The Hindu Business Line : A primer on school fees

SCHOOL receipts normally mention various heads such as monthly fees, term fees, transport fees, and so on, whereas Section 88 rebate is available only on tuition fees. Should the employer, therefore, stick to the letter of law and insist on allowing rebate only to the extent the school receipt has got to show something by way of tuition fee? - R. Gopalakrishnan, Chennai

Fortunately for the employer as well as the employee, there is enough thaw in the language of Section 88 itself. While talking of tuition fees, it makes it a point to exclude from its purview "development fees or donation or payment of similar nature."

It follows from this that any other description would pass muster under the term `tuition fees'. The employer, therefore, would be justified in allowing, and the employee would be in claiming, rebate even on term fees, laboratory charges, computer fees, and so on.

One wonders whether one can press his luck further and claim rebate on transport fees as well. It seems one cannot because transport fees is by no stretch of imagination relatable to the education part of the school's bill which tuition fee implies.

It's different

WHY is no depreciation allowed on cost of land under the income-tax law? - Sridutt Vernekar, Mumbai

Presumptively no depreciation is allowed on land because, land supposedly suffers neither from obsolescence nor from wear and tear — the twin traditional planks for granting depreciation.

But there are sceptics who argue that if depreciation can be allowed on intellectual property rights, such as goodwill, brand, and so on, which too suffer no erosion, there is no reason why land should be kept away from the scope of depreciation.

Moreover, denial of depreciation also goes against the matching principle, under which, revenue and expenditures have to be matched.

A business invests in land admittedly to carry on its revenue-producing activities.

If this is conceded, there should be no problem in granting the need for allowing depreciation on land.

(ASK! Send in your queries on accounting, auditing, corporate law and taxation to ask@thehindu.co.in)

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