies lack proper roads, have no electricity, sewerage and water connections. Apart from this , there were chances of the houses being demolished. By making illegal colonies, the colonisers are not only fleecing buyers, but are also evading development tax worth lakhs of rupees. This has to be paid to the municipal corporation as charges to connect the colony road to other main roads, using the MC sewerage facility, and other charges for using municipal water supply connection etc.

Twist in MC tale

The shocking figure of 44 illegal colonies in the area was revealed in 2008 when the Municipal Engineer (ME) and Junior Engineer (JE) started verification to report illegal colonies to PUDA for necessary action.

In February 2008, ME and JE of the municipal council found the first illegal colony, Kishan Bagh colony, near Street Number 8 here. After that in September 2008, the ME and JE located another 31 colonies within the municipal limits of Sangrur. After that till this time, the municipal council engineers have marked 12 more such colonies that have come up illegally in Sangrur city.

Interestingly, while the MC on the one hand prepared a list of illegal colonies and sent it to PUDA and other departments for action, and on the other, it recently passed a resolution asking the government to allow it to pass the maps of the land owners in these colonies.

Sources in the municipal council say that in May, PUDA had asked the DC to take appropriate action against illegal colonisers in Sangrur under the Punjab Apartment and Property Regulatory act (PAPRA) 1995. The DC had marked the letter to the tehsildar, but he deflected the letter to the MC, which responded by saying that it had nothing to do with the land records. After a few days of this, however, the MC, in an unusual move, passed a resolution to clear the maps of the owners of land in illegal colonies. The matter is hanging fire as no concrete decision has been taken in this regard so far.

In the meantime, the government has also clipped the powers of PUDA, and a few months ago it lost the authority to act against the illegal colonies within the municipal limits. The government, through an order in June 2010, has diverted the powers to Deputy Director, Local Bodies, of the zone concerned to act against the illegal colonisers.

As a result the sale-purchase of land is going on unabated, and many of the gullible buyers are completely unaware of the status of the land being purchased by them.

The major colonies in Sangrur that have been declared illegal include Kishan Bagh Colony, Atwal Colony, Sekhon Colony, Shakti Colony, Bhajan Singh Colony and a colony near Mehlan road. These colonies, besides 38 other colonies, have been declared illegal because they don’t meet the government requirements for legal colonies like road specification (for main road width should be 45 ft and for side roads it is 30 ft), parking zone, separate residential and commercial zones, and the 65:35 ratio for constructed and non-constructed zones.

There is a lot of resentment among the developers who have taken the legal route and have carved out approved colonies. One such developer said the illegal colonisers were fleecing the buyers by selling plots in colonies with no facilities like water supply, electricity, sewerage etc, and were also evading the development tax. The development tax comes out to be around Rs 50 lakh for a colony developed over 5 kila area. Thus, if the development tax and other taxes were calculated for the 44 illegal colonies, then the figure came to a whopping Rs 20 crore.

However, it is not only the colonisers who carve illegal colonies to blame for the mess, the government, too, has played its part in the growth of illegal colonies by registering land in illegal colonies for earning revenue.

“Various provisions of the Registration Act, 1908, as also the various verdicts of High Court stop us from not registering the land. We can stop the registration on three grounds — if a person is insane, a minor, or if a person denies the execution of a deed”, says District Revenue Officer, Sangrur, Satinder Kumar Khera.

Deputy Commissioner Harkesh Singh Sidhu said he had written to PUDA, Income Tax department and the MC to take action against these illegal colonisers in Sangrur.

The Deputy Director, Local Bodies, Patiala zone, Ashok Kumar Sikka, said the colonies which were formed before 2007 were likely to be regularised and were no longer illegal.

However, he didn’t have any concrete answer about the status of illegal colonies in Sangrur. Though he said the colonies that had come up before 2007 would be regularised.

As PUDA has lost the power to take action against colonisers carving colonies within the municipal limits without taking proper clearances from government departments, the MC first suggested to the agencies concerned to act against the illegal colonies and also prepared a list of such colonies, and later passed a resolution asking the government to regularise the same.

Now with the Deputy Director, Local Bodies, Sangrur Zone, saying that the colonies which came up before 2007 will be regularised, the list prepared by the MC suggests that these 44 illegal colonies have come up after 2007.

So no one knows what will be the fate of these colonies and of those who have invested money here. As for the time being, buyers who are ignorant of these legal nitty-gritties are continuing to purchase land on in these illegal colonies.

Taking farmers for a ride

In a majority of the cases where the colonisers have carved illegal colonies on farm land, they earn profit by carving colonies without actually being a part of the deal. The modus operandi is that colonisers buy agricultural land by paying some amount in advance to farmers without gaining ownership of the land. After that the colonisers look for buyers for the land, and when they get buyers, they sell the land to them directly. The land is, thus, transferred from the farmer to the buyers directly. The colonisers then pay the balance amount to the farmers from whom they had bought the land. In this process the colonisers earn huge amounts of money without actually coming in the picture themselves. The colonisers also earn more profit as the registration charges for agricultural land are much less than those for land to be used for commercial purposes.

GROUND REALTY
Laying marble with finesse
Jagvir Goyal

In the last article, we had discussed the right way of buying good quality marble at a reasonable cost. Today, we’ll discuss the right method of laying it. Marble slabs selected for use may be of finest quality but won’t give the desired look, finish and service unless these are laid properly. So here are a few points to keep in mind:

Check the slabs

See that all marble slabs are of equal and selected size with all the four edges of each slab machine-cut at right angles to one another. The edges should be straight and vertically cut for full depth of slabs. Any two slabs when laid abutting each other should be fully in contact with each other. There should be no chippings on any of the edges. One slab can be checked to be truly to size and with right-angled edges and taking this slab as the standard piece; others can be checked for size and edges by placing them one by one over it. Thickness of slabs should not be less than 20 mm. It may be more but uniformly same for all slabs.

Laying of mortar

Get the base concrete laid in the floor thoroughly cleaned. Wet it fully. Now lay a layer of cement mortar over it for the area equivalent to that of the slab. Suppose a slab is of 3 ft x 2 ft size. Lay the mortar in this 6 sq. ft area only. Let the cement mortar have a ratio of one part cement and three parts sand or one part cement and four parts sand. See that the thickness of mortar is 20 mm. At some places, it may be a little less or more due to the unevenness of base concrete but don’t keep it less than 12 mm thick.

Add adhesive

You may add a polymer adhesive to the mortar for its better grip on the marble slab. Use a liquid adhesive like Fevimate with excellent adhesion properties. For right use, mix one kg of the adhesive with 20 litres of water and stir it well. Add this solution to dry mix of cement and sand till the time a uniform mortar is available. Now spread this mortar on the base. When an adhesive is used, cement mortar used may be 1:4 instead of 1:3. Thus, part cost of adhesive is recovered.

Laying slabs

Comb the mortar bed with a notched trowel before laying the marble slab on it. Now, lay the slab and tap it well with wooden hammer. See that no air gaps are created below marble slab by any unevenness of lean concrete or mortar. This is important for the long life of the floor. Now lift the slab and see if any hollows have been created below the slab in the mortar. Fill these well with the mortar and relay the slab and tap it well. After laying of the first slab, see that edges of all slabs laid further come in full contact with the slabs already laid. Keep the joint gap as 1.5 mm. Progress further till the whole of floor area is covered. Keep wiping any mortar that rises above at joints during laying of slabs.

Finer points

When the slabs are laid, lifted to check hollow spots and then re-laid as described above, it is felt that the mortar laid below has hardened a bit. In such cases, apply neat cement slurry on the mortar bed before laying of slabs. Also, just before laying a slab, apply white cement slurry on the two exposed edges of last marble slab. These two measures will result in a truly tough marble floor.

Floor gradient

While laying flooring in rooms, prefer to maintain dead level of floors. Provide a slope of 1 in 50 to 1 in 60 in bathrooms, toilets and kitchen towards the floor trap. In verandahs, provide a slope of 1 in 48 towards outside. Marble soaks moisture. So always keep top level of marble flooring flush with DPC.

Skirting

Apply white cement to the edges of slabs laid adjacent to the walls and see that the slabs enter under the wall plaster. Prefer to select skirting pieces from end pieces of marble. This will match the skirting with the flooring and make it look beautiful. Use long pieces of skirting to have minimum number of joints in it.

Post-laying care

Twenty-four hours after the laying of marble slabs, grout the joints with white cement slurry. Wipe off the excessive slurry from the slab surface. Don’t allow walking over laid marble for seven days at least and cure it well during these days.

Fixing on walls

If you have planned to fix marble on walls of some area, use the same adhesive as was used for marble flooring. However, for walls, keep the cement sand mortar of 1:2 ratio. You may also choose an epoxy based, non-shrinking and non-staining type adhesive. Such adhesives provide bonding strength for years to come but are costly. These adhesives are not to be mixed with mortar and are applied straight on the prepared surface before fixing the marble.

Perfect polish

Marble floors need polishing. No one uses the old method of 3-4 cuttings for the polishing of floors these days. The 7 cutting method is used and it gives a real shine to the floor. Its popular name is granite polish. Grit blocks of 0, 1, 2, 2 ½, 3, 4, 5 and 6 number are used for this polish. Water is used during cutting to act as a lubricant. Use this method for polishing of floors. The shine remains intact for seven or more years. Nowadays, an additional cutting is done with a very fine imported grit block to bring mirror like shine in the floor.

Polish operation

First four operations of ‘granite polish’ of marble floors involve cutting and grinding, and the next three operations involve polishing of floors. After the first cutting, wash the surface thoroughly and cover it with white cement grout to fill pinholes appearing after first cutting. Cure it for 3 days and then allow second cutting. Apply the repair again after the second cutting. No repair is generally required after second cutting unless some pinholes are still noticed. The complete polishing operation lasts 10 to 11 days.

(This column appears fortnightly)

LAUNCH PAD
Impact Senior Living Estates

The Impact Group is coming up with its first residential complex — Impact Senior Living Estates (ISLE) — for senior citizens in Amritsar. The complex, spread over an area of 5 acres, will bring in global standards of living for seniors. ISLE Pvt. Ltd., the company floated by the Impact Group, has plans to come up with more such senior living estates in the National Capital Region (NCR), Himachal Pradesh, Greater Chandigarh Region and in coastal India.

From independent living to assisted living and then nursed living, ISLE shall offer every possible service for its ageing residents.

ISLE has hired one of the leading international architecture firms that has ample experience in terms of setting up world class senior living townships abroad. Every detail in terms of architecture and interiors therefore shall be as per their requirements. Some of the senior living friendly features include grab rails at vantage points, panic buttons connected to control room; thin, wide steps and gradual slopes (ramps) on stairs; auto door stretcher elevators, easy access to switches and cupboards, prefab attendant rooms which can be dismantled as and when the need for assistance is over (e.g. post surgery), wide revolving space for wheelchair, terraces with walkways, colour indications for particular facilities etc. The gated complex shall also feature landscaping; paved driveways, parking facilities, sewage treatment and recycling / reuse of water, rainwater harvesting, responsible and managed garbage disposal etc.

The complex will be equipped with an MI (medical intervention) room for frequent and periodic checkup as well as administration of basic healthcare services to residents. A stand-by ambulance shall be available 24x7, should any of the residents require to be admitted to the hospital in the immediate vicinity. Best of 'four-star' hospitality shall be at the beck and call of the residents as the complex shall have a resident to staff ratio of 1:1. A dedicated activity manager will be in place to ensure that residents have a pre-scheduled 3-4 hours of engagement everyday as per their varied interests, a factor that makes ISLE very unique.

ISLE will have a distinctive model of ownership wherein residents will lease out the apartment unit either for lifetime or for a select period and the monthly payouts will remain unvarying.

Oxford Square

Supertech Limited has launched Oxford Square, its first project based on the concept of independent floors in Noida Extension.

Oxford Square is a 22 acre project, which will comprise two, three and four BHK G+2 independent and duplex floors. The area of the units will range from 1,086 sq. ft. to 2,713 sq. ft, priced at Rs 2,450 per sq. ft.. These units will be villa-type fully air-conditioned independent floors with woodwork, duplex units with personal splash pool and terrace garden, exclusive lawn for ground floor, and independent parking for all floors. The project will provide a medication centre, a crèche and a well equipped in-house club with facilities of a gymnasium, swimming pool and kids’ area.

The project will involve an investment of Rs 600 crore and the possession will be given in 18 months from the date of construction.

RG Luxury Homes

RG Group has expanded its footprint into luxury homes segment by launching RG Luxury Homes in the Greater Noida region. This township is based on a landscaped podium concept, which is the first of its kind to come up in the region. RG will invest nearly Rs 800 crore in developing this project situated at Sector 16 B, Greater Noida. The project is likely to be completed by December 2013.

The 18-acre project will comprise 12 towers having spacious two and three bedroom apartments. The all inclusive cost of the apartments will be between Rs 18 lakh and Rs 30 lakh. The cost of the apartments is based on the actual covered area rather than the super built up area which is the general norm in the industry.

The residential complex will offer four-side open flats with spacious rooms and wooden flooring coupled with modular kitchen and cupboards. The township will have facilities like a club house, covered car parking, power back-up systems, swimming pool, health club, steam and sauna, ATM Facility, multi-purpose hall, super market and 24x7 chemist shop.

— Based on information furnished by the developer

Tax tips
S.C. Vasudeva
This column appears weekly. The writer can be contacted at sc@scvasudeva.com

Distance measurement

Q. I would like to know as to how the distance is measured from the corporation limits for the purpose of determining rural/urban agriculture land. Whether such distance should be by road or by any other method?

— R.K. Soni

A. Section 2(14) of the Income-tax Act 1961 (the Act), which defines the term ‘capital asset’ does not provide any guidance with regard to the method of determining the distance for the purposes of the said section. Notification No. SO 10(E), (dated 6.01.1994), as amended by Notification No. SO 1320, (dated 28.12.1999) issued by the Government of India which specifies the distance in kilometers from the local limit of any municipality etc; for the purposes of ascertaining whether the land is rural or an urban agricultural land, is also silent in this respect. In my opinion, the appropriate method should be the measurement of distance by road. The reason for coming to this conclusion is the language used in the notification which requires “areas upto a distance of _x_ kilometers from the municipal limits in all directions” to be ascertained for determining such distance. 

Buying two houses may not save tax 

Q. I purchased a plot of 600 sq yards in urban area in 1971 for Rs 5 lakh. One of my friends, who is a builder, wants to take this plot and build two houses of 3,000 sq feet covered area each for both of us on this plot on 300 sq yd area each. As per the agreement, he will give me the house free of cost within two years, and Rs 5 crore in addition before I hand over the plot to him. Please give me clarification on the following points:

How to calculate and what will be my tax liability?

How to register my house in my name once I transfer my plot to him?

Can I buy another flat for Rs 5 crore? I have no house at present. I have been told that I can have two houses and save LTCG also this way. Please guide me.

— S.K. Agarwal

A. The replies to your queries are as under:

The portion of land on which your friend will build a house of 3,000 sq. ft. for himself would be considered a transfer of land to that extent. The consideration for such transfer would be the amount of Rs 5 crore proposed to be given to you and the construction cost of house having an area of 3,000 sq. ft. The indexed cost of that portion of land which has been transferred by you to your friend would be deducted from the aggregate of such cost and Rs 5 crore. The balance amount would be a long-term capital gain arising on such transaction. It is not possible to compute the tax liability as all the relevant particulars for computing such tax liability are not given in the query.

The transfer would be in respect of that portion of land on which house has been constructed by your friend. There should not be a necessity for you to register your house as you are the owner of the plot. However, you will have to execute a sale deed in favour of your friend in respect of the portion of land transferred to him.

The acquisition of two residential houses on the sale of a long-term capital asset other than a residential house may not entitle you to claim the exemption from the capital gains tax in view of the provisions of Section 54F of the Act, which provide that exemption would not be allowable if the assessee owns more than one residential house other than the newly acquired one as on the date of transfer of the original asset.

This would imply that in case the capital gain arises on the sale of a long-term capital asset not being a residential house, the long-term capital gain would not be chargeable to tax if an assessee owns more than one residential house other than the newly acquired/constructed as on the date of transfer of a long-term capital asset. The facts in the query indicate that you will be simultaneously buying two houses by utilising the consideration on the sale of a portion of plot of land. This may not enable you to save tax on capital gain arising on the sale of a portion of plot. This is in view of the decision of the ITAT reported in 107 ITD 327 (Mumbai) (SB).

Deduction on stamp duty

Q. Is it possible to get the deduction in respect of stamp duty and registration charges paid for the acquisition of a house? I had borrowed money for the acquisition of house and paid such amounts out of the borrowed money. Can I get deduction of such an amount?

— Naval

A. Any amount paid for the purposes of purchase or construction of a residential house property where such payments have been made towards or by way of stamp duty, registration fee and other expenses for the purposes of transfer of such house property by the assessee is allowable as deduction under Section 80C of the Act. The deduction allowable is within the monetary limit of Rs 1 lakh provided for in the said Section. Such an expense need not flow from borrowed funds. The following payments are, however, excluded from being covered under the above mentioned section.

Admission fee, cost of share or initial deposit; cost of any addition, alteration, renovation or repairs carried out after the issue of the completion certificate or after the house is occupied by the assessee or has been let out; and

Expenditure in respect of which a deduction is separately allowable under Section 24 of the Act.

Agricultural income

Q. I have sold agricultural land which is within the limits of municipality as laid down in the Notification No. 9447 (F. No. 164/3/87-ITA-1) dated January 6, 1994. Apart from the agricultural land, I have also sold in the relevant year some trees, which had grown naturally on the land. The capital gain arising on the sale of agricultural land is taxable in view of the above notification. However, I would like to know whether the sale of trees and wood etc. which grew spontaneously on that land could be treated as an agricultural income?

— A.K. Sud

A. The income from the sale of trees that have grown spontaneously without any efforts by anyone is not an agricultural income.

For the purposes of an agricultural income some basic operation such as tilling the land, sowing of the seeds, planting and similar operations must be carried out by a human agency. The income derived from agricultural land after carrying out such operations is treated as income from agricultural operations.

In this connection your kind attention is invited to a decision of Privy Council reported in 16 ITR 330.

Tax liabilities of mother and daughter

Q. My husband bought a plot on which we constructed a house in 2000-01 by taking loan from his department. He died in 2007. My daughter (major) and myself are the legal heirs. I have re-married recently. We intend selling the house for Rs 40 lakh.

My questions to you are as follows:

Is it necessary to buy a residential property in exchange of our sold house? or can we buy a plot in exchange of a house?

I and my daughter should have a joint account to get DD from the buyer or shall we take separate DDs in separate accounts? Is it necessary to buy new property jointly or can I buy it solely on my daughter’s name?

If we don’t spend all the money, what are the tax liabilities of remaining money?

— Gulshan Kaur

A. The answers to your queries are given hereunder:

The capital gain arising on the sale of residential house would be exempt from tax only if you construct a residential house within a period of three years after the date of sale of the old house or purchase a residential house within one year before or two years after the date of sale of the old residential house. If you have intentions to construct a new house, buying of the plot can be a process towards the same purpose. However, plot of land must be purchased before the due date of filing of the Income-tax return or in the alternative the capital gain arising on the sale of house should be deposited in a designated bank account under capital gains scheme. You will have to withdraw the money from the said account for acquisition of the plot and for constructing the residential house thereon within the period specified herein above. I may add that purchase of plot alone would not enable you to claim exemption from the leviability of tax on capital gain.

It will be advisable to take a separate demand draft in your name as well as in the name of your daughter because the capital gain will be assessable in your hands and in your daughter’s hand separately. Each one of you can invest the capital gain so earned separately in the acquisition of a new house or buying of tax-free bonds for the purposes of saving tax on capital gain.

The capital gain would be taxable in your hands as well as in your daughter’s hand at the rate of 20 per cent thereof plus the applicable education cess thereon. 

Click to pick designs 

House designing is now going the electronic way and consumers can get a design for their homes at the click of the mouse.

National capital-based urban planner REPL (Rudrabhishek Enterprises) has launched the country’s first portal for home designing — ApnaGhar.co.in that provides eco-friendly commercial and residential designs.

The portal is targeting a customer base of 500 in the next two years. So far, in the last six months over 50 customers have already availed the service.

“The portal helps people understand more about the architectural designing and about their construction budget,” REPL Director Pradeep Misra said.

The company, which has a team of a dozen architects, also takes cares of ‘vastu shastra’ before designing any house.

Experts believe that the internet boom has considerably helped the real estate sector with realty portals like Makaan.com, 99Acres.com and MagicBricks.com, providing a much more economical platform for advertising the sale and purchase of houses.

“Now everybody wants designer houses. Currently we are providing at least 100 designs at economical cost. We can also provide designs as per customers demand depending upon the size of the plot,” Misra said. — PTI