The Hindu Business Line : Instalments that make the grade

I purchased a DDA SFS flat in Delhi on leasehold basis on power of attorney (POA) a year ago. I am now paying the monthly instalments to DDA, which will continue for the next 10 years, after which DDA will execute the conveyance deed. The instalments as well as ground rent are being deposited in the name of seller/original allottee. As per the income-tax law, property purchased on POA is treated as purchase and the purchaser is deemed to be the owner, and he can claim deduction on the interest paid on instalments. Please confirm whether in this case, I can, as the owner of house, claim deduction of interest paid which is included in instalments paid to DDA. If I can, will it be on payment basis or accrual as the only evidence that I can give is the payment receipt which too is in the name of seller/first allottee and which does not mention any bifurcation of detail of amount paid as interest and principal unlike in case of banks who give a certificate of same. DDA has only specified the same in their brochure, which is available?

Manish, New Delhi

I think what you have paid are the instalments. Instalments make the grade under Section 80C. For claiming interest under Section 24, you must have acquired the house with borrowed capital. Admittedly, you have not borrowed anything from the DDA.

Subsidised transport

Our company provides subsidised transport to employees between the place of work and their residence. The company recovers Rs 525 from the employees towards the facility provided. Can we allow the exemption of Rs 525 under Section 10(14) while calculating the tax liability?

Vikrant, email

I don't think so because the employees are not receiving any transport allowance. In any case, Rs 525 is what is being recovered from the staff, which by no stretch of imagination can be equated with a transport allowance.

Gratuity addition

I worked with a company for three years in one spell, left it for one year and rejoined two years ago. Will my gratuity be added up?

Capt Prabhat Subudhi

This column does not deal with labour law matters. However, the answer to your question is in the negative. The first three-year spell would not have got you any gratuity, as the minimum period of continuous service required is five years. Therefore, you will have to build your five-year base afresh after rejoining the company.

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

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S. Murlidharan

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