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Wednesday, September 10, 2014

Mumbai faces an oversupply of properties worth Rs 2 crore and above

Mumbai faces an oversupply of properties worth Rs 2 crore and above

Mumbai

Localities along the harbour line and in central and south Mumbai, are facing an oversupply of properties in the Rs 2 crore and above category, as per the latest PropIndex data (April-June 2014) by Magicbricks.com. While the central and south Mumbai zone registered 15-17 per cent oversupply, harbour line saw an oversupply of approximately 25 per cent in the April-June 2014 quarter.

According to real estate agents, one of the reasons behind the oversupply is the economic slowdown the city is currently facing. “Homebuyers are holding back money in the expectation of a price correction which has led to a halt in the inflow,“ says Santosh Arte of Search Enterprises, a broker firm. “Developers who used to sell 10-12 units a month earlier have been selling just 3-4 units for the past few months,“ adds Arte. “During the monsoon, the realty market of the city generally takes a back seat. This has added to the woes of developers and owners of properties,“ adds Rajesh Butani, owner of Rajesh Property Consultants, a broker firm active between Andheri and Bandra.

“Most of the localities in Mumbai are end-user driven. Investors look towards Navi Mumai and Thane where the profit margin is high while the initial investment remains less,“ says Butani.“When it comes to end-users, they take a lot of time before finalising a deal especially when such a huge amount is involved and hence the conversion rate remains low,“ says Arte.

According to Butani, buyers in this segment include businessmen, jewellers, doctors, people working in stock market, CEOs, CMDs and other professionals working at top managerial levels. “Though the developers are faced with unsold inventory and bargaining prospects are more at present, it is hard to imagine that they will slash prices further as their profit margin will decrease,“ says Butani.

Source: Times Property, Mumbai/MagicBricks.com Bureau

Properties under Hindu Undivided Family (HUF)

Properties under Hindu Undivided Family (HUF)


vimal punmiya





By CA Vimal Punmiya
  1. INTRODUCTION :
  1. The Hindu Undivided Family (HUF) is a special feature of Hindu society. Hindu Undivided Family is defined as consisting of a common ancestor and all his lineal male descendants together with their wives and daughters. Therefore a Hindu Undivided Family consists of males and females. Daughters born in the family are coparcener and women married into the family are equally members of the undivided family. On the other hand at any given point of time a coparcenary is limited to only members in the four degrees of the common male ancestor and daughter.
  2. Hindu: In this term are included all the persons who are Hindus by religion. Section 2 of the Hindu Succession Act, 1956, elaborately declares that it applies to any person, who is a Hindu by religion in any of its forms or developments, including a Virashaiva, a Lingayat or a follower of Brahmo, Prathana or Arya Samaj, a Buddist,  Jain or Sikh. In CWT. Smt. Champa Kumari Singh (1972) 83 ITR 720, the Supreme Court held that the HUF includes Jain Undivided Family.
  3. Hindu Undivided Family (HUF) is a legal expression which has been employed in taxation laws as a separate taxable entity. It is the same thing as “Joint Hindu Family”. It has not been defined under the Income Tax Act, as it has a well defined connotation under Hindu Law.
  4. A Hindu Undivided Family (HUF) is a separate entity for taxation under the provisions of sec. 2(31) of the Income Tax Act, 1961. This is in addition to an individual  as a separate taxable entity , it means that the same person can be assessed in two different capacities viz. as an individual and as Karta of his HUF.

  1. HOW HUF COMES INTO EXISTENCE :
A Hindu male with his wife and children automatically constitutes the HUF. The HUF is a creature of Hindu Law. It cannot be created by acts of any party save in so far as by adoption or marriage, a stranger may be affiliated as a member thereof.  An Undivided Family which is a normal condition of the Hindu society is ordinarily joint not only in estate but in food and worship. The joint family being the result of birth, possession of joint property is only an adjunct of the Joint Family and is not necessary for its constitution.

  1. BASIC REQUIREMENTS FOR THE EXISTENCE OF AN HUF ARE AS FOLLOWS :
(i)           Only one co-parcener or member cannot form an HUF
Family is a group of people related by blood or marriage. A single person, male or female, does not constitute a family.
The Hon’ble Supereme Court held in C. Krishna Prashad V/s CIT (1974) 97 ITR 493 (SC) that the word “Family” always signifies a group. Plurality of persons is an essential attribute of a Family. A Single person, male or female, doesn’t constitute a family.
However the property held by a single co-parcener does not lose its character of Joint Family property solely for the reason that there is no other male or female member at a particular point of time. Once the co-parcener marries, an HUF comes into existence as he alongwith his wife constitutes a Joint Hindu Family as held in the case of  Prem Kumar v. CIT , 121 ITR 347 (All.)
(ii)          Joint Family continues even in the hands of females after the death of sole male member :
Even after the death of the sole male member so long as the original property of the Joint Family remains in the hands of the widows of the members of the family and the same is not divided amongst them; the Joint Hindu Family continues to exist. CIT v. Veerapa Chettiar, 76 ITR 467(SC)
(iii)        An HUF need not consist of two male members- even one male member is enough :
The plea that there must be at least two male members to form an HUF as a taxable entity, has no force. – Gauli Buddanna v. CIT, 60 ITR 347 (SC); C. Krishna Prasad v. CIT 97 ITR 493 (SC) and Surjit Lal Chhabda v. CIT, 101 ITR 776 (SC)
A father and his unmarried daughters can also form an HUF, CIT v. Harshavadan Mangladas, 194  ITR 136 (Guj.)
Further on partition of an HUF a family consisting of a co-parcener and female members is to be assessed in the status of an HUF.
  1. NUCLEUS OF HUF :
It is many times argued that existence of nucleus or joint family property is necessary to recognize the claim of HUF status in respect of any property or income of an HUF. It has been established now that since the HUF is a creature of Hindu Law, it can exist even without any nucleus or ancestral joint family property.

  1. MANAGER OF HUF OR KARTA :
The person who manages the affairs of the family is known as Karta. Normally the senior most male member of the family acts as Karta. However a junior male member can also act as Karta with the consent of the other member. Narendrakumar J. Modi v. Seth Govindram Sugar Mills 57 ITR 510 (SC).
A Wife cannot become KARTA in normal circumstances. However, in Sushila Devi Rampuria V/s ITO (1960) 38 ITR 316 (Cal), it was held that if Co-parceners are incapable, wife can act as KARTA.
Besides the same person can be taxed as both individual and Karta of an HUF. The individual and the HUF are two different units of taxation i.e. two different assesses CIT v. Rameshwarlal Sanwarmal 82 ITR 628 (SC).

  1. JOINT FAMILY PROPERTY :
The following types of properties are generally accepted as joint family property:
(i)           Ancestral property;
(ii)          Property allotted on partition;
(iii)        Property acquired with the aid of joint family property;
(iv)         Separate property of a co-parcener blended with or thrown into a common family hotchpot. The provisions of sec. 64 (2) of the Income Tax Act, 1961 have superseded the principles of Hindu Law, in a case where a co-parcener impresses his property with the character of joint family property.

A female member cannot blend her separate property with joint family property but she can make a gift of it to the HUF. Pushpadevi v. CIT 109 ITR 730 (SC). A female member can also bequeath her property to the HUF, CIT v. G.D. Mukim, 118 ITR 930 ( P & H ).

  1. G.   BRANCHES OF HUF :
An HUF can have several branches or sub-branches. For example, if a person has his wife and sons, they constitute an HUF. If the sons have wives and children, they also constitute smaller HUFs. If the grandsons also have wives and children, then even they will also constitute still smaller or sub-branch HUFs. As stated above, the HUF is a creature of Hindu Law and these entities are HUFs alongwith the bigger HUF of the father or the grandfather. It is immaterial whether these smaller HUFs possess any property or not. Property can be acquired by any mode; by partition of bigger HUF or by gifts from any member of the family or even by a stranger or by will with unequivocal intention of the donor or the testator that the said gift or bequest will form the joint family property of the donee or the testate or Re-union of HUF.

An HUF can be composed of a large number of branch families, each of the branch itself being an HUF and so also the sub-branches of more branches. CIT v. M.M.Khanna 49 ITR 232 (Bom).

  1. H.   RIGHT OF MEMBERS :
HUF is not a natural body. It does not have physical existence as such. It is composed of members. Those members are classified in two categories, viz (i) Coparceners, and (ii) Non-Coparceners.
Coparcener means a member who has a right to demand partition. Non-Coparcener means a member who doesn’t have a right to demand partition. AS per Current scenario RIGHT TO DEMAND PARTITION is vested in male member and daughter only.
Every Co-parcener is Member, but every Member is not Co-parcener. Rights of Members are-

Supreme Court said NRI landlord needn't prove title to evict tenant

Supreme Court said NRI landlord needn’t prove title to evict tenant


NRI landlord needn’t prove title to evict tenant





By Accommodation Times News Service
Over ruling the High Court order Supreme Court has said that non- resident Indians (NRIs) cannot be asked to prove the ownership of their property to get their tenants evict.
“If ordinarily a landlord cannot be asked to prove his title before getting his tenant evicted on any one of the grounds stipulated for such eviction, we see no reason why he should be asked to do so only because he happens to be an NRI,” a Supreme Court bench said.
Section 13-B is a beneficial provision intended to provide a speedy remedy to NRIs who return to their native places and need property let out by them for their own requirement or the requirement of those who are living with and economically dependent upon them. Their position cannot, therefore, be worse off than what it would have been if they were not NRIs,“ it said.
Justices TS Thakur and C Nagappan said that the law entitles an NRI who returns to India to demand eviction of any residential or non-residential building let out by him, if it is required for his use or his dependant. However, the right to seek the tenant’s eviction is available only after five years from the date of such NRI becoming owner of any building.
This is also subject to the condition that any such right shall be avail able to an NRI owner of the premises only once during his life time.
“The courts be low fell in manifest error in holding that the appellant landlord was obliged to prove his title to the property, no matter the ten ant clearly admits existence of relationship of landlord and tenant between him and the appellant (NRI). We have…no hesitation in reversing the view taken by the courts below and in decreeing the eviction petition, “the bench said in its order.

WILL WE START BUYING HOMES ONLINE?

WILL WE START BUYING HOMES ONLINE?
Payal Momaya Tpmfeedback


Considering the increased internet penetration in the country, now is the right time to evaluate if Indians will ever start buying their homes online
There is an increase in the use of digital platforms by end-users as well as investors, to identify promising localities and projects within the city. Most developers now, use e-marketing to some extent or the other. However, property buyers in India, still have to inspect properties and the related documents first-hand, before being able to make a purchase decision. None of the transactions take place through online portals as most of them continue to remain classified search portals as opposed to full-fledged e-commerce portals.Advitiya Sharma, partner of Housing.com, says, “The Indian real estate sector focuses on converting the offline house hunting process into an online convenience. No steps have been taken to develop the online experience into a complete, self-sufficient process. Numerous websites house lists of documents necessary to procure a home loan or blog posts that outline the method. However, we haven't been able to create a platform that takes the user through the entire process of online transactions in buying a property . There is a huge potential in addressing this gap and consider addressing this tangent of the real estate market.“
However, there are several barriers, pertaining to enabling buying a home online. Sanjay Dutt, executive managing director South Asia, Cushman & Wakefield, says, “Any real estate transaction involves a built product, which is usually not a standardised commodity . Additionally, there are multiple parties including the developer (seller), buyer, lender (bankNBFC) and government authority (registrar), involved in the entire transaction process. The property portal intending to start online transactions with an aim to be a one-stop-shop, has to necessarily liaison with these parties, along with setting up the required back-end technology (for data dissemination) and secure payment.“
According to Ganesh Vasudevan, CEO, IndiaProperty .com, most land and ownership records of a property are not digi tised, which makes the offline leg almost inevitable. “The sector lacks transparency and hence, credibility of most builders and intermediaries is viewed with suspicion. The credibility aspect can be addressed by verifying information put up on the portal including legal aspects. The transparency is little difficult to address, as the offline leg of the purchase process is an important one, given the high involvement nature of the purchase.“
Dutt adds, “Although online transactions will be a boon to today's net-savvy consumers, it will be a tough task to adapt to the real estate sector, considering the necessity of viewing the property andor its location, etc., in person, besides the involvement of multiple parties, large amounts of documentation work (which is not paperless) and managing the complexity of the transaction, considering the opaque nature of this sector. Moreover, real estate purchases are dependent on a number of qualitative factors such as location, neighbourhood profiles, availability of social infrastructure, accessibility, etc., making the transaction complex as compared to simple online transactions such as flight ticket booking or electronic purchases.“
Most portals have introduced many features to eliminate the need to physically evaluate the property, including location, through features like 3D floor plans of individual apartments, last mile video maps of the project, locality liveability ratings, amenities and videos.They also provide complete online assistance to a customer in purchasing a property, including home loan assistance, legal and documentation assistance, among others. A user can easily evaluate the project, locality, financing options and intermediaries involved, in complete detail and also compare several projects to make an informed decision.
Om Ahuja, CEO residential services, JLL India, opines, “India is still a long way off from the day when properties can be sold and bought online in the manner seen in more developed countries. The high incidence of flawed or incomplete titles is a real and present fact of life. Despite the fact that this practice is being increasingly curbed by more stringent regulations, many people in India, still see property purchase as a means to get rid of undeclared funds.This is still a widespread practice in smaller towns and cities. In countries like the UK and Singapore, there are high levels of transparency and properties in the market are fully documented.“
Arvind Jain, managing director, Pride Group, agrees, “In more advanced countries, properties can be bought and sold like many other assets because all the necessary details are available to the buyers. This is one of the main reasons why the practice of 'flipping' properties is workable in those countries. In India, every property must be thoroughly titlesearched before it becomes marketable.Digitisation of land and property records is still in its infancy here and a large part of the market remains unorganised. In the resale market, issues like multiple owners, non-registration of properties and even lack of approvals and clearances by competent authorities, are still rampant. The authorities are working on removing these lacunae and perhaps, transacting properties online, will become a possibility in the coming decades. However, until that point, property sites and portals will not serve a greater purpose than giving an overview of some of the options available.“
However, as Kishor Pate, CMD, Amit Enterprises Housing Ltd, says, “Buying a home is still a very personal matter in India and it cannot be entirely de-personalised. Buyers as well as lending institutions, dealing with home loans, have to confirm various different aspects of the project and the individual units. As such, developers can market their properties online but actually selling them by such means, is not viable, as of now.“
Anil Pharande, chairman, Pharande Spaces, says, “India is nowhere near the time when real estate can be transacted solely online as the realty market is still too unorganised.“
Initiatives like a universal standard of property measurement (which is in the pipeline), can prove to be a move in the right direction to not just tackle the problem of low investor confidence by creating a level playing field for the way property is measured, valued and ultimately reported in financial statements but will also encourage people to make transactions online.
[FAST FACT] THE CREDIBILITY ASPECT CAN BE ADDRESSED BY VERIFYING INFORMATION PUT UP ON THE PORTAL INCLUDING LEGAL ASPECTS
QUICK BYTE BUYING A HOME IS STILL A VERY PERSONAL MATTER IN INDIA AND IT CANNOT BE ENTIRELY DE PERSONALISED.
BUYERS AS WELL AS LENDING INSTITUTIONS DEALING WITH HOME LOANS, HAVE TO CONFIRM DIFFERENT ASPECTS OF THE PROJECT AND THE INDIVIDUAL UNITS. AS SUCH, DEVELOPERS CAN MARKET THEIR PROPERTIES ONLINE BUT ACTUALLY SELLING THEM BY SUCH MEANS, IS NOT VIABLE AS OF NOW.

HIDDEN CHARGES: READ BETWEEN THE LINES

 HIDDEN CHARGES: READ BETWEEN THE LINES
Anurag Jhanwar Tpmfeedback


While buying a property, the buyer should look into the hidden costs and not go by the advertised price alone, to arrive at a more accurate costing of his dream home
Ashok Verma, a government employee from Mumbai, had been searching for a home for a few months. He is already 55 and needs to shift from his government quarters immediately after retirement. Verma looked through online property portals and shortlisted one property on the outskirts of the city, which had rates within his budget and a down payment that he could manage.As per his initial calculations, for a 700 sq ft super-built up area at Rs 6,500 per sq ft, the amount came to Rs 50 lakh, including stamp duty and registration. Next, he visited the property site and was very happy with everything he saw from the social infrastructure to amenities and specifications of the site. However, when he actually met the marketing representative on site for final discussions, he found the price had increased to Rs 7,000 per sq ft due to floor rise, legal charges, maintenance, sinking fund, etc. The total price increased by Rs 5 lakh, causing an increase in the down payment and leading to a considerable stretch in Verma's budget.
The above is the case with most aspiring property buyers across India. What you actually need to pay is significantly higher than the multiplication of the 'per sq ft' rate and the total area. This is because all developers advertise the base price in large print, with the word 'onwards' following it in small print. This term 'onwards' includes costs such as floor rise, PLC, registration cost, etc., that go unaccounted for in original calculations, but get reflected in the final payment schedule. The additional costs also vary from builder to builder and according to the facilities that the house is equipped with.
Following are the additional costs that you need to budget for when you plan to purchase your dream home.
>> STAMP DUTY AND REGISTRATION COSTS
Stamp duty is the tax paid on the market value of the house, while the registration gives you legal rights to the property . Stamp duty charges are mandatory as per the government of India and are levied as a percentage of the property value. It is different for different locations.
>> SERVICE TAX AND VAT
An under-construction property attracts service tax and VAT. The current service tax rate is in the range of 3-4 per cent of the property price and is applicable in all states. VAT (Value Added Tax) are charges by the state and vary from state to state.
>> PARKING SPACE
Though the developers are not supposed to charge the parking space provided to customers, most developers charge a handsome amount, which is included in the property cost. Factors like locality, type of property and parking space, are taken into consideration prior to fixing the amount under this head and it varies from Rs 2 lakh-Rs 25 lakh.
>> DEPOSIT FOR MAINTENANCEEXTERNAL DEVELOPMENT CHARGES (EDC)
Many builders take an up-front maintenance deposit which includes the cost of maintaining roads, parks, street lights and other common facilities in the society. The charges for water and electricity back-up are also included in this. Most developers insist on the deposit for maintenance to be paid initially as it provides them with more capital.
>> PREFERENTIAL LOCATION CHARGES (PLC)
These charges are levied by the builder for any preference with regard to your choice of floor, size or alignment. That is, you pay a premium if you want your home to be on a certain floor, or east-facingsea-facing and so on. The PLC varies from city-to-city, based on the climatic conditions and customer preferences.
>> FLOOR-RISE
If a customer wants to have his apartment on a higher floor, he has to pay floorrise charges. The floor-rise charges are applicable after a particular floor and will go on increasing with each additional floor. For example, if a project charges a floor-rise of Rs 25 per sq ft as you go up, the first floor onwards in a 24-storeyed apartment, the floor-rise of first floor is Rs 25 per sq ft while that of the 25th floor, is Rs 550 per sq ft.
>> INFRASTRUCTURE DEVELOPMENT CHARGES (IDC)
Infrastructure development charges are imposed by the government on developers. It is utilised for the development and maintenance of infrastructure around the project.>> UTILITY CHARGES For ultra-luxurious amenities, developers charge upfront for club membership which also accounts for a significant amount. This may also be charged on a yearly or lifetime basis. It is always better to have clear knowledge about the hidden costs while planning your dream home. It saves you from the ugly dilemma of 'to buy or not to buy' once you have set your heart on your desired property .(The writer is director , CRISIL Real Estate Ratings)
[FAST FACT]
THE FLOOR-RISE CHARGES ARE APPLICABLE AFTER A PARTICULAR FLOOR AND WILL GO ON INCREASING WITH EACH ADDITIONAL FLOOR
QUICK BYTE
MANY BUILDERS TAKE AN UP-FRONT MAINTENANCE DEPOSIT WHICH INCLUDES THE COST OF MAINTAINING ROADS, PARKS, STREET LIGHTS AND OTHER COMMON FACILITIES IN THE SOCIETY.

Friday, September 5, 2014

Maharashtra govt to act against landowners flouting Urban Land Ceiling Act

Maharashtra govt to act against landowners flouting Urban Land Ceiling Act


In a landmark judgment, the Bombay high courton September 3 held that developers and landowners cannot escape liability of surrendering their excess land despite the repeal of Urban Land (Ceiling and Regulation) Act in 2007.

The HC empowered the state to recover the excess land for public housing from private landowners for violations under the now defunct Act. Several major builders with land holdings mainly in the eastern suburbs and Thane, are expected to be hit by the order. They may move the Supreme Court.

In a majority verdict, a three-judge bench held that the state is empowered to enforce, even today, a scheme permitted under the 1976 Act so far as schemes under Section 20 are concerned. Under this section of Ulcra, developers could get their lands exempted if they handed over 5% of the flats for public housing. An individual could hold land not more than 500 sqm in size and the rest had to be surrendered for public housing.

Justices S C Dharmadhikari and Girish Kulkarni accepted the arguments of advocate general Darius Khambata that development schemes sanctioned under Section 20 are enforceable even after the Act was repealed in 2007. The HC was deciding the fate and applicability of Section 20, post repeal.

Several builders and the Maharashtra Chamber of Housing Industry (MCHI) moved the HC on the plea that the state cannot take the excess as the law no longer exists. They said they are no longer bound to return excess vacant land or surrender flat to comply with provisions of the schemes under Section 20. Till 2012, the state had acquired only 262 acres of excess vacant land in the city over 30 years, but had granted exemptions for an astounding 1,851 acres of such “excess land”.

Milind Sathe, senior counsel for MCHI and several builders including Kalpataru, had argued that “once Ulcra was repealed there was a closure to the ULC regime”. He said whatever land the state had got by that date was all that it could be entitled to. He argued that if the state’s stand was accepted then it would mean “resurrection of the entire law” which was not the legislative intent when the Centre repealed Ulcra in 2007.

The majority view now is that the state “can cancel the schemes” if builders have violated mandatory conditions. But the third judge, Justice S C Gupte, held that the state can’t implement schemes after the repeal, but can take other actions.

Source: The Times of India, Mumbai

Maharashtra: Aadhaar mandatory for e-registration of real estate

Maharashtra: Aadhaar mandatory for e-registration of real estate

The state is offering online registration for new flat purchases and has made the Aadhaar card mandatory both for the purchaser and the seller under the scheme.

On August 31, revenue minister Balasaheb Thorat will flag off the first e-registration scheme at Mulund. “Till now Marathon Realty for their Panvel project, Dreamcity Developers for their Dahanu project and Ajmera Housing at Wadala have opted for the e-registration scheme,” said Shikar Pardeshi, inspector-general of registration and collection of stamps. The registration of a flat requires preparation of documents by the stamp duty department, authentication by taking a photograph and thumb imprint at theregistration office and then payment. The stamp duty for flat registration is 5% of the cost of the flat and Rs 30,000 is charged as registration fees.

While the scheme is not mandatory, but the fact that flats can be registered with the government on the same day as the purchase may be beneficial to buyers. “We have enabled builders to register the flats online from their offices. This will help buyers as they won’t have to take the day off,” Pardeshi added. Buyers won’t need to engage an agent to expedite the registration. Pardeshi said the model of using Aadhaar card for registration is being implemented for leave-and-licence agreements.

Source: The Times of India, Mumbai