Further, I have defaulted on a few installments for which the authority is charging 18 per cent penal interest. The amount has become so large that unless I get a housing loan from a bank, I am unable to pay the sum of Rs 2.5 lakh at one go. But no bank is ready to accept my house as collateral security though I have been living in the house for the last 10 years and paying all the municipal dues in my name

I will be grateful if you would clarify these points for me.
Puja Grover, GHAZIABAD

In my opinion, since the house does not belong to you, you are not eligible for any concessions on the housing loan. Then again, no financial institution would have the courage to give you a loan on a third party house. The Transfer of Property Act is different from the ITA.

The Power of Attorney (PoA) system allows one to bypass the Stamp Act, but I strongly feel that it is not worthwhile to avoid the stamp duty. I really wonder why the PoA system is so popular and that too only in Delhi. Is it the difference between leasehold and freehold that causes the problem? If that is indeed the case, why are the authorities standing by, watching the fun?

Imagine that I have purchased units of pure income funds such as UTI's MIP and the `Income' schemes of MFs at a face value of Rs 10 and have then sold them two or three years later, also for Rs 10. Can I avail of indexation and show a capital loss? The dividends received from time to time will be treated as income for the year in the normal course and are tax-free. I pose this question as apparently, investments made under ELSS schemes have not been allowed for indexation by some authorities. Even some of the well-known funds have not been able to give me a clear reply on the indexability of income schemes. Kindly clarify the matter for me.
Parmeshwar Nilkant, MUMBAI

I request you to read page 77 of the latest edition of my book, The Wonderland of Investment. You will find the following paragraph:

As per its definition, when a `financial asset' is `transferred', the surplus or deficit is treated as a capital gain or loss. Regular income paying avenues like bank deposits, NSCs, Co-FDs, etc., posed no problem since at their maturity, there was no surplus or deficit. Now, with the introduction of indexed cost, if I am allowed to go strictly by the letter of the law, I can claim substantial long-term capital loss even on such instruments! This is illogical.

Now, as regards ELSS, the following para:

While introducing the radical changes in the structure of tax on long-term gains, the authors of FA92 appear to have forgotten to make a corresponding change in Section 45(6), dealing with units issued u/s 80CCB. This continues to state: "The difference between the repurchase price of the units and the capital value of such units shall be deemed to be the capital gains arising to the assessee." I thought this was an error of omission. It cannot be the intention of the legislation to deny indexation only to this particular financial asset. However, it appears that the authorities are taking mean advantage of the lapse and sticking to it as law. The present situation is that indexation is not allowed only for ELSSs launched in FY 1990-91 and 1991-92. All subsequent ELSSs attract indexation.

Incidentally, the example that you have cited assumes the purchase and sale NAVs to be identical. If the sale NAV is less than the purchase NAV, you are still allowed indexation. I have strived to include each and every aspect related to small investors in my book. However, it does require careful reading. Thank you very much for your attempt to raise this quality. I welcome all such suggestions from readers.