Income tax: Loss from house can be carried forward by filing return of income now

Jan 14 2014, 14:12 IST
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SummaryAs per Section 55 of the Income Tax Act, 1961, where a capital asset became the property...

I made a cash gift of R7 lakh to my wife in 2010 with which she bought some jewellery. The value of the jewellery as on March 2013 was R8,10,000. What would be the implication of this while computing the net wealth of my wife for the assessment year 2013-14?

—Vipul Kumar

Section 4(1)(a)(i) of the Wealth tax Act,1957 provides that assets held by the spouse of an individual to whom such assets have been transferred by the individual, directly or indirectly, otherwise than for adequate consideration or in connection with agreement to live apart, shall be included in computing the net wealth of the individual. Thus, in your case, the value of jewellery held by your wife shall be included in computation of your net wealth for assessment year 2013-14.

My husband died in July 2013 while he was a director in a reputed company. The company gave me certain amount as ex gratia. Will such amount be taxable?

—BK George

The CBDT through a circular No. 573 dated August 21, 1990, has clarified that a lumpsum payment, made gratuitously or by way of compensation or otherwise, to the widow or other legal heirs of an employee, who dies while still in active service, is not taxable as income under the Income Tax Act, 1961. Further, reliance can be placed on decision of the Mumbai Tribunal in the case of ACIT Vs late Anil Bhatia. Thus, it may be inferred that such amount shall not be taxable in your hands.

I acquired a plot of land for R40,000 in May 1979. I am planning to sell this for R13 lakh. What will be the cost of acquisition?

—DS Solanki

As per Section 55 of the Income Tax Act, 1961 (the Act), where a capital asset became the property of the assessee before April 1, 1981, the assessee has the option to take higher of fair market value of the asset as on April 1, 1981, or the actual cost of the asset as the cost of acquisition. So, you can take R40,000 or fair market value of the plot as on April 1, 1981, whichever is higher as the cost of acquisition. It may be noted that as per section 55A of the Act where the assessing officer is of opinion that value adopted by the assessee as on April 1, 1981, is higher than the fair market value as on that date, he can make reference to the valuation officer for determining the fair market value of the property.

What are the tax implications if I keep my flat unoccupied and stay in a rented house?

—Narendra Singh

As per section 23 of Income Tax Act, if a person owns more than one house then the annual value of one of the houses of his choice can be considered as nil and the annual value of the other house(s) shall be determined as prescribed for the purpose of computation of income from house property. However, in your case, as you own only one house, there shall be no tax implications in this regard, unless the said property is actually rented out.

I have some loss from house property for financial year 2012-13. I could not file income tax return before July 31, 2013. Can I file carry forward the loss if I file the return now?

—Deepak Sharma

As per the provisions of the Income Tax Act, submission of return of loss on or before the due date under section 139(1) of the IT Act (i.e. July 31, 2013) is compulsory for availing the benefit of carry forward of losses. However, the loss under the head ‘income from house property’ can be carried forward even if the return is filed after the due date. Thus, you can carry forward the loss from house property by filing the return of income now.

* The writer is founder of RSM Astute Consulting Group

* Send your queries at fepersonalfinance@expressindia.com

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