Land of hope & despair
Ambika Sharma

The growth of the real estate sector in the Baddi-Barotiwala-Naraingarh industrial belt in Himachal has been an on and off story over the past few years. The industrial belt was touted as one of the most promising realty investment sites in the state as several crores were invested in different industrial projects in the area which was expected to become a bustling industrial hub within a short time. But it has not been smooth sailing as the realty sector here has seen many lows over the past few years making industry watchers skeptical about the new residential as well as commercial projects being launched here.

A major factor behind the slackened response to various real estate projects here is the fact that the central industrial package offered in 2003 is about to expire soon. A number of smaller industrial ventures have already started wrapping up their operations thus taking with them the demand for corporate offices which would have served the smaller ventures.

The biggest drawback has, however, been the failure of the state government to ease the restrictions of Section 118 of the HP Land Reforms and Tenancy Act as entrepreneurs have failed to get property registered in their name due to the tedious procedure involved. This has made several investors think twice before investing in the BBN, quips Lalit Jindal, who was among the first builders to venture in the region.

He says, "Though there has been a slight improvement in the commercial scenario as people are willing to invest due to the rising demand, poor infrastructure and inadequacy of the BBN Development Authority has failed to ease the situation. The authority has been reduced to an extension of the Town and Country Planning body and since it lacks the administrative powers, an investor had to go through the tedious routine of visiting various offices for getting permissions before initiating any venture".

With poorly maintained roads lacking proper maintenance, the area is actually being patronised by low-rung employees and very few office executives. The demand is also more for hiring a rented accommodation rather than owning a place making developers a disheartened lot. They are now banking on the existing industries as these alone could lead to sustainable growth in future.

Though the property scene here is not very upbeat as far as commercial segment is concerned, with the state's first mall getting operational in Baddi the hopes of better times for the sector are riding high again.

Hitherto acclaimed as Himachal's industrial hub, accounting for nearly 70 per cent of the business investment, Baddi now has a shopping mall showcasing prestigious brands like Big Bazaar as a predominant feature.

Among the pioneers in the area is the Homeland Mall, which is sprawled across about 4 lakh sq ft. and includes an 84-room hotel and multiplexes in addition to a shopping area.

"We have tried to ensure affordability to enable the middle class investor to buy shops at a reasonable cost. A shop in the surrounding area of Chandigarh costs anything from Rs 16 to Rs 70 crore, so Baddi promises an affordable opportunity to investor wanting to buy retail space," says Sunil Sood, promoter of the mall.

Several leading brands like Dominos pizza, Black, Café Coffee Day, Bata, Rock, Mufti, Chrome and many others are in the process of opening their outlets here.

The initial doubts about the success of such a venture in this area appear to have been allayed with Homeland managing to tie up with renowned brands. Getting a go-ahead from big brands has helped in boosting the image of this prime industrial area of Himachal, which has attracted an investment of several hundred crores. Having a workforce of nearly 1.5 lakh and several educational institutions swelling up the student population, the mall has become a popular point for entertainment and shopping.

The virtual lack of any entertainment or quality shopping area in the nearly 35-km stretch of Baddi-Barotiwala-Nalagarh industrial area will prove to be a positive factor for this project.

More commercial ventures like Motia Plaza have also started the sale of shops though a large part of the complex is yet to find buyers. This has also affected the coming up of other malls in spite of the fact that construction work had commenced there. With other ventures like City Square, which will have ready-to-move-in office space, also failing to find buyers all is not well in the realty sector here, opine realtors. Since several MNCs and renowned industries had set up their units here, optimists have not written off BBN completely and say that it will take some more time for things to improve here. So, till then projects like Homeland hold a ray of hope for the area.

Industry reactions

RBI’S decision to hike key policy rates by 50 basis points has been termed as a harsh step by realty industry experts. The move will hurt the developers as well as the buyers as the cost of borrowing will go up, leading to an increase in housing prices. Here’s what some industry insiders had to say:

This is the 11th time for the past 18 months that the home loan rate has been increased and this has made things difficult for the existing home loan customers. Home loans have now touched an eight-year high following the RBI’s 50 basis point hike on its repo rate. This is not good for the industry. Currently, the real estate industry is already facing a lot of problem in the NCR region and now with this increase in EMIs for the customers it is a sort of double hit for customer and developers both. Construction cost and raw material anyways are touching the sky. So I think government has to do some thing about it.

— Vijay Jindal, CMD, SVP Group

With interest rates on housing loans breaching the 12% per annum mark, existing borrowers face the prospect of either paying the same EMI for the rest of their lives or liquidating some nest-egg funds to pay a part of the housing loan upfront. So while the existing customers will have to rework their financial planning, new customers will think twice before making a decision to buy a home and take loan from banks

— Sumit Bansal, JMD, Innovative Infradevelopers

This will make the cost of funds expensive for both developers and buyers... As a real estate developer, we are not left with any choice but to pass on the same to our buyers, resulting in an increase in property prices

— Pradeep Jain, CREDAI Chairman

Tax tips
Right to explain
S. C. Vasudeva

Q. I had sold my house in Gurgaon in 2009. My tax advisor was not aware of the implications of Section 50C. The buyer, who paid the stamp duty never informed me of the substantially high value assumed by stamp authorities i.e Rs 85 lakh as against Rs 55 lakh mentioned in the sale agreement.

The Income Tax officer also did not issue any notice to me before raising the demand for additional tax. I appealed against this, but so far no decision has been intimated to me. However, I understand that the Commissioner has asked for valuation of the property a few months back. I have not received any notice/communication from the Valuation Officer so far. I am a Senior citizen now living in Dubai. I want to know:

l Can the Valuation Officer as well as the Commissioner give a final decision without giving me any opportunity to contest?

l Should I write to the Commissioner seeking an opportunity to explain my point before taking any decision?

— Ram Lal

A. Your queries are replied hereunder:

l The Valuation Officer as well as the Commissioner of Income-tax (Appeals) has to give you a chance of being heard.

l Normally the valuation department makes out a draft valuation report and sends the same to the taxpayer for his objections. The report is finalised after taking into account the objections, if any, raised by the tax payer.

l You may, if so desired, write to the Commissioner of Income-Tax (Appeals). But as stated above the Commissioner of Income-Tax (Appeals) is required to give an opportunity to the appellant of being heard in connection with the matter which has been contested in an appeal.

In case, the above opportunities are not offered to you, you have a right to appeal to the Income-tax Appellate Tribunal in the matter.

Tax on compensation amount

Q. My five marla agricultural land on NH-21 has been acquired by the government. I had purchased this land in 1993 at the rate of Rs 1,000 per marla and the government has acquired it for Rs 24,000 per marla. Tax @ 10% was deducted out of the compensation amount. My land is in a village and away from any municipality, cantonment etc. I want to know whether the tax deduction from the compensation amount correct or not. What should I do if this deduction is not correct?

— Girija Shankar Dwivedi

A. The facts in the query indicate that the agricultural land owned by you is away from any municipality. It is, however, not indicated whether the agricultural land was situated within such distance of the municipality as has been notified by the Central Government. In case the agricultural land was situated beyond such distance, it will not be treated as a capital asset and profit arising on the compulsory acquisition would not be taxable. Further, in case the agricultural land was within the notified distance of a municipality, the profit arising on the compulsory acquisition of such land would not be taxable if the following conditions are satisfied:

l The land is situated within the municipal area or within such distance of municipality as has been notified;

l The land was being used for agricultural purposes during the period of two years immediately preceding the date of sale by the assessee himself or his parent;

l The transfer is by way of compulsory acquisition under any law, or a transfer, the consideration for which is determined or approved by the Central Government or the Reserve Bank of India;

l The consideration for such transfer has been received on or after April 1, 2004.

It is a possibility that tax has been deducted from the interest component of the compensation. The refund for the tax deduction at source can be claimed by filing the tax return for the year in which the agricultural land has been compulsorily acquired.

Significance of dates

Q. I need a bit of help if you can clarify with regards to the capital gains tax. How do you calculate the period for which the property is held. Is it from the date of allotment or the date of possession? What is the significance of the date of the letter of intent in this calculation?

— Nikhil

A. In case the property is sold after allotment but before taking the possession, the period of three years would be worked out with reference to the date of allotment. The date of allotment would be relevant in such case for the purpose of ascertaining whether the capital gain is a short-term capital gain or a long term capital gain arising on the sale of a property. In case the sale takes place after taking over the possession, the period of three years would be computed from the date of possession. This is because the allotment right gets merged with the right of possession.

Paying Service Tax

Q. I entered into an agreement to purchase a flat recently in a residential complex. Am I liable to pay Service Tax on the construction of such a flat?

— Rajeshwar

A. According to the provisions of Section 65 of the Finance Act, 1994, any services provided or to be provided to any person by any other person in relation to the construction of a complex are to be construed as taxable. The construction of complex means the construction of a new residential complex or part thereof. A residential complex means any complex comprising:

l a building or buildings having more than 12 residential units;

l a common area; and

l any one or more of facilities or services such as park, lift, parking space, community hall, common water supply or effluent treatment system located within a premises and the layout of such a premises is approved by an authority made under any law but does not include a complex which is constructed by a person directly engaging any other person for designing or planning of the layout, provided such complex is indented for personal use as residence by the person constructing it.

The need to pay Service Tax by you would arise in accordance with the agreement entered into with the seller of the residential complex. The value of taxable service is to be computed in accordance with the provisions of Section 67 of the Finance Act, 1994.

Service Tax is payable @ 10% at present. The Service Tax rate was reduced in February, 2009 from 12% to 10%. The education cess of 3% on such service tax, however, remained unchanged. 

Tax has to be paid

Q. One of my friends had purchased a plot two years ago. Suppose the cost of the plot was 'x'. Due to certain constraints he had to sell the plot in the third year for value 'y', which is a little more than the cost (x). In the third year he purchased another plot. Is he liable to pay tax in this case?

— Ramesh

A. Your friend would be liable to pay tax on the capital gain arising on the sale of the plot. Such a capital gain would be computed by deducting cost price i.e. x from the sale price i.e. y. It will be a case of short-term capital gain as the capital asset (plot) has been sold within a period of three years. Such a short-term capital gain would be included in the total income of your friend and would be taxable at the normal slab rate applicable to him. 

Safe investment

Q. If you could help on the query as below:

An assessee who owns two residential houses sells one and long-term capital gains are generated on the transaction. If he re-invests the total capital gains in purchasing two separate residential houses, will he be entitled to claim exemption under Section 54 of The IT Act?

Further and if the answer to the above is yes, can the new acquisitions be done jointly in his and his two respective married daughters’ names and still avail exemption u/s 54 ?

— Aditya

A. Though there are a few decisions against the proposition suggested by you with regard to purchase of two residential houses as a consequences of reinvestment of long- term capital gain arising on the sale of a residential house, it should be possible to claim the benefit of exemption in view of decisions in favour of such a proposition. The acquisition should be in the name of the assessee who has sold the residential house. In case of a joint ownership the benefit of exemption would be allowable to the extent of the share of the assessee. 

File Return as self-employed person

Q. I work with an MNC in Manesar, Haryana, on contractual terms and my employer treats me as self-employed instead of a regular employee. The compensation is paid in the form of "fee" on which TDS is deducted every month. I checked with the finance department and they have explained that I will be provided with form 16A. I want to know under which category I should file my Return for assessment year 2010-2011 and how I can claim refund of the tax which my employer has deducted every month?

What kind of rebates can I get to minimise my taxable income. Can I also get the benefits of investments under Section 80C.

— Ajay

A. Your queries are replied hereunder:

l You will have to file your Return under the category of a self-employed person who is being paid retainership. The amount of tax deducted at source can be reduced from the gross tax payable on your total income. Form 16A supplied to you by the tax deductor would enable you to claim such adjustment against the amount of gross tax payable by you. Refund, if any, would also be granted in case the tax payable by you on your total income is less than the tax deducted at source.

l You can claim the benefit of investment under Section 80C of the Income-Tax Act 1961 (the Act) provided such investment has been made prior to the close of the financial year i.e. March 31, 2011. 

Land rules

Q. I read your column regularly in and find it very informative. It is really nice of you to share your knowledge with public in this regards, as most of the people usually are not aware of the rules/regulations. I have a question about owning agricultural land in Haryana:

l How much is the maximum agricultural land that a single person can own in Haryana? I know there is some difference of 'Fertile vs. Non-Fertile land', but not sure how much is the maximum Govt. of Haryana allows? I had heard that the limit is 20 acres for a single person, is that correct?

l Are husband and wife allowed hold more land jointly or separately or is the limit applicable per single family?

l There are a few big land owners who own 100 acres, how do they do it? Is there a legal process by which one can own more land (around 40 acres) as part of a single family?

— Gaurav

A. Your queries are replied hereunder:

l The provisions of Haryana land Ceiling Holdings Act, 1972, in respect of agricultural land holdings are contained in Section 4 of the said Act. According to these provisions the permissible area in relation to a land owner or tenant or mortgagee with possession or partly in one capacity or partly in another of person or family consisting of husband, wife and up to three minor children (primary unit of family) shall be in respect of;

l Land capable of two crops in a year with assured irrigation 7.25 Hectares.

l Land capable of one crop in a year with assured irrigation 10.9 Hectares.

l Land of other type including under orchard 21.8 Hectares.

l As indicated hereinabove, husband and wife are treated as one unit.

l I would not be able to comment on the issue raised by you without going into the facts of each case. However, it is a possibility that the land holdings of brothers are being held together and the same being cultivated by one 
of them. 

green house
The right FIT
Satish Narula

Kinnow: Great bearing and excellent aesthetic value

Fruit-laden tree or trees in a home garden are indeed owner's pride and neighbour's envy. In fact, since ages a garden or a green space has been considered incomplete without the presence of trees yielding luscious and nutritious fruits. Take for example the famous Mughal Garden in the Rastrapati Bhawan in New Delhi, Pinjore Garden in Chandigarh's neighbourhood, the Baradari Gardens in Patiala or the Aam Khas Bagh in Fatehgarh Sahib. All these famous gardens have separate sections for fruit trees which add to the appeal of these retreats.

In the last column we talked about procuring the saplings from right places and planting them in the right manner to get healthy fruits. If you are planning to add the "fruit flavour" to your home garden or in your housing society then choose the plants wisely otherwise the "fruits" of your labour will go waste. The fruit-bearing plants should be planted as per their suitability in the region. You may be a litchi or chiku aficionado but if you are living in the central and southern parts of Punjab then it will not be possible for you to enjoy the pleasure of seeing these fruits ripen in your home garden. These are fit for planting in the sub-mountainous region comprising the belt from Pathankot to Yamunanagar along the foothills of the Shivalik range. These trees need more humidity to prosper. Litchi needs more water too.

Another factor that should be kept in mind while choosing a fruit tree is the preference of family members for that particular fruit. If no one likes papaya in the family then it would once again be a waste of effort to plant and tend a papaya tree.

There are, however, some fruits which are never out of favour in any family and one such 'must have' for any garden is the lemon tree. For those living in the southern districts it will be better to plant the kagzi nimboo variety and for those in the sub-mountainous zone it has to be the baramasi variety.

The kagzi nimboo variety doesn't grow well in the sub-mountainous zone due to certain diseases that develop on the terminals of branches where the fruit is borne.

While choosing appropriate fruit trees for larger plantations or for community gardens opt for jamun, shehtoot, bael, phalsa, amla etc.

Some fruit-bearing plants like peach, plum and pear bear excellent blooms which add to the aesthetic appeal of a garden. These blooms are also used in fresh-flower arrangements.

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

Parsvnath to drop six SEZ projects

Several realty firms, including Parsvnath, have sought the government's nod to shelve their special economic zone (SEZ) projects amid continued tax uncertainties.

Among others, Parsvnath SEZ Ltd, a Parsvnath Group subsidiary, has offered to surrender six SEZs in Uttar Pradesh, Rajasthan, Haryana, Tamil Nadu and Maharashtra that had earlier been granted in-principle approval by the government.

"The developer has requested for withdrawal of in-principle approval, citing economic (in realty market) slowdown, Direct Tax Code (DTC), imposition of minimum alternate tax (MAT) as the reason for the same,"" an official in the Commerce Ministry said.

Parsvnath's request for pulling out from the SEZ projects and other applications will come up before the inter-ministerial Board of Approval (BoA), which is scheduled to meet on July 22.

Besides Parsvnath, other developers that want to exit from their SEZ projects include Juventus Builders and Developers, Alok Infrastructure, Oval Developers, Airmid Developers and NG Realty.

Parsvnath had got in-principle approval for leather and handicrafts SEZs at Agra and Moradabad, respectively, a gems and jewellery tax-free zone in Jaipur, a food processing SEZ in Sonepat, an auto component zone in Pune and a multi-product SEZ in Kanceepuram.

The draft DTC has proposed withdrawal of exemptions for new units that come up after the tax code is implemented and replacement of tax exemption on profits for developers with sops on investments.

The DTC is expected to implemented from the next fiscal. The industry has also expressed concern over the imposition of Minimum Alternate Tax (MAT) of 18.5 per cent on the book profits of SEZ developers and units.

Under the SEZ Act, SEZ units get 100 per cent tax exemption on profits earned for the first five years, a 50 per cent exemption for the next five years and another 50 per cent exemption on re-invested profits in the following five years.

SEZ developers, on the other hand, get 100 per cent tax exemption on profits for 10 years, which they can choose in the block of the first 15 years.

Five developers have approached the BoA to de-notify their tax-free enclaves.

In addition, as many as 45 SEZ developers, including Raheja SEZ, Navi Mumbai and GP Realtors, have sought more time to execute their projects.

SEZs in India have emerged as manufacturing and export bases. — PTI

REALTY GUIDE
Buying disputed property
B K Sanghi

Q. I have purchased a freehold shop-cum-office in a town in Haryana. After the registration of sale deed, I came to know that High Court had passed an injunction and had retrained the sellers from alienating, selling transferring the property. But the sellers were not aware of such an injunction/ restrain.

Anyhow, now the sellers are settling the dispute by compromising with the party that had filed the suit against them. I want to know that after the case is withdrawn/compromised, will I get a good title to the property or will the sale deed in my favour (which had been executed during stay period) become null and void?

— Abhinav Sood, Sirsa

A. If the dispute is settled and the case pending in the High Court is withdrawn as settled, then your title is good and you will continue to be the owner of the said property with a clear title.

Ignorance is no excuse

Q. I have purchased a housing board house. All the money for this house has been paid by me. But after the sale deed it came to my knowledge that the property was already mortgaged by a bank as an equitable mortgage and the loan account of the vendor in the bank was in very bad condition. So, in future the bank can take any action to recover the outstanding loan. In this procedure the bank can even sell my house by auction. Please suggest what should I do to save my property?

— Neelam Gupta

A. The law is well settled that in any transaction it is obligatory for the buyer to check the title of a property that he is buying.

If you have purchased the property without seeing and taking the original sale deed from the seller then it is a big mistake on your part. Ignorance about a law or rules is no excuse in any court of law. In your case the bank has full right to take over and sell the house. It is better that you pay the amount to the bank and file a recovery suit against the seller.

The Sale Deed in your favour may contain a clause that the property is free from all the encumbrances. Check the sale deed thoroughly as on the basis of this clause you can file a criminal complaint of cheating against the seller.

REALTY BYTES
Gujarat's biggest mall

Real estate developer JP Iscon will construct Gujarat's biggest mall, with a million sq ft of retail space, in the next two years. "We have acquired some land in Ahmedabad and plan to construct our second mega mall, having over one million sq ft of retail space, over the next two years," JP Iscon Chairman Pravin Kotak said in Ahmedabad recently.

The company has developed 35 lakh sq ft of residential, corporate, commercial and retail space across Gujarat. The company has a mall each in Ahmedabad and Surat, besides two in Rajkot.

Godrej Properties’ JV

Real estate development arm of Godrej Group, Godrej Properties (GPL) has entered into a joint venture with Godrej & Boyce to develop residential projects in Hyderabad and Thane.

The company has formed two limited liability partnerships (LLPs) with Godrej & Boyce — Godrej Buildcorp LLP (GB LLP) and Godrej Property Developers LLP (GPD LLP) — to develop the projects in Hyderabad and Thane, respectively. GB LLP will develop the 9.16 acres land parcel at Moosapet, Hyderabad. The approximate developable area will be two million sq ft. This is a profit sharing arrangement with GPL getting 35 per cent of the profits from the project. — PTI 

Furniture trends
In love with leather
Akshaya Badrinarayanan

The furniture industry like all the other industries is undergoing a lot of changes as far as the variety of choices being offered and the materials that are grabbing the eyeballs of customers are concerned. Before talking about the current trends in this field, it is necessary to understand that when we talk of decor and interiors trends should be seen as the undercurrents that drive what you see and are willing to buy, obviously keeping an eye on your pocket. Leather furniture is in huge demand because of its acceptability , variety and modern outlook which is attracting young couples and, of course, corporate buyers, who are generally inclined towards the new-age furniture pieces.

Thus, a number of upscale furniture showrooms are mushrooming across urban India as more and more young professionals are ready to splurge on luxurious living room sets with bedroom basics and stylish kitchen. The spurt in the real estate projects and growth in the IT and other service sectors has also led to a massive increase in demand for leather furniture for homes as well as offices.

European twist

A look at the market trends reveals that Italian leather furniture is going great guns this season. European leather is considered as the best in the world and is being used extensively in luxury brands these days because of its texture and comfort. European leather sofa is topping the charts in consumers’ priority list these days. The primary distinction of the European leather from other forms of leather available in the market is its quality and durability.

Colour palette

Modern leather furniture has gone beyond the beige, white and tan colour palette to don more vibrant hues. With the change in time the tastes of people have undergone certain changes and the inclination is now towards bright hues such as cherry, orange, yellow and black apart from the evergreen white, and cream. This colourful transformation also signifies the shift from ethnic decor ideas to more contemporary furniture as the jet set endeavours to give an overall trendy get up to their apartments and workplace. Therefore, tleather furniture is experimenting with a lot of colours and that too bright ones, which also signify positivity and youthfulness. For a formal drawing room, people prefer some specific designs like embroidered cushions with swaroski designs which are commonly known as Modern–Classical style of sofas.

Size factor

Right now there is also a strong introduction of more compact, more down-sized products that are suitable to cater to the “high-rise” ways of life. Large-sized sectional sofas have always been restricted to big spaces but now a number of companies have launched sectionals that succeed in many of those more compact spaces. Effectively these products are space savers for the living rooms also.

Sleek grace

Straight and sleek designs are also in fashion nowadays. A comfort range of leather sofas are best suited for drawing rooms and are also placed in lounges where one can laze around with ease. Recliner sofas, also known as motion sofas, are very much in trend and are available in various colours. Recliners have moving parts like arms, footrest etc for extra comfort. These are generally of two kinds, namely manual and electrical. They are the most comfortable pieces of furniture which give a soothing feeling and an experience of comfort like never before.

International trends in the furniture industry are being manifested in the use of the global trend of tropical luxury and sophistication. Animal tracks are back in fashion for a while and have been explored extensively to offer variety to consumers.

Leather has always been and will remain one of the most popular choices for upholstery, and these days, the leather is really nice when used in conjunction with the tissue. Today, the skin is often used in smaller doses, as an emphasis on wood and pieces of cloth can not be avoided. After all, home trends today support the mixed media of expression.

The writer is the Director of Stanley Lifestyles based in New Delhi 

launch pad
Storage statement

KIWA, a venture of IKian Furnitures, has launched the Falcon range of functional and stylish wardrobes recently. The wardrobes come with matt finishes on contemporary classic swing door compositions and are an amalgamation of attractive designs and functional traits. The wardrobes also come with a plenty of shelving space and drawers providing an attractive storage option for the design-conscious Indian market. Made from honey comb panel for doors and class E 1 particle board thwese wardrobes come in lacquer, laminate or glass finishes as per the demand of customers at a price of Rs. 1500 per sq ft.

Enhanced Reflections

Versatile and statement making accents not only exemplify the aesthetics of home décor but also add beauty. Living In Style, Mumbai, recently unveiled a whole new range of Venetian mirrors.

Imported from Italy from Murano region, these mirrors are an outcome of the combination of tradition and innovation. The most exhilarating feature of these mirrors is the quality of the silvering that is made using pure silver, the skill and precision of the entirely hand-worked engravings and finishing’s. Also the wide range and brilliance of the colours make these mirrors splendid. These handcrafted Venetian mirrorsl lend a majestic feel with their exclusivity and their magnificent designs will adorn your walls with opulence and style.

Afzal Chandiwala, Director, Living In Style, said, “Mirrors apart from being a necessity for every home also provide a focal point by balancing and complimenting the decor elements. They can transform an otherwise dull space into a stylish spot. Also they are one of the most affordable and versatile means to give your home a classy ambience.” 

Turning a fresh leaf
S. C. Dhall

The Union Cabinet earlier this week approved the proposal for the enactment of a new legislation in the form of the Benami Transactions (Prohibition) Bill, 2011 to replace the existing Benami Transactions (Prohibition) Act, 1988, and for its introduction in Parliament.

During the process of formulating the rules for implementing certain provisions of the present Act, which was passed in 1988, it was found that owing to infirmities in the legislation, the formulation of rules would not be possible without a comprehensive legislation by repealing the Act.

The Bill contains elaborate provisions dealing with the definition of benami transaction and benami property, prohibited benami transactions, consequences of entering into a prohibited benami transaction and the procedure for implementing the benami law.

Properties held by a coparcener in a Hindu undivided family and property held by a person in fiduciary capacity are excluded from the definition of benami transaction. Further, properties acquired by an individual in the name of spouse, brother or sister or any lineal ascendant or descendant are benami transactions which are not prohibited. Consequently, they are not subject to penal provisions.

Where any person enters into a benami transaction in order to defeat the provisions of any law or to avoid payment of statutory dues or to avoid payment to creditors, the beneficial owner, benamidar and any other person who abets or induces any person to enter into such benami transaction, shall be punishable with imprisonment for a term which shall not be less than six months but which may extend to two years and shall also be liable to a fine.

A benami property shall also be liable for confiscation by the Adjudicating Authority after the person concerned has been given due opportunity of being heard. 

law point
Plea rejected

The Supreme Court ruled earlier this week that flat owners in cooperative group housing societies in Noida will have to get their houses registered at the current stamp duty rates. The court dismissed a petition filed by some resident welfare associations.

Army Welfare Housing Organisation, Kendriya Vihar Residents Welfare Association, Swarn Jayanti Rail Nagar Flats Owners Association and others had challenged the Noida authority's order that the flat owners pay the stamp duty at current rates.

The court said that the stamp duty was always charged at the rate prevailing on the date on which a property was sought to be registered.

The apex court bench of Justice Dalveer Bhandari and Justice H.S. Bedi, however, extended the time for the registration of the flats by another six months for those who had not done it so far.

The petitioner societies had filed a contempt petition, contending that they could not be forced to pay stamp duty at the current rate and by insisting on it (current rate) Noida authority was committing contempt of court.

"We find no merit in the contempt petition and the interlocutory applications. Accordingly, the contempt petition as well as all the interlocutory applications on board are dismissed. However, the time for executing the tripartite agreement (involving flat owner, housing society and registring authority) is extended by six months from today," the court's order read.

The court asked counsel for the Noida authority if it could change the date of registration or reduce the stamp duty.

The Noida authority said that it was not imposing any penalty or levying any extra charge on the flat owners who had not registered their flats so far.

The court had on September 10, 2010, asked flat owners of housing societies to get their tripartite agreements registered within six months. This time was extended by a few more days in March this year.

About 60 per cent of the flat owners got their flats registered but the remaining dragged the Noida authority to court. — IANS