The Hindu Business Line : Tax benefit for repayment of joint housing loan For the Asking

I and my husband have got a housing loan in our joint names. The first installment of the loan was released in January 2007 upon successful laying of foundation. Can we claim tax benefit for repayment of loan during the three months, namely, January, February and March 2007? Can we claim in the ratio of 50:50 or turn by turn?

G. Chitra, Thanjavur

Since the construction is still under way, I am afraid you may have to wait till its completion to claim the tax benefits though you can accumulate the interest paid during the construction period for one-fifth write off each year for five years following the completion. If you are joint owners, anyone who pays the instalment of principal becomes entitled to the deduction under Section 80C. Accordingly, you can tailor your repayments to suit your and your husband’s financial and tax needs.

Tax benefit on home loan

A plot is registered in my father’s name. We want to construct a house thereon by taking a loan. What should I do to get the tax benefit? My father is an agriculturist and I am a salaried person.

Mallika Arjun Mudda, email

You must be at least a co-owner of the house. Since he presumably does not have any taxable income, he can if he so wishes get the house registered in your name in which case you will get all the tax benefits. Your father would not resent this because they have no use for him.

Special business

What is a special business under the company law?

N. R. K. Marimuthu, email

At an annual general meeting, all the four items of business usually transacted, namely, appointment of auditors, appointment of directors in place of those retiring at the AGM, consideration of accounts and approving proposed dividend are items of ordinary business.

All other items are special business. At an Extraordinary General Meeting (EGM) all businesses are deemed to be special.

For special businesses, explanatory statements need to be given, including the interest if any of any director in such business.

Cash payments

Have the amendments to Section 40A (3) improved things?

Mridula Mirchandani, New Delhi

Two amendments have been made to this section in recent times in quick succession. First, the law on routing the payments through banking channels has been tightened — a mere crossed cheque or demand draft would not do; in addition the words ‘account payee’ should be inserted between the cross lines.

Second, if payment is made otherwise than in the manner prescribed by the section, the consequence would not be a mere 20 per cent disallowance but complete disallowance. Sensible as these twin amendments are, Parliament has not plugged the major loophole — latitude up to Rs 20,000.

So long as this latitude is available, cash payments aggregating to crores of rupees would go on unabated or unhindered through the simple expedient of multiple billing and multiple payments to ensure that each bill or each payment steers clear of the upper limit of Rs 20,000.

S. MURLIDHARAN

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

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