Query corner: Tax

Our expert helps you Understand the Complexities of Tax In This Weekly Column. Email to etquerytax
@indiatimes.com

Is every payment to a shareholder a deemed dividend? How is it calculated?
Varun Juneja

No, not every payment to a shareholder is considered as deemed dividend Under Section 2(22) of the Income-Tax Act, 1961. For example, payments made to a shareholder towards goods or services sold by him to the company would not be considered as dividend. In general, distribution by a company of its accumulated profits to its shareholders in certain forms [refer section 2(22) (a) to (d) of the I-T Act, 1961] is considered as dividend. Further, advances or loans made to certain shareholders (i.e. those holding 10% or more voting power in the company) are deemed to be dividend to the extent company possesses accumulated profits.

My son and I sold our respective (two separate) houses in Ahmedabad and invested the aggregate sale proceeds (of both houses) plus a loan of Rs 30 lakh from my husband’s HUF in an under-construction flat in Mumbai in our joint names. Can my son and I claim full exemption for our respective LTCG U\S 54? Can we also claim interest payable to my husband’s HUF @Rs 1.5 lakh each after possessing the flat?
Prema

You can claim full exemption for your respective long-term capital gains Under Section 54. You are eligible to claim deduction on interest payable on loan taken for purchase of the house. U/S 54, all you are required to do is purchase / construct a residential house within the prescribed period. The residential house can be old or new.

I am a senior citizen. My PPF account matured this year. I wish to know how and till when I can run this HUF PPF a/c with interest on the existing balance standing in this account. Please let me know the revised rules for matured PPF a/c of HUF status.
Girish C Gupta

You have to file Form H if you wish to continue the account for a further period of 5 years. Interest would be payable on the balance amount in the account during such period.

My wife and I jointly took a housing loan in June 2008. My wife is a home-maker and is not paying anything towards the loan. All the instalments are directly transferred from my salary a/c. Is there any way through which I can claim the entire benefit or give an affidavit of my wife surrendering the ownership to my name?Vijay Goyal

You can claim the entire deduction on interest payable on the housing loan interest and on repayment of principal loan amount. You need not obtain any affidavit for surrender of ownership from your wife.
By Vaibhav Sankla, Executive Director, Adroit