The Hindu Business Line : Reaping income-tax benefit for treatment

I was working in a private company but resigned as I was diagnosed with breast cancer in 2003. I underwent surgery and I am under medication. I am spending around Rs 2,000 a month on medicines and around Rs 8,000 a year on investigation procedures. My husband’s income is Rs 8,000 a month and he is not an income-tax assessee. Can my employed daughter claim deduction u/s 80DDB on the medical expenses incurred for me. If yes, what documents are required to be submitted to her employer? — Kalyani

Section 80DDB allows deduction of expenditure incurred on medical treatment incurred by an assessee, who is a resident of India, of such disease or ailment specified in the rules. The expenditure may be incurred on the individual or a dependent. The deduction can be claimed only where the assessee furnishes, along with the return of income, a certificate in the prescribed form from a specialist. Dependent is defined as spouse, children, parents, brothers and sisters of an individual dependent wholly or mainly on such individual.

It may not be possible for your daughter to make a claim for deduction u/s 80DDB by furnishing particulars to her employer whereby tax could be deducted on the salary after taking into account the deduction under this section by her employer. She will only have to furnish a return and make a claim for such deduction before the assessing officer.

I am a retired Government employee and have invested Rs 15 lakh of my retirement benefits in 9 per cent Senior Citizen Scheme in the joint names of myself and my wife with first name being mine. Out of this I get an interest of Rs 1.35 lakh per annum. I wish to gift this account to my wife on a verbal agreement to enable her to meet household and other social obligations. Do I need to show this interest income in my return of income? — R.S. Maken

The interest income earned from the deposits will continue to be charged in your hands even after you gift the investment to your wife. This will be so because section 64(1) provides for the clubbing of the spouse’s income with that of the transferor spouse if assets are transferred by an individual to the spouse without adequate consideration.

I have completed my MS in US with the help of a student loan in USA. I am currently working in India and I am paying interest of Rs 7,000 a month on that loan. Is this payment allowable as deduction? — Joseph Pramodh

Deduction u/s 80E is available in respect of the interest on loan taken from a financial institution or approved charitable institution for pursuing higher education either of the individual or his relative.

Higher education will mean full-time studies for any graduate or postgraduate course in engineering, medicine, management or for postgraduate courses in applied sciences or pure sciences. The deduction under this section will be available for eight assessment years beginning from the year in which the interest on the loan is paid.

I have a coconut farm of about 15 acres. I had planted teakwood 30 years ago on the borders of the farm. I now propose to sell the teakwood. Will it attract capital gains tax? — K. Ramasamy

The Supreme Court in CIT v Raja Benoy Kumar Sahas Roy [1957] 32 ITR 466 (SC) has held that the basic operations relating to agriculture are tilling of land, sowing of seeds, planting and similar operations. These basic operations would require the expenditure of human skill and labour on the land. The court held that other operations — such as removal of undesirable growth and operations that foster growth and preserve it — would be part of agricultural operations if they are taken up in conjunction with basic operations.

In your case, you would satisfy the tests laid down by the Supreme Court and the income would be treated as agricultural income.

(Mail your queries to taxtalk@thehindu.co.in or by post to `Tax Talk', Business Line, Kasturi Buildings, 859, Anna Salai, Chennai-600002)

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