The Hindu Business Line : Plump for the presumptive tax

The tax laws provide for certain kind of taxpayers, such as building contractors and transport operators, to show a stipulated percentage of turnover/gross receipts as taxable income and pay tax on the same in case they don't maintain proper books of accounts. Whereas under yet another provision, a taxpayer is required to maintain proper books of accounts. Assuming a building contractor opts for the first route and files his tax returns on this premise, can he still be proceeded against by tax authorities for not maintaining proper books of accounts?

R. M. Subramaniam, Chennai

The relevant Sections governing the respective presumptive taxation schemes adumbrated by you concede that neither the requirement to maintain books nor the tax audit requirement applies to those who choose to be governed by, and are eligible for, the presumptive taxation scheme.

It is only when they assert that the profit margin posited by the presumptive tax scheme is higher than what they have actually earned that they are obliged to maintain books and get their accounts audited.

Therefore, there is no question of any penalty when books are not maintained on the ground that the assessee has opted for the presumptive taxation scheme that he is entitled to. I would like to add that the presumptive tax schemes could be opted for if otherwise eligible even if proper accounts are maintained.

Form 12C

I want to submit Form 12C to my company giving details of income from house and property. I have two flats — one is self-occupied for which interest paid during FY06-07 is Rs 78,000.

The possession of the second flat was given on December 30, 2006. Interest for second flat is Rs 3.5 lakh for FY 06-07. No pre-EMI interest has been paid. Repayment of loan for second flat started with effect from April 1, 2006. I want to show notional rent for three months — January to March 2007 — for the second flat. Thus, in Form 12C, the total loss of income from house property will be aggregate of loss of both flats. The amount is roughly Rs 4 lakh. My company's accounts department informs me that through the employer I can claim a maximum of Rs 1.5 lakh as loss from house property and that I can claim the balance Rs 2.5 lakh only by filing my IT return. Please let me know if my company is right in restricting the amount of loss to Rs 1.5 lakh.

Sanjay, email

Form 12C is no longer in vogue. One can declare one's `other incomes', including negative income from house property, on a plain paper followed by a declaration that what is stated hereinabove is true to best of one's information and belief. Of course, this is a mere technicality and you have not harmed yourself by using a form that is no longer in vogue.

What is shocking is your employer's refusal to consider loss in excess of Rs 1.5 lakh from house property. He is obliged by Section 192(2B) read with Rule 26B to consider the entire loss. It is another matter that this requirement is a positive burden on him. But then that is no ground to ignore the mandate of law as it is whether one likes it or not.

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S. Murlidharan

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