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Joint problems!

MYSELF and my wife bought a house in our joints names. The acquisition of the house was partially financed out of loan taken by my wife from her employer. She has quit her job. If I take a fresh loan in my name, will I get the tax rebate under Section 88 ?

S. Sudarshanam, Chennai

You may by all means pay off the outstanding loan of your wife that she owes to her erstwhile employer from your bank account. The fresh loan taken by you from one of the seven sources specified in Section 88(xv)(c), which includes, among other, banks, h ousing financial institutions and one's own employer if he is a public company, would entitle you to claim the tax rebate from the previous year in which you start repaying the principal in respect of this loan. You are not required to inform the income- tax office of the factum of substitution of the old loan by the new loan.

You are entitled to tax rebate by virtue of being a co-owner of the house property which would have been assessable to tax under the head `income from house property' but for the fact that it is under self-occupation.

Suspent cos

I AM holding shares of at least 10 companies which have never sent any annual report to me much less paid dividend for the last so many years. The shares of these companies are not quoted though they got their listing at the time of the IPO. I suspect wh ether these companies exist at all. Please advise me and others who are in a similar predicament as to the agency we should approach for getting redress.

M. Sundarrajan, Chennai

The Department of Company Affairs (DCA) had issued a press note on July 2, 2001, in this regard. It has classified companies into four categories: a) banking companies; b) non-banking financial companies; c) non-banking non-financial companies (listed); and d) non-banking non-financial companies (unlisted). It says that complaints relating to the first two are looked into by the RBI. The third category with which investors like you are concerned is dealt with by the Securities and Exchange Board of Indi a (SEBI). Complaints relating to the last category are looked into by the DCA.

If a company against which one has a grievance is under liquidation, complaint must be made to the official liquidator attached to the High Court in which the registered office of the company is situated. In case of the last category, the DCA has been fo llowing the salutary practice of acknowledging each complaint with a complaint number, and the current status of the complaint is also displayed at www.nic.in/dca. I am sure SEBI must be as progressive as the DCA in this regard. You may lodge your compla ints with the appropriate agency. You would kindly appreciate that e-mail address is person-specific. When you lodge a complaint with a given agency, you may simultaneously request it to give you the e-mail address of the official concerned along with th e acknowledgement of your complaint.

Allowances galore

I AM a Development Officer with the LIC of India. Among other things, my salary includes additional conveyance allowance and incentive bonus. Is additional conveyance allowance eligible for any exemption under Section 10(14)? Is incentive bonus eligible for any soft tax treatment?

Dada Khalander, e-mail

Additional conveyance allowance, which you fully spend in performance of your duties as Development Officer, is exempt from tax if the following two conditions are fulfilled:

* it is granted to you on the condition that you use the allowance to meet conveyance expenses wholly, necessarily and exclusively incurred in the performance of the duties of your employment; and

* under Rule 2BB made under Section 10(14), among other things, ``any allowance granted to meet the expenditure incurred on conveyance in performance of duties of an office or employment of profit'' is exempt from tax provided the employer has not provid ed you with a free conveyance. You must therefore not have been provided with a free conveyance by the LIC.

It hardly matters whether the allowance is called conveyance allowance or additional conveyance allowance so long as the above two conditions are satisfied. But one is indeed curious to know why the description of the allowance under discussion is prefix ed with the term `additional'. Presumably, you are also given 'conveyance allowance' for commuting between residence and office which in tax lingo is known as `transport allowance', which enjoys tax exemption up to Rs 800 per month.

Incentive bonus does not beget any special tax treatment or concession.

VRS relief

RECENTLY, a number of nationalised banks offered voluntary retirement schemes to their employees. I would like to know whether the compensation received under the scheme is eligible for relief under Section 89. Suppose an employee has been relieved durin g June 2001 under such scheme. Can he file his income-tax return for the period April 2000-June 2001 comprising a period of 15 months and claim the benefit under Section 89 by submitting the required particulars in Form 10E to his employer/former employe r instead of waiting to file his return for the assessment year (AY) 2002-2003?

P. Kumar, e-mail

If an employee was granted the voluntary retirement compensation in June 2001, it will be included in his salary income for the previous year 2001-2002 relevant to the AY 2002-2003. The Income-tax Act, 1961 as it stands, does not provide for a previous y ear that is longer than 12 months. There is, therefore, no way the employee can include the taxable portion of the VRS compensation as the income of the previous year 2000-2001 in these circumstances. And in any case, what is the tearing hurry for? Assum ing the law allowed such longer previous year, that would be detrimental to the taxpayer assuming the income in future is less than what it was while in employment.

Yes, an employee getting VRS can apply to his employer in Form 10E requesting him to give him relief under Section 89 read with rule 21A(4).

S. Murlidharan

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