The Hindu Business Line : Taxability on sale of assets

I had purchased a property in Pune. I have claimed the stamp duty, registration charges and the principal amount of housing loan as a deduction u/s 80C during assessment year 2008-09. For the same year I had also claimed interest on housing loan as deduction. I now propose to sell this property within one year of its acquisition. What will be the tax implications? — Abhaykumar Lodha

Under section 80C(5) the amount of deduction claimed under this section up to the previous year immediately preceding the previous year of transfer will be deemed as income of the previous year of transfer if the house property is transferred within five years from the end of the financial year in which possession is obtained.

This being so, in your case the stamp duty, registration charges and the principal amount of housing loan claimed as a deduction u/s 80C during the assessment year 2008-09 will be taxed as the income of the current financial year, will be taxed in the assessment year 2009-10.

My employer is an Indian company and I have been deputed to the US for two years. I am a Green Card holder in the US and a person of Indian origin. I receive salary both in USA and in India. I am in USA since December 2007. I have filed my tax return in USA for December 2007 reflecting only the salary paid in USA. I am yet to file my tax returns in India and I wish to know whether there are any benefits in India available under the Double Taxation Avoidance Agreement between India and USA?

I am told by my employer that under the Double Taxation Avoidance Agreement between India and USA, I can claim the taxes deducted by my employer on my salary in India as a refund while filing my tax returns. Is this correct? Would I be required to reflect my salary income earned in India in my US tax returns? — Sreedhar

Only a consultant in the US can say if the income earned in India has to be reflected in your tax returns there.

The Double Taxation Avoidance Agreement between India and the US in Article 25 provides that if any income is taxed in India and in the US, the country of residence will give credit in respect of the tax paid in the country of source.

From the details given by you, the Indian income does not seem to have been offered by you to tax in the US. In such circumstances the question of claiming any relief under the Double Taxation Avoidance Agreement when there is no doubly taxed income does not arise. You may note that if the Indian income is taxable in the US and if you are a resident in India in accordance with Article 4 of the Double Taxation Avoidance Agreement between India and the US, you may claim credit in India in respect of the tax paid in the US.

You may also note that the credit cannot exceed the tax payable in India on such doubly taxed income.

I am 47 years old and was diagnosed with cancer in June 2008. I underwent surgery in a private nursing home near my residence and am undergoing chemotherapy in another private nursing home.

I am a resident individual and a regular tax assessee. I have not received any reimbursement from my employer for the surgery or the chemotherapy nor have I received any sums under any Mediclaim. Some of the payments to the nursing home and chemist have been in cash as they do not accept cheques.

I understand that to claim deduction u/s 80DDB, I need to submit Form 10-I. I would like to know if the payments in cash will also be eligible for deduction.

I would also like to know if I need to attach any supporting bills with my return to be eligible for the claim or if Form 10-I would suffice? As mentioned earlier, I have undergone the surgery and the chemotherapy only in private nursing homes and that being so I would like to know whether the expenditure will qualify for deduction. — Ahilya Raman

Section 80DDB allows a deduction to a resident individual if he incurs expenditure on medical treatment of a disease or an ailment specified by the board if the treatment is for himself or a dependent.

The deduction will be the amount incurred or Rs 40,000, whichever is less (Rs 60,000 if the patient is a senior citizen). For claiming this deduction, the assessee must furnish a certificate in the prescribed form from a specialist working in a Government hospital.

Rule 11DD further prescribes that when no specialist has been specified for diseases and ailments or where the specialist specified is not posted in the Government hospital where the patient is receiving treatment, such certificate, with prior approval of the head of the hospital, may be issued by another specialist working full time in that hospital and having a postgraduate degree in general or internal medicine which is recognised by the Medical Council of India.

The diseases and ailments for deduction u/s 80DDB in Rule 11DD are neurological diseases where the disability level has been certified to be of 40% and above, dementia, dystonia musculorum deformans, motor neuron disease, ataxia, chorea, hemiballismus, aphasia, Parkinsons Disease, malignant cancers, full-blown AIDS, chronic renal failure, hematological disorders, hemohilia, thalassaemia.

If the cancer that has been detected in your case is malignant, deduction will be available u/s 80DDB provided the prescribed Form 10-I is filed along with the return of income.

The prescribed certificate can also be obtained from a specialist working (provided such specialist is not specified or is not posted in the Government hospital) full time in the private nursing home.

The fact that the surgery and treatment are in a private hospital will not debar you from making a claim for deduction u/s 80DDB.

Section 80DDB allows a deduction subject to the limits stated above but cannot exceed the amount of expenditure incurred.

Therefore, the onus of proving the quantum of expenditure will lie on you in the event of being called upon to prove the same though no bills need to be attached along with the return of income.

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