An individual can have option to select any one house for his selfresidence and the notional income of such residence would be nil.

Sagar BhosaleCategories: Tax Queriesjoin us on whatsappfollow us on googleprefered on google

An individual can have option to select any one house for his selfresidence and the notional income of such residence would be nil.

We are a partnership firm where I, along with one Mr B, are the partners having profit share of 40% and 60%, respectively. The firm has unabsorbed losses of Rs10 crore upto the Assessment Year 2017-18. Due to the losses, Partner B wants to resign and in his place one Mr C is ready to join. Please let us know whether there will be any impact on the allow ability of carried forward losses in the subsequent years with myself and Mr C as partners? 

We are a partnership firm where I, along with one Mr B, are the partners having profit share of 40% and 60%, respectively. The firm has unabsorbed losses of Rs10 crore upto the Assessment Year 2017-18. Due to the losses, Partner B wants to resign and in his place one Mr C is ready to join. Please let us know whether there will be any impact on the allow ability of carried forward losses in the subsequent years with myself and Mr C as partners? 

  • Under Section 78 of the Income Tax Act, where a change has occurred in the constitution of the firm, then the firm shall not be entitled for carried forward losses and set-off of so much of the loss proportionate to the share of retired partner. Thus, unabsorbed loss to the extent of 60%, i.e. share of retired partner Mr. B, will not be allowed to be carried forward and set-off against subsequent year’s income and, accordingly,it will go waste. However, the firm may be entitled to balance loss of 40%, i.e., the share of the continuing partner for set-off against future income of the firm. 

I am a trustee of a charitable trust. For the Assessment Year 2017-18, we have filed the return electronically, but due to oversight, we did not upload the auditor’s report electronically. The return was processed under section 143(1)(a) of the Act and exemption under section 11 was denied on the ground that the trust has not filed the auditor’s report electronically and, therefore, did not satisfy all the conditions required for allowing exemption under section 11. We have approached the Assessing Officer, but he has refused. What are the remedies available with us and which forum we have to address? Kindly note that subsequently we have uploaded the auditor’s report electronically. 

  • The best approach is to file an appeal before the CIT(A) against the Intimation under section 143(1)(a) and the main ground should be that “exemption under section 11 denied only on technical ground, i.e., non-filing of auditor’s report electronically”. In my opinion, the CIT(A) will admit the appeal and allow your plea in view of various precedents where the courts have held that legal claim should not be denied merely on technical ground and,particularly, when subsequently it has been rectified. If the CIT(A) does not allow, then you may move to ITAT, where the ITAT has been taking a very lenient stand and will definitely allow your appeal in view of several judgements.

I am an individual having four residential houses. All the four houses have not been let out and are for family use. Recently, I came to know that I am entitled to exemption in respect of only one house and, for the other three houses, I have to offer notional income. Is it true, and if yes, what is the law and what I should do ? 

  • Yes it is correct. Under section 23 of the Income Tax Act, an individual can have option to select any one house for his self-residence and the notional income of such residence would be nil. However, the other three houses are subject to notional income and payment of taxes thereon under the Income Tax Act. These three houses would be treated as if these have been let out. The notional income would be the amount for which the property might reasonably expected to be let out from year to year, i.e., fair rent in your locality. You would be entitled to get 30% notional deduction also. 

You can revise the return for assessment year 2017-18 voluntarily and offer the same and pay tax. From the assessment year 2018-19 onwards, you can show the notional income in the original return itself. 

I am a senior citizen. Can you let me know what are the latest amendments in respect of exemption of interest received from the bank? Also, if any other amendment pertaining to me as a senior citizen? 

  • Section 80TTB has been inserted which provide that in case of senior citizens, deduction of interest up to Rs50,000 received from bank, co-operative bank or post office on all the deposits will be allowed for computing the total income. For example, if you receive interest of Rs1,00,000 in a year, only `50,000 will be taxed as Rs50,000 is deductable under section 80TTB Further, Section 194A has been amended with effect from April 1, 2018, to provide that tax will not be deducted at source by bank, cooperative bank or post office in respect of interest up to Rs50,000 on a deposit made by a senior citizen. Thus, there is no tax upto Rs50,000 as also no tax deduction at source. Under Section 80D, health insurance premium and preventive health check-up and medical expenses is now allowed up to Rs50,000 to senior citizens. Earlier, the limit was Rs30,000 Further, under section 80DDB, the limit for medical expenses in respect of certain critical illness has been increased to Rs1,00,000 per year.