01 January 0001

Direct Tax Amicus: July 2019

Tax incentives for affordable housing: An analysis
by Tanmay Bhatnagar

In the wake of recent Budget speech of the Finance Minister, which mentioned Govt’s objective of housing for all by 2022, two amendments have been proposed in the Income Tax Act - Amendment to Section 80-IBA and insertion of Section 80EEA. While amendment to Section 80-IBA provides for deduction of 100% profits by assessee in the business of Housing projects, insertion of Section 80EEA provides deduction in respect of interest on loan taken from financial institution on acquisition of specific residential property. A pertinent question that the article raises is where two individuals jointly acquire a property, whether they will be eligible to claim deduction. The author proposes that deduction from income from house property u/s. 24 may be claimed by co-owners against individual share of property. However, the question remains as to what view Dept. would take in situations with two sharing owners while allowing deduction under Section 80EEA.

Budget 2019

  • Lower corporate tax rate - Threshold raised
  • New categories of persons required to file return of income
  • Reqirement to obtain PAN in certain cases and inter-operability of Aadhar and PAN
  • Listed shares also brought within the ambit of tax on buy back
  • Tax incentive for purchase of electric vehicles
  • Rationalization of provision relating to prosecution on failure to file return of income
  • Cancellation of registration of trusts
  • Gift to non-resident deemed to be income arising in India
  • Exemption to interest on rupee denominated bonds arising to non-resident
  • Tax neutral demergers
  • New TDS obligations on individuals paying to contractors and on cash withdrawals and ’consideration’ defined for purpose of Section 194-IA
  • Extension of relief in case of non-deduction of tax on payments to non-residents
  • Start-up incentives

Ratio decidendi

  • Amendment to Explanation to Section 73 is prospective in nature - Supreme Court
  • Non-deposit of tax deducted at source - Initiation of prosecution is not dependent or controlled by Section 201(1A) or Section 221 - Karnataka High Court
  • Credit for taxes paid to Federal & State government of USA would be available u/s. 91 - Resident but not Ordinary Resident would be eligible for benefit u/s. 91 – ITAT
  • Section 72A read with Rule 9C(a) cannot be invoked before end of 4 years from date of amalgamation - ITAT
  • Intimation under Section 143(1) is an order for purposes of revision under Section 264 - Delhi High Court

June, 2019/Issue-58 July, 2019/Issue-58

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