The Hindu Business Line : Claiming tax paid on bonus returned

I joined a company in February 2006 and I got some joining bonus (that is, Rs 1.5 lakh minus tax on it). I left that company in April 2006 and, as per the agreement, I had to return the entire joining bonus, which was Rs 1.5 lakh. I forgot to claim the tax I paid on bonus in the tax return I filed in July 2006. I am wondering if I can file a revised return to claim the amount deducted on joining bonus? If so, what is the procedure? Please guide me.

Abdul Qabiz, email

It is a pity that you have to pay tax on the amount you received and returned post-haste. That of course is the law, which does not allow any rebate or abatement for such forfeiture of joining bonus. A revised return can be filed within a year of the end of the assessment year, which means you can do so by March 31, 2008. You can show therein the fact of payment of tax on such bonus, but you should be able to produce the certificate to this effect from the employer with whom you had but a fleeting relationship.

Registration of flat

I had booked a flat sometime in March 2005. An agreement was made with the vendor that the amount may be paid in instalments within three years from the date of execution of the unregistered agreement for the sale of the flat.

However, by selling my old flat I had paid the vendor almost the entire amount within six months from the date of the agreement. Now the vendor does not want to register stating that if he registers it within three years from the date the flat was handed over to him by the promoter of the building by demolition of his old ancestral building, he will have to pay capital gains tax.

Kindly let me know whether the contentions of the vendor are right. If yes, what precaution can I take to safeguard my interest on the property. However the possession of the property was handed over to me in March 2005 itself.

Golam Safdar Ali, email

Section 53A of the Transfer of Property Act has been adopted by Section 2(47) of the Income-Tax Act while defining the term `transfer'. Section 53A deals with the concept of `power of attorney' and the income-tax law says transfer sans registration is enough for tax purposes provided the conditions spelt out in Section 53A, which are as follows, are satisfied:

First, there should be a contract in writing. Second, the transferee has paid or has agreed to pay the consideration in terms of the contract. And, third, the transferee must have obtained possession of the property.

To my mind, it appears the transaction you have described squarely falls within the purview of Section 53A of the Transfer of Property Act.

The vendor is under the mistaken impression that the capital gains tax is attracted only when registration sanctifies the transfer whereas the income-tax law discards this legal formality in order to get over attempts at tax evasion by the simple expedient of entering into power-of-attorney transactions without going for registration. What perhaps bothers the vendor is, he committed the indiscretion of signing the agreement with you while the property was a short-term asset, capital gains from which does not enjoy any tax incentive by way of tax shelter under Section 54 or 54EC or the benefit of cost inflation index.

Quoting PAN

As per Section 139A, it seems only the taxpayer (assessee) is under obligation to quote (intimate) his/her PAN in all his returns, correspondences with the I-T department. A plain reading of Section 139A gives an impression that the tax officials are under no similar obligation to quote the taxpayer's PAN, though they do it many cases, in their orders or any other correspondences with the taxpayer (assessee). Is my understanding correct?

R.M. Subramaniam, Chennai

Though no express obligation has been cast on the department, I believe it is a two-way street and the department would also invariably start quoting the number when it is fully computerised with assessees identifiable only through a unique number which doubtless would be his PAN.

(ASK! Send in your queries to ask@thehindu.co.in.)

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S. Murlidharan

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