Secondly, I want to get the latest information about modifications that take place in income-tax laws. Can you give me the telephone numbers and address of the place/person from whom I can get regular circulars related to taxation?

-Vivek Sang, RISHIKESH

You should use the withdrawn money for your day-to-day expenses and contribute to Section 88 from your income chargeable to tax. Unreasonable legislative provisions can thus be got around with reasonable measures.

You may subscribe to the Tax & Corporate Referencer (TCR). Address your subscription correspondence to Bharat Law House Pvt. Ltd, 222, Tarun Enclave, Pitampura, New Delhi-110 034; Tel: (011) 701 6884, 702 5884; Fax: (011) 701 2323.

Once I open an NRE account and give my father the mandate to operate it, can he withdraw money from my account and use it for his own business? Is there any limit to the money he can withdraw from my NRE savings account? Does he have to pay tax on the money he withdraws from my account? Please explain the tax that must be levied for an NRE savings account holder?

-Sandeep Narang, CALIFORNIA

Yes, if you give your father a Power of Attorney or a letter of authority, he can do so, but it is not advisable. The amounts withdrawn by him can be either a tax-free gift or income that is taxable. Ideally, there should be an express understanding between the two of you that this is a gift.

I purchased a plot for Rs 3 lakh in the month of September 1999. Though the plot papers have been transferred in my name, it is due for registration only in April 2000. Kindly guide me on whether I should disclose the property in the financial year ending in 2000 or do so only after the registration is done. Secondly, can tax exemption be avoided on loans taken from relatives?

-Anurag Yadav, anurag-yadav@yahoo.com

In most cases, it is the date of transfer, and in some other cases, the date of registration that is taken as the date of acquisition of the property.

However, strictly speaking, it is the date of possession of the property that matters. It is found that many assessees occupy the premises awaiting transfer and registration. This may take quite a long time, possibly in connivance with the builder or the seller. This is the reason why many of the courts have taken this view.

I entered into two separate agreements with a promoter about 3-4 years ago. One for the purchase of a proportionate land share, the other pertaining to the development agreement for the flat construction. Now the building is complete and the final payment is due. While some people are staying in the building, I want to dispose off the flat. What is my tax liability?

-Kedar Singh, CALCUTTA

You have sold your land and acquired a housing property. If you are eligible for exemption u/s 54F and, moreover, if you have taken possession of the flat within three years of the sale of the land, then you are entitled to claim exemption on longterm capital gains. The fact that one installment is still pending is immaterial. However, if you sell the property without taking possession of the house, you will have to pay tax on the longterm capital gains arising out of the land sale.

If the land was sold over three years ago-this is an important criterion which you have not stated clearly-and if you sell the house without taking possession, you will have earned a longterm capital gain. However, if the building is ready and you sell the flat immediately after taking possession, short-term capital gains will be applicable. Here, you will not be selling the right of possession, but the residential flat itself. The new asset has to be held again for three years more to get the status of a longterm capital asset!

(The author may be contacted at anshanbhag@yahoo.com.)