Legal heir can sign IT return of deceased

SC Vasudeva

My wife, Prem Kaur, an income tax assessee having Punjab Government PPO No. 199092/P6, died on March 23, 2017. Her income tax return for the year 2016-17 (AY 2017-18) is due which is complete and is to be filed online. As she is no more, can I sign her income tax return of stated year supporting with her death certificate’s photocopy? Please advise.

— Swaran Singh

You can sign the income tax return on behalf of your wife who died on March 23, 2017. However, before filing the return online, you will have to get registered online as a legal heir of the deceased. The return can be filed only after the status of legal heir has been accepted and approved by the department. For online registration as a legal heir, you need to login your account on the e-filing website, click on ‘add/register as representative’ in the ‘My Account’ tab, attach the necessary documents (i.e. copy of PAN card of deceased and legal heir, death certificate, legal heir certificate/registered will/ surviving member certificate/pension order) and enter the  requisite details.

I purchased an industrial shed in August 1989 for Rs 4 lakh, including all charges. I carried out my business from there till May, 2009. No industrial activity or business of any type was carried out from the premises thereafter. It had been lying totally vacant ever since. I was charging depreciation on the industrial shed till FY 2009-10 as I carried out my industry till May, 2009 from the premises. I have sold it out now and its sale deed was registered on May 9, 2017.  I have following queries:

Shall I be eligible to pay long-term capital gains or shall I be taxed as per slab rates as I had been availing depreciation on this shed till FY 2009-10?

Cost inflation index for long-term capital gains has been shifted from 01.04,1981 to 01.04.2001. What is its relevance to me as far as this deal is concerned? Does it mean that its market value as on 01.04.2001 will be taken as my acquisition cost to calculate my tax liability? And how does one determine the market value as on 01.04.2001 — on the basis of collector’s rate as of 01.04.2001 or by obtaining a valuation report from a certified valuer?

For better clarity, please calculate my tax liability in this deal.  I have sold it for Rs 2 crore.  And I spent no amount on its improvement/ maintenance ever since May 2009 when I stopped using it for industrial production. And till then, whatever amount was being spent on its improvement/maintenance etc. etc., was charged towards expenditure.  

— Yogesh Chawla

Your queries are replied hereunder:

You would be liable to pay tax on the amount of long-term capital gain arising on the sale of land on which the industrial shed had been constructed.  The depreciated value of the structure of the shed on which the depreciation has been charged shall be treated as a short-term capital asset and tax would be chargeable on the sale of such structure at the rate applicable for the taxability of short- term capital gain.

It is advisable to get an approved valuer’s report for the cost of the structure as on 1.4.2001.  Circle rate can be adopted for the value of land as on 1.4.2001 so as to compute long-term capital gain. You are correct in assuming that instead of cost market value as on 1.4.2001 would be adopted for the purpose of giving the benefit to the assessee on account of the increase in market value up to 1.4.2001 due to inflation.

Written down value of the industrial shed as well as the market value of land on the basis of circle rate for financial year 2001-02 has not been indicated in the query.  Further, separate sale price of the shed and the land has also not been indicated in the query. Therefore, it is not possible to compute the amount of capital gain on the sale of industrial shed. These figures are essential to enable us to compute the amount of capital gain.

Thanks for reply to my query on dated 22.5.2017 under “No rebate on gift to mother”. Please clarify further:

Whether the amount gifted — higher limit of Rs 3,00,000 per year or any amount can be given as lump sum out of old savings (she is a senior citizen).

Can she also take similar gifts from her unmarried taxpayee daughters? —  S Aggarwal

A gift can be made by a son or a daughter. Any amount gifted by an assessee to his mother would not be taxable in the hands of the recipient.