Can Wife Claim Deduction of Interest & Under Section 80C Despite Husband Paying EMI of Home Loan?

Me and My husband have taken a home loan last year. It was a joint loan on a property. EMI is paid from my husband’s salary account. Can I take tax benefits for it even though I am not contributing to paying EMI. The interest statement has names of both of us. Rashmi, Delhi Yes

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Disability Deduction u/s 80U simplified in six steps !

Section 80U of the I T Act provides deduction to person sffering from specified disability by at least to the extent of 40 % or in case of sever disability , 80 % suffering. For claiming deduction,you ought to have the certificate first , before you can claim the deduction u/s 80U. As per Rule 11A of I T Rules, medical authority for issuing certificate of disability are

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Easy chart of deductions u/s 80C to 80U every individual should aware of !

income_tax_worry_deductionThe season of tax has arrived. Therefore , there is need for easy chart of all tax deduction u/s 80c to 80U for an Individual taxpayer?Under Income tax , deduction u/s 80C,80CCC, 80D, 80DD,80DDB,80G , 80GG, 80GGA, 80GGC , 80IAB , 80IB , 80IC , 80ID ,80IE , 80JJA , 80QQB ,80RRB , 80U  are relevant to Individuals depending on the condition fulfillment. The following chart of deductions will give instant and fair idea about certain deductions to individual tax payers. (section 80IAB to 80IE are not discussed which are specific to business men )

Easy Chart for deduction u/s80C to 80U & Rebate u/s 87A

Postal & Insurance Agents :What Deductions Allowed ?

The persons who are insurance agent or postal agents who receives commission for selling various kinds of investments and insurance products of  insurance companies and postal department. One reader Vasantha , Trichy  has asked  ”I am a mutual fund broker, LIC agent & Postal agent. I am getting income by way of commission for my agentship. Please guide me under which head I should show my commission income in itr-4. What is the maximum expenditure can I deduct from my gross income.

The readers were informed that even though the income from insurance commission falls under the head “Income from business ” , so the return has to be filed is ITR-4 , but it is also a fact that the 

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Does Payment To Travel Agent Require TDS ?

Tax deduction at source (TDS ) is done for various kinds of payments , falling under any provision given Chapter XVII of the Income Tax Act.If one examines the work of travel agent, one can see that the payments to a travel agent can relate to either only for ticket or hotel booking or for…

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Section 80P: No Deduction on Rental Income !

Section 80P of the Income Tax Act provides deduction to cooperative society .However the deduction is allowable only in case the income  of the taxpayer arises from the business of banking or providing credit facility to its members and any activity which are attributable to business of banking .

What does Section 80P say ?

The section 80P of the Income tax Act is as under

“80P. (1) Where, in the case of an assessee being a co-operative society, the gross total income includes any income referred to in sub-section (2), there shall be deducted, in accordance with and subject to the provisions of this section, the sums specified in sub-section (2), in computing the total income of the assessee.

(2) The sums referred in sub-section (1) shall be the following:-

(a) In the case of a co-operative society engaged in -

(i) Carrying on the business of banking or providing credit facilities to its members, or

(ii) A cottage industry, or

(iii) The marketing of agricultural produce grown by its members, or

(iv) The purchase of agricultural implements, seeds, livestock or other articles intended for agriculture for the purpose of supplying them to its members, or’

(v) The processing, without the aid of power, of the agricultural produce of its members, or

(vi) The collective disposal of the labour of its members, or

(vii) Fishing or allied activities, that is to say, the catching, curing, processing, preserving, storing or marketing of fish or the purchase of materials and equipment in connection therewith for the purpose of supplying them to its members,

The whole of the amount of profits and gains of business attributable to any one or more of such activities:”

 

Whether rental income eligible for deduction u/s Section 80P

 

ITAT , Cochin, in case of Income Tax Officer, Ward 1(1), Trivandrum v.Kerala State Co-op. Bank Ltd. considered the issue whether deduction under section 80P(2)(a)(i) in respect of rental income received by the assessee-state co-operative Bank.

The facts of the case was that the appellant , a cooperative society earned rental income on its commercial premises/ assets. It claime deduction u/s 80P which was disallowed by A.O. CIT(A) allowed the appeal and the department contested before Tribunal against the judgment of CIT(A).

The Tribunal held , favoring Revenue as under

 A bare reading of the section 6 of the Banking Regulations Act clearly shows that the letting out of the property in no way connects with the banking business or providing credit facility. Letting out the premises is an independent and separate activity for the purpose of exploiting the landed properties.[Para 7]

 

11. In the case on our hand also the taxpayer has let out the building. It is nobody’s case that the commercial asset was exploited in the course of its banking activity or providing credit facility to its members. Therefore, letting out of the property is other than one specified in section and u/s 80P(2)(a)(i) and 80P(2)(c). Therefore, the rental income received by the taxpayer has to be assessed as “Income from house property” and it is not eligible for deduction u/s 80P(2)(a)(i) of the Act as held by the Kerala High Court in Kottayam Co-operative Land Mortgage Bank Ltd (supra). This judgment of the Kerala High Court is binding on all authorities and this Tribunal. It is unfortunate that the Commissioner of Income-tax(A) has chosen to place reliance on the judgment of the Madras High Court rather than that of the jurisdictional High Court. The law Laid down by the jurisdictional High Court is binding on all authorities. Therefore, all authorities in the State of Kerala has to prefer to follow the judgment of Kerala High Court rather than other High Courts. This Tribunal is of the considered opinion that the judgment of the Kerala High Court in the case of Kottayam Co-operative Land Mortgage Bank Ltd is squarely applicable to the facts of the case.

12. We have also carefully gone through the judgment of the Apex Court in the case of Totgar’s Co-operative Sales Society Ltd (supra). The Apex Court, after considering the provisions of section 80P found that the source of income is relevant for deciding the applicability of section 80P of the Act. The Apex Court further found that weightage should be given to the words “the whole of the amount of profit and gain of business” attributable to one of the activities specified in section 80P(2)(a) of the Act. The Apex Court further found that “the whole of the amount of profit and gain of business” emphasizes that the income in respect of which deduction is sought must constitute the operational income and not the other income which accrues to the society. Therefore, for the purpose of claiming deduction u/s 80P(2)(a)(i), the income should be from operational activity, viz. banking activity. Unless and until the letting out of property falls within the definition of banking activity, the rental income received by the taxpayer cannot be construed as operational income. Therefore, as held by the apex court, the rental income received by the taxpayer on letting out of the property has to be assessed as “Income from house property” and it cannot be construed as “Income from banking activity”. At no stretch of imagination it could be said that rental income is attributable to banking business.

13. A similar view was taken by the Madras High Court in the case of Indian Overseas Bank Ltd v. CIT [2000] 246 ITR 206/[2002] 121 Taxman 16. The Madras High Court, after distinguishing the judgment of the Madhya Pradesh High Court in CIT v. National Newsprint & Paper Mills Ltd [1978] 114 ITR 388 found that the business of the taxpayer is banking and the business connection between the tenant and taxpayer has nothing to do with banking operation carried on by the taxpayer. Further, the Kerala High Court in Kottayam District Co-operative Bank Ltd. v. CIT [1991] 188 ITR 568 / 57 Taxman 175 (Ker.) has also taken a similar view. Therefore, this Tribunal is of the considered opinion that the taxpayer is not eligible for deduction u/s 80P(2)(a)(i) in respect of rental income. By respectfully following the judgment of the Apex Court in the case of Totgar’s Co-operative Sales Society Ltd. (supra) and the Kerala High Court in the case of Kottayam Co-operative Land Mortgage Ltd. (supra) we set aside the order of the Commissioner of Income-tax(A) and restore that of the assessing officer.

14. In the result, the appeal of the revenue stands allowed.

Revision of Late Return Filed u/s 139(4) Legally Correct !

Late return can be revised, indeed! It is generally understood that if tax return is filed after the due date (late return) , such return of income cannot be revised . In fact that the common error in belief that once a person files return late , then even when he finds a genuine error…

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Section 54EC: Sales Consideration or Only Gains Should Be Invested !

Section 54EC of the Income Tax Act provides exemption provision in case of long term capital gains . The confusion actually in the mind of the tax payer starts when he has to decide how much he/ she has to invest in the specified bonds of section 54EC . The real confusion is about whether…

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Can You Claim Exemption u/s 54F & 54EC Together !

Income Tax Act provides for claim of exemption from tax on long term capital gains on sale of capital asset under various provision.For example section 54 or section 54F provides exemption in case investment of net sales proceeds are made in another residential house, while section 54EC provides exemption upto R 50 lakhs if the…

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Penalty u/s 271(1)(c) For Non Deduction of Tax is Unfair & Unjustified

Section 40(a )(ia) of the Income Tax Act provides that in case of non deduction of tax or non deposit of tax deducted at source on any payment which is claimed as allowable expense while computing business income , the expense will be disallowed completely. The Assessing officer also , in many case in a…

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