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| REAL ESTATE |
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real issue
real talk
Green house
realty bites tax tips
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High living
The slowdown in the realty sector witnessed over the past few years may have stunted its growth to some extent, but there is one aspect that is growing taller and taller with each passing year. It is the trend of multi-storeyed high-rise residential towers, especially in the northern region. While we are yet to witness too many “true” sky scrapers of over 80 floors in the region, a large number of builders are coming up with 18 to 40-storey residential projects in the NCR. Even in smaller centres like the tricity area it is no longer uncommon to see housing societies with over 12 floors (something which was a rarity a few years back). A changing mindset and increased acceptance for living on higher floors is the key factor that is driving the demand for these residential units. “Earlier home buyers, especially in the tricity area, were not ready to buy flats on upper floors and prices of upper floors were always less than those of say the first or second floor, but this is not the case any longer as buyers are now aware of the advantages of living on higher floors,” says Amit Mittal, Director, Maya Developers, whose group is coming up with 12 and 14-storey premium apartments in Maya Garden City project in Zirakpur. Omaxe group also recently launched a high-rise residential project in its project in Mullanpur and several upcoming projects in Mohali also have ample supply of flats in this category. “In recent times, there is a significant change in making a choice of living for Indian customers. The availability of land in metros is shrinking and the number of occupants is growing, thereby increasing the demand of housing units. Also increase in the FAR induces developers to go for high rises. In today’s changing lifestyle, people are constantly looking for something new. Changing demographics, an increase in disposable income and the growing aspirations have also encouraged the developers to launch conceptually designed skyscrapers projects with facilities which are matchless and desired by the people”, says Rahul Gaur, CMD, Brys Group that is coming up with Brys Buzz, located at Sector 150, Noida. It is claimed to be North India’s tallest residential tower at 300 meters with 81 storeys. While vertical expansion is the obvious answer to deal with the problems of housing shortage in urban centres and land scarcity, it also offers a better lifestyle and living conditions to home buyers. The higher the floor the cleaner is the air, there is lesser threat of insects and noise pollution too is less, says Rajesh Goyal, MD RG Group, while adding that more and more buyers are opting for upper floors because of healthy living conditions. And with developers like DLF, Unitech, Supertech, Raheja, Vipul, Chintels and many more having such projects there is ample choice available to home buyers in all segments, be it affordable or luxury. The trend is gaining momentum in the northern region says Alok Tyagi, CMD ATN Group, a real estate consultant firm. “We get a lot of customers from higher and middle income groups who demand flats on higher floors as they feel that living on higher floors will give them a peaceful and healthy life with the privacy to enjoy mornings and evenings in their respective balconies”. Even micro markets in NCR have shown an increased demand for high rises, says Vivek Raj Anand, Director, Fairwealth group that is coming up with an 18-storey project in Bhiwadi that will have 3 BHK luxury apartments and a sky pool on the 18th floor. “We carried out a survey before planning the project and found that buyers were open to living on upper floors”. Better building techniques and facilities such as 24 hour power back up etc have also gone a long way in changing the mindset of home buyers, says Alok Sharma, CEO of a FMCG Company “Earlier the infrastructure was not good but now that is not the case. For example when we talk about the lifts now the technology is much better, safety features are much more and with CCTV cameras and 24-hour power back up maintenance is not a problem any more. So one is not scared of getting trapped in a lift. The construction is also earthquake resistant and the basic structure of buildings is now stronger due to the use of new technology”, says Anil Mithas, CMD, Unnati Fortune Group that is coming up with a green project Aranya in Noida that will have 25 floors. Most of the high rise projects also have more green areas and better landscaping and recreational areas, says Neeraj Gupta a resident of a high rise complex in Gurgaon. “It gives an entirely different feeling when people look up from that height which cannot be possible in other kind of residential development. That’s the reason people prefer higher floors in comparison to the lower floors. The price of PLC (Preferential Location Charge) differs as one goes for higher floors”, says Rahul Gaur.
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Positive tidings for home buyers While the undercurrents of slowdown are still strong in the realty market and buyers remain apprehensive due to the uncertainty over the formation of a new government, the market seems to have tilted in the favour of buyers in the first quarter of 2014. The main reason for this is the price stability that has been witnessed in different pockets across the country in Jan-March 2014 period. According to market watchers 2013 was a topsy-turvy year for the real estate sector in general and for the residential segment in particular. While property buyers adopted a cautious approach, the local and national level deveopers maintained controlled supply. Sentiments remained subdued and several revival strategies like festive season discounts and inclusion of freebies failed to bring about the desired results as buyers waited for the prices to bottom out. But the price trends in the first four months of 2014 reveal that the prices have stabilised, which makes the time right for investment, according to experts. The property index for the first quarterreleased by real estate protal makaan.com earleir this week also reveal that property prices on a national level have shown a stabilised trend. “Indian Real Estate market is going through a challenging phase with multiple macroeconomic headwinds like poor liquidity for developers, increased cost of construction, high land prices, delayed projects, high interest rates. These factors are keeping the home buyers away from the market; however, the trend for the last quarter seems favorable for property investment”, says Aditya Verma, CEO, Makaan.com. “The latest figures for Jan-Mar 2014 from the real estate market research and analysis point to a nation-wide increase of only 0.8 per cent. Therefore, the prices for the quarter have gone up by only 0.8 per cent. So, we can say that the prices for the quarter have stablised”, adds Verma. The national level index provides just the right amount of ‘push’ a buyer needs for investing in real estate and fulfilling the dreams. Stability gained in Hyderabad and Ahmedabad The cities that show stabilised property index over the quarter are Hyderabad and Ahmedabad. The homebuyers should be on a look out as the property prices in these regions will probably tend to be stabilised and maintain their high-end investment potential over the next few months. “For Jan-Mar 2014, the Hyderabad MPI shows an increase of only 0.8 per cent. Therefore, the trend for quarter can be said as stabilised and it seems favourable for the home buyers. It will be interesting to see in which direction this marginal increase moves in the coming months”, adds Verma. Meanwhile, other centres ike Bangalore, Chennai and Mumbai have shown appreciating property prices by 5.3, 4.6 and 4.3 per cent, respectively. — GV
Price movement
Chandigarh The home buyers interested in investing in the real estate market of Chandigarh should rejoice as Jan- Mar 2014 property index shows a decrease. The first quarter of the year has brought good news for the home buyers as this only means that the coming months might experience a further reduction. Over the last quarter, the Chandigarh MPI has seen property depreciating by almost 9.8 per cent; it has moved from 1454 in December 2013 to 1312 in March 2014. This means that this might be the best time for investing in the market. Over the quarter, the property prices in Chandigarh have been falling for all the three months; however, the major shift happened between February and March 2014. “As compared to last year, the Chandigarh Property Index in March 2014 as also depreciated. The prices have had minor highs and lows over the last year, but have mainly remained in favour of home buyers”, says
Verma. Other realty hubs in the country have also shown a downward trend. Kolkata, Pune and Delhi have shown maximum depreciation of 10, 6.3 and 2.5 per cent, respectively. Over the span of three months, the MPIs for Delhi, Pune and Kolkata have shown a buyer-attracting trend. The buyers interested in investing in the real estate market of these key property areas should rejoice as Jan-Mar 2014 MPI shows a decrease. The Delhi MPI has shown a dip of 2.5 per cent over the quarter. This means that this might be the best time for investing in the market.
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Small steps for big storage
It is the age of high EMIs and micro pads where people have to make-do with restricted interiors. And those living in these confined apartments know that small living spaces can pose a serious challenge as far as storage goes. Any interior decorator will tell you that it is possible to have plenty of storage space in a small apartment. All it needs is some smart choices and thinking outside the cabinets and cupboards. In fact, designers and architects are coming out with innovative ideas to ensure that every inch of space is used advantageously in small apartments. Smart steps Take for example the staircase. In a tiny apartment, say new-age designers, it should not just be a means of going from one level to another. It should also double up as an innovative storage area. Many such staircases have pull-out drawers under each step to store shoes, school bags, sports gear, dirty linen and other paraphernalia that would otherwise clutter the house. In fact many modern staircases come with built-in drawers in the space under them that can be used to store any number of things. However, for those who like books, this space can also be utilised to create an attractive bookshelf which, besides being a showstopper, will come in very handy as a shelf not just to display books but also vinyl records and other collectibles. However, for those who like to get cozy, the space under the staircase can also be used to create a recliner where children and adults can curl-up to read a book, listen to music or even for a quick nap if the space allows. In fact, some avant garde designers are going several steps further for optimal usage of this space which is often neglected in the house. They are experimenting with the idea of making a half bathroom for guests if the area under the staircase is large enough. Though a bit cramped, it can be an important-and a very practical addition to a small apartment. Bed-time The tiny bedroom has for long been the object of attention of designers. When cupboards and cabinets are not enough it is best to go in for a box bed. But the bed box is old hat as it has been around for years. Designers are now going much beyond that. One of the most innovative concepts to come out in recent years is the bed-head sliding shelf. This is basically a bed headboard that slides out and can be used to store books, clothes, shoes or any other knick-knacks. Food for thought The kitchen is another place that designers have been changing to maximise every inch of the available storage space. From cabinets that accommodate large pots and their unwieldy lids to condiment drawers that have wood inserts with covered stainless steel bins for storing flour, grains and spices, the kitchen space is getting an innovative makeover. One of the most imaginative-and basic-space savers being used these days in the kitchen is a pegboard fitted with hooks which is ideal for hanging small pots and pans, as well as utensils. This pegboard is usually near the work area so that all the cooking tools are just at an arm’s length. This is not just a convenient storage solution but will also free up the drawers and cabinets for other things like crockery and cutlery. Another useful idea for storage is to use dividers for different things in the kitchen. Designers are making separate drawers for spoons, forks and spatulas. However, separate hanging spaces are created for all sharp objects like knives, peelers and slicers as they are not to be cramped in drawers for fear of cuts and injuries. Items that are not required frequently are usually relocated to overhead drawers or cabinets. Top cabinets In case one still falls short of space the top cabinets can be a great solution. These are created over regular cabinets and may sometimes extend to the ceiling. They do not take any extra space and provide storage facility for infrequently used kitchen gear. A ladder or a stool may be required to access them but they cabinets are meant for items that are not required on a daily basis. Alternatively, these cabinets can be used to store stuff that would otherwise go in a pantry of a big kitchen. No-waste washrooms The third vital part of the small apartment that requires plenty of storage space is the bathroom and here too designers are coming up with very inventive ideas. They are using sliding doors and utilising the space that would have otherwise been covered by the swing door to make recess cabinets. The space under the sink too comes in very handy as it is usually made into a storage area where people can keep towels and other toiletries. In addition to that, many designers are also making deep niches on both sides of the bathroom mirror for additional space. These can be with a door or they can be left open for neatly displaying soaps, shampoos, deodorants, perfumes, hair oils, toothpastes and toothbrushes. Whether it is a bathroom, bedroom, drawing room or kitchen, designers are using ample imagination to turn cramped living spaces into cozy retreats. Indeed, the small apartment is coming in for a major makeover as far as storage space is concerned.
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real issue
As the nation is in the process of electing a new government, the new government would be duty-bound to give due attention to the much neglected housing sector. At the outset the new government should set up a single-window clearance system to cut delays in getting approvals for housing projects and check cost escalation. It has to ensure that the average approval time is reduced from 196 days to 45-60 days. Delay in obtaining approvals often increases the cost of a housing project 1.5 times. At present around 34 permits are required for a housing project. “Like me all the stake-holders of housing sector are waiting for that day when single-window system for clearance of housing projects will see light of the day. I am only hopeful that better days will come for realty sector sooner rather than later. It is a different matter that we are already late in implementing single-window clearance system for housing sector,” says Samir Jasuja of Prop equity. It may be recalled that the when Ajay Makan was looking after the Housing and Urban Poverty Alleviation Ministry, it was formulating a single window system for clearance of real estate projects throughout the country following the report of a committee for streamlining the approval procedure for real estate projects. It took this step on the recommendations of the Dhanendra Kumar Committee report. The committee was set up in mid-2012. It was asked to recommend as to how single window clearance system can be implemented. However, once Makan was shunted from his ministry, everything came to a standill. Sanjay Khanna, director of Delhi-based Kailash Nath Projects, says that in spite of the fact that the realty sector is such a key sector, it has hardly got any due attention from successive governments over the years. “Even though we are asking for a regulator, the government is not taking any decision. This speaks volumes about the government’s seriousness about the housing sector”, he added. It goes without saying that real estate market in various parts of the country is in a very sorry state with developers having to face a tough time in getting clearances and a system plagued by corruption. Just a couple of months ago so many innocent lives were lost when an unauthorised building near Mumbai collapsed. It ad been constructed by shady builders with the help of corrupt government officials “There is no doubt that there are bad fish in the sector who use unfair means to circumvent rules and most of the times it is the genuine players who face the brunt of archaic laws and clearances to implement their projects. Realty firms have to spend lot of time and money to get these clearances. Hopefully, things will streamline once single-window clearance system is in place,” says Rajeev Chopra,CEO of ILD Developers. Meanwhile, it is believed that once the new government is in saddle, some of its key recommendations will be implemented. Some others, including setting up of an IT-based, single-window clearance system for proposals like a single-unified form to be put up at local municipality Websites, are also being discussed. “ The worst thing is that even for affordable housing projects, one has to wait a long time to take all the permissions. I strongly feel that irrespective of which party’s government will be taking over the reins, it has to work to streamline the affairs of housing sector. With around 34 clearance procedures starting from the local municipality to the top, the average minimum time for approving a project is really very long,” says Mahesh Pawar, managing director of Mahaveer Hanuman Group. It is a well-known fact that even the top officials of union government also admit privately that due to the cumbersome policies, projects take really long time. Naturally, at the end of day, customers are the worst suffers. Meanwhile, Anil Kumar Sharma, President, CREDAI-NCR, is of the view those unnecessary and sometimes motivated delays in clearances of projects and subsequently in issuing the NOC for possession purposes are not only affecting the buyers but also negatively impacting the developers. “The vested interests at the lowest level are so strong that they do not want any transparency in single-window clearance. Now it is a chain of events, first get one clearance then apply for the second, the third and so on till all clearances are received. Why can’t we have a platform for the builder or the promoter to apply for all the required clearances together,” says Nikhil Jain,CEO of Ramprastha Developers. Meanwhile, Dr. Arun Kumar, who has authored highly acclaimed book Affordable Housing is of the view that the new government must give enough boost to affordable housing sector. It has to encourage private players by providing cheap land to builders for construction of affordable houses. The dream to provide cheap housing to poor will be accomplished with really big steps and honest intentions.
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real talk
The real estate market in the country has been experiencing a low sentiment for the past couple of years. How has this impacted the buyers and the developers? There is no denying the fact that the realty sector has seen a tough time over the past few years. With low sale volumes and rising inventories the growth of this sector has taken some beating and it is only with a positive policy thrust from the government that we can expect growth and revival in the sector. However, some positive signs have been there in this gloomy scenario too. For example though overall 2013 was a tough year and Q1 was a bit slow for the sector but things started to move in Q2 and Q3 with increasing demand. Industry saw some new launches in the Delhi-NCR region. Q4 also saw some big land deals happening. There were some favourable moves by the government to ensure transparency in the sector . The market is in a wait-and -watch mood because of the ongoing elections and is expected to see some positive movement in demand post the formation of a stable government. What has been the trigger for this slowdown? Every sector goes through ups and downs. The slowdown in the realtysector is related mainly to economy and growth. But as the economy bottoms out and we see growth coming back, we see lot of business initiatives being taken. Again, post elections, we expect to see an increase in demand and queries getting converted into actual sales. A lot of it will depend on the next government. Do you think that the market will improve in 2014? Comment The demand is expected to increase in the coming 2-4 months. Delhi-NCR will see an upsurge in the queries getting converted into actual sales. Demand for affordable and mid-income housing segment will increase and places like Greater Noida, Yamuna Expressway and Sohna Road will witness robust development activities. As property market is sentiment driven, a stable government will play a crucial role in improving the market sentiment. But overall, the year promises to be a good one for the developers and buyers as well with demand expected to overcome the supply in the NCR. What sort of policy measures do you think will restore buyer confidence and boost the market? The biggest hurdle is the large number of regulatory clearances that developers have to get from different agencies for a project. The industry has been demanding single-window clearance for the projects for a long time and it is high time that some decision is taken on this front. Another point is the high interest rates by banks. We were expecting a cut in the rates by RBI in their last policy review. We know for the apex bank, the priority is to tame inflation but it should not hamper growth. For real estate sector in particular, conditions are already adverse as the country is undergoing general elections and home buyers are not coming forward to make purchases. Any cut in key rates in the RBI Bi-Monetary Policy Review would have boosted the sentiments and could have impacted demand. I hope the RBI would consider our concerns as well and would cut rates significantly. What are the new projects planned by your group and what investment you are planning in the near future? Currently, work is in progress at our WindPark group housing project in Tech Zone IV, Greater Noida (West). We are also planning our next project for which we have zeroed in on certain points like it will be most likely residential, affordable in Noida extension/Noida/Yamuna Expressway. — As told to Geetu Vaid
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Pretty blooms that withstand weather vagaries Amarjeet Batth North India experiences extreme weather conditions be it the chilling winters or searing summers. These climatic conditions make maintaining an attractive home garden a tough job as one is constantly struggling to save the plants from heat or cold. However, there are many beautiful annuals that continue flowering in spite of changes in the weather conditions. These include osteospermums, gomphrena globosa, gaillardia grandiflora,celosia, vinca and hybrid of petunia, verbena and marigold. These long-duration flowers are also available in different colours that help you in maintaining colour, harmony and contrast in your garden all over the year. Maximise beauty These flowering plants yield good blooms when planted in full sunlight. The flower beds should be well drained, weed free and leveled. Soil beds are prepared by applying 4-6 kg of FYM per square meter along with 60 grams of DAP and then mixing the ingredients thoroughly. As these annuals do not tolerate water logging, they have to be maintained at optimum moisture level on raised beds. Nurture right Use of proper fertilisers at regular intervals is necessary to maintain heslthy plants. The application of soluble fertiliser NPK 20:20:20 1-2 gram per liter of water at an interval of 2-3 weeks will provide enough nutrients for continued growth and flowering of the plants. Further, spent flowers must be removed as soon as they are seen. Selective pruning needs to be carried out by thinning out the crowding shoots and also to maintain good shape and form. The flowerbeds should be weed free and plant should be watched for any pest attack. Well maintained hybrid petunia, verbena and marigold (Triploid) have been observed to remain in continuous flowering for much longer period than the open pollinated (OP) varieties. These flowering annuals grow equally well in pots which can be moved to a favourable location.
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market pulse
India continues to see a wave of new shopping center development despite some developers pushing back completion dates due to financing issues. Around 500,000 sq. m. of new retail space is under construction in New Delhi. The largest two projects, DLF Mall of India Noida (204,385 sq. m.) and Logix City Center Mall (111,483 sq. m.), are both located in Noida. Among tier II cities in India, Hyderabad is the most active market with a current supply pipeline (483,000 sq. m.) three times greater than its existing stock. Buoyant occupier demand is pushing a strong development pipeline in New Delhi with 500,000 sq. m. of new retail space currently under construction. According to the latest Global Viewpoint from CBRE Research a total of 39 million sq. m. of shopping center space is currently under construction across the world's major cities, representing a three million sq. m. increase from 2013, Most of this development activity for shopping center space around the world is focused in China. According to the report, more than half of the shopping center space under construction in the 180 countries surveyed is taking place within China's borders. Shanghai takes first position with 3.3 million sq. m. of space under construction-more than the combined total of all 86 European cities excluding those in Russia and Turkey. Just behind Shanghai is Chengdu with 3.2 million sq. m., followed by Shenzhen and Tianjin with 2.7 million sq. m. and 2.5 million sq. m. under construction, respectively. Commenting on the findings of the report, Anshuman Magazine, Chairman and Managing Director of CBRE, South Asia Pvt. Ltd. said, “Strong economic growth in many Asian markets has been attracting an increasing number of cross-border retailers. Even though China remains by far the most active market for shopping center development, the Tier I and II cities of India are also among the most active globally. Unfortunately, however, there continues to exist a dearth of quality shopping space in many of our market places. Along with the large-scale urbanisation of our leading cities and a burgeoning middle class population, it is this that has been driving shopping center development forward.” According to CBRE research, New Delhi is ranked 21, Hyderabad 23, and Bangalore 31, among global cities with the maximum shopping center space under construction in 2014. “The scale of new development in Asia and China in particular is staggering but there are a number of quite understandable factors behind it. The most reported is economic growth, which continues, although now with some signs of slowing down. In addition, Chinese cities, and many others in Asia, present a physical environment that lends itself to environment controlled shopping centers. Outdoor shopping can be too hot, too humid, too cold, too wet, too unsafe or too dirty and polluted-modern shopping centers are none of these when managed properly," said Sebastian Skiff, Executive Director of CBRE Retail. Kuala Lumpur in Malaysia falls just outside the top 10 coming in as the 11th most active market globally. Southeast Asia has 3.3 million sq. m. under construction and nearly 40 per cent of this is located in the Malaysian city. — TNS
Fact file *
A total of 39 million sq. m. of shopping center space currently under construction across major global cities *
India’sTier I & II cities among the most active markets globally for shopping center development *
The 2014 shopping centre pipeline represents a 3 million sq. m. increase over 2013 *
Chennai among the top 15 most active shopping centre development markets in the world in 2013
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realty bites Bhoomi pujan ceremony was held at Chandigarh Citi Center in Zirakpur earlier this week. The upcoming commercial centre that will spread over an area of 10 acres is located at the VIP Road in Zirakpur and will be a one-stop-destination for retail needs of the people living in and around the area. Speaking on the occasion Vijay Jindal, MD of the Group said, "Before conceiving the project we conducted an extensive survey and analysis of the local market and came up with a perfect investment opportunity, promising great returns in the form of rentals, business returns and capital appreciation". Xander invests 370 cr in Kapstone Constructions Realty player Rustomjee has raised ~370 crore from global private equity lender Xander Group and the funds will be utilised to reduce its debt as well as to fuel its growth plans. Xander has invested ~370 crore in Rustomjee's subsidiary firm Kapstone Constructions, which is currently developing Rustomjee Urbania, a self-sufficient township in Thane, spread across 127 acre, a statement issued in Mumbai stated. “This is the fifth private equity investment in our company. Xander’s extensive industry knowledge and global experience will add significant value to our company. We have provided successful exits to all our previous investors,” Rustomjee Chairman Boman Irani said. The company has already delivered nearly 8.4 million sqft of residential and commercial space in Mumbai.
Auris Serenity near Mumbai Sheth Creators, the Mumbai-based real estate company, has launched a luxury residential project called ‘Auris Serenity’ on Malad Link Road in Malad suburb of Mumbai. It is a joint project with Transcon that specialises in land acquisition for development in Mumbai. Spread over eight-acres, the project comprises four luxury towers of 54 storeys each. It promises to offer all modern amenities with two BHK, three BHK and four BHK apartments. The project will have four luxury towers offering 1,200 apartments, the first phase consists of one tower with 54 floors, offering 320 apartments. The company is offering the apartments at the base price of Rs 13,500 per sq ft. The phase one of the project will be ready for possession over the next three years.
Mahindra Lifespace profit dips Mahindra group’s real estate firm Mahindra Lifespace Developers has reported 63 per cent fall in its consolidated net profit at ~30.30 crore for quarter ended March 31 on lower sales. The company’s net profit stood at ~81.74 crore in the year ago period, Mahindra Lifespace Developers said in a filing to the BSE. During 2013-14 fiscal, the company's consolidated net profit declined by 29 per cent to ~100.63 crore from ~141.37 crore in the previous year. Commenting on the result, Mahindra Lifespace Managing Director and CEO Anita Arjundas said: “We have seen revenue growth of over 10 per cent in the residential business backed by a continuous focus on execution”. During last fiscal, the company launched two new housing projects and sold 706 units across eight projects. The Mumbai-based developer is present in nine cities and its portfolio includes 11.25 million sq ft of development in the ongoing and forthcoming projects. — TNS & Agencies
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Property ownership in partnership deed S. C. Vasudeva email your queries to realestate@tribunemail.com Q. Can a property purchased by partners in their individual name (like factory land purchased in individual name) be shown in the partnership balance sheet as also the building constructed upon later? The partnership deed stipulates that land be shown in partnership business. —
Abhishek A. Section 14 and 15 of the Partnership Act 1932 deal with the provisions relating to the property of a firm. Section 14 of the said Act provides that subject to the contract between the partners, the property of the firm includes all property and rights and interests in property originally brought into the stock of the firm, or acquired, by purchase or otherwise, by or for the firm, or for the purposes and in the course of the business of the firm, and includes also the goodwill of the business. It has also been provided in the said Section that unless contrary to the intentions, property acquired with money belonging to the firm is deemed to have been acquired for the firm. The facts given by you in the query do not indicate whether the factory land purchased in individual name has been acquired with the funds belonging to the firm. In such a case if the property is reflected as a land in the balance-sheet of the firm, this would clearly indicate that either the land has been acquired with the funds of the firm or the partners have agreed to treat the same as a partnership property. Further, in case the funds of the firm are utilised for constructing a building thereon, it would also confirm that the intentions of the partners are to treat the land on which the building has been constructed, as a partnership property. It may be added that a property belonging to a person in the absence of an agreement to the contrary, does not become the property of partnership merely because it is used for the business of the partnership. It would become property of the partnership only if there is an agreement express or implied that the property is to be treated as a partnership property. In case a partner has bought the land in his individual name but has introduced the same as part of his capital, the same would be treated as a partnership property. Such a transaction would, however, attract the provisions of Section 45(3) of the Income-Tax Act 1961 (the Act).
Loan to son *
Kindly give an outline of family settlement agreement giving main terms and conditions. *
The land is already registered in his name. Do I have to get it registered again by making a conveyance deed on the stamp paper by spending huge money or not? *
Will the tehsildar-patvari concerned carry out the mutation without any objection or it is mandatory for me to purchase the stamp papers and get the conveyance deed made in my name? *
Having done the above exercise positively based upon your advice, can my son delete his liability of loan of ~20 lakh from his balance sheet, for the purpose of filling an income tax return. —S.K. sharma
A. Your queries are replied hereunder: *
A Family Settlement Deed is entered into between the members of a family who are having a dispute relating to various properties and/or business owned by the family. It is also possible to enter into a family settlement if there is a likelihood of dispute between members of a family regarding the properties or business so as to avoid the dispute. In the case cited by you no family settlement would be possible. It would be advisable to execute a gift deed by your son in your favour in this case. *
The gift deed will have to be registered and will be on a stamp paper and the stamp duty will have to be paid on the market value of the property. *
The Tehsildar/Patwari would make the mutation in your favour on the basis of the gift deed so executed and duly registered with the Sub-Registrar. *
The amount of loan given by you can be treated as a gift to your son by you later on the basis of which your son can delete the liability from his books of account.
Investing sale proceeds to save tax Q. I owned a house in south Delhi in which I was living with my family for the past 40 years. I entered into an agreement to sell the house on June 10, 2013. Out of the earnest money received I purchased a house at Gurgaon which was registered in my name on June 20, 2013. The sale deed of the house in Delhi was registered in February 2014. Kindly advise me on the following: *
Will I be entitled to deduct the sale price of the house purchased in Gurgaon and also the indexed cost of the house in Delhi from the sale price of the house in Delhi under Section 54 of the Act? *
As the sale of the house in Delhi was registered in February, 2014, can I buy bonds of ~50,00,000 till March
31, 2014 and can I get the benefit of buying bonds of another ~50,00,000 till August, 2014. *
For bonds to be purchased in financial year 2014-15, can I get rebate in assessment year 2015-16? *
For bonds to be purchased in financial year 2014-15, may I first deposit the amount in capital gain scheme and then withdraw it and buy bonds of ~50,00,000. —
Rajan
A. Your queries are replied hereunder: *
The capital gain arising on the sale of the residential house situated in south Delhi shall be computed after taking into account the indexed cost of the aforesaid house. *
The benefit of Section 54 of the Act would be available in respect of the capital gain arising on the sale of the aforesaid residential house. *
The provisions of Section 54EC of the Act provide that the investment of long- term capital gain in tax-saving bonds has to be made within six months of the date of transfer of the capital asset subject to a limit of ~50,00,000 in a financial year. In my opinion, therefore, you should be able to get the benefit of the provisions of section 54EC of the Act if your purchase such bonds to the extent of ~50 lakh in each of the two financial years provided the same are purchased within six months of the date of transfer of the capital asset. Six months period in this case would expire in August 2014. It would be advisable to buy the bonds before July 31, 2014 so that the same can be reflected in the return of income which in your case will have to be filed by July 31, 2014. *
Yes, you should be entitled to claim the benefit of deduction under Section 54EC of the Act on the basis of the investment to the extent of ~1 crore. It may be added that there are two decisions of the Income-tax Appellate Tribunal that confirm this proposition. *
The investment in the bonds has to be made within six months of the date of transfer of capital asset and therefore it should not be necessary for you to open an account under capital gains scheme for depositing the balance amount of capital gain arising on the sale of the house situated in south Delhi.
Can I issue rent receipt to my wife?
A. Section 13A of the Act provides for the exemption of the house rent allowance subject to conditions prescribed in the Income Tax Rules. As per Rule 2A of the said Rules the amount of house rent allowance not includible in the salary is to be worked out as under: *
The actual amount of such allowance received by the assessee in respect of the relevant period; or *
The amount by which the expenditure actually incurred by the assessee in payment of rent in respect of residential accommodation occupied by him exceeds one-tenth of the amount of salary due to the assessee in respect of the relevant period; or *
An amount equal to (i) where such accommodation in situated at Bombay, Calcutta, Delhi or Madras, one-half of the amount of salary due to the assessee in respect of the relevant period; and (ii) where such accommodation is situated at any other place, two-fifths of the amount of salary due to the assessee in respect of the relevant period. n Whichever of the above is the least would not be includible in the income from salary. It would be observed from the above, that one of the requirement is that the amount of deduction is limited to the excess of the amount actually incurred by the assessee in payment of rent over 1/10th of the salary of the relevant period. The issuance of mere receipt would not, therefore, be of any help and there has to be an actual payment of rent by your wife to you. It is not possible to compute the deduction allowable as the figure of total salary received by your wife is not indicated in the query. I would like to caution you that the department is not likely to agree for allowing a deduction as it seems to be most un-natural for a wife making payment to her husband towards house rent for the residential accommodation occupied by her though both of them are living together in the same house which is owned by the husband.
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As the nation is in the process of electing a new government, the new government would be duty-bound to give due attention to the much neglected housing sector. At the outset the new government should set up a single-window clearance system to cut delays in getting approvals for housing projects and check cost escalation. It has to ensure that the average approval time is reduced from 196 days to 45-60 days. Delay in obtaining approvals often increases the cost of a housing project 1.5 times. At present around 34 permits are required for a housing project.
The real estate market in the country has been experiencing a low sentiment for the past couple of years. How has this impacted the buyers and the developers?
North India experiences extreme weather conditions be it the chilling winters or searing summers. These climatic conditions make maintaining an attractive home garden a tough job as one is constantly struggling to save the plants from heat or cold. However, there are many beautiful annuals that continue flowering in spite of changes in the weather conditions. These include
osteospermums, gomphrena globosa, gaillardia grandiflora,celosia, vinca and hybrid of petunia, verbena and marigold. These long-duration flowers are also available in different colours that help you in maintaining
colour, harmony and contrast in your garden all over the year.
market pulse
Q.
My son had taken a loan of Rs 20 lakh from me through an account payee cheque two years ago. Now he wants to enter into a family settlement with me by giving me a piece of agricultural land situated in the same city where we are living. This land is almost of the equivalent value. My queries are:
Q.
Kindly guide me on the following points: