TIP #32

LAND ACQUISITON

1. The State or Central Government can acquire a land in any locality provided the land is need for public purpose or for any company

2. Before acquisition of a property, a preliminary notification U/s 4 of The Land Acquisition Act, 1894, that effect must be published in the official gazette and in two daily newspapers circulating in that locality of which at least one shall be in a regional language by the state government.

3. Collector shall put up public notice at a convenient place in the said locality regarding acquisition of land.

4. Without issuing notice or publication or notification, the land acquisition officer will not have any right to survey mark, draw boundaries and enter the lands of any persons.

5. The land owner can file his objections against the acquisition of land within 30 days from the date of publishing the notification. The collector shall give the objector an opportunity of being heard. The decisions of the appropriate government on the objections shall be final.

6. U/s 6 of the Act if a declaration is made by the appropriate government regarding requirement of land for public purpose or company, within one year. It shall be conclusive evidence that the land is needed for public purpose or company. Such Declaration shall be published in official gazette and in the local newspaper.

7. After the declaration the collector may be directed by the government to take order for acquisition of the land.

8. The collector then cause public notice, U/s 9 stating the government intends to take possession of the land and the claims for compensation can be made to him.

9. The collector shall also serve the public notice to the land owners / occupiers / persons interested in the land / to the agents authorized to receive them if the interested person resides elsewhere, notice shall be sent post to his best known residence or place of business.

10. Only if an award is passed, the collector will have right to take possession of the land and then the land shall vest absolutely in the government free from encumbrances.

11. The collector shall make an award within a period of two years from the date of publication of declaration; if it is not made the entire acquisition procedure shall lapse.

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TIP# 33

SERVICE TAX ON APARTMENTS

Whether service tax is leviable under construction of complex service [section 65(105)(zzzh)] on builder, promoter, developer or any such person,-

(a) who gets the complex built by engaging the services of a separate contractor, and

(b) who builds the residential complex on his own by employing direct labour?

a) In a case where the builder, promoter, developer or any such person builds a residential complex, having more than 12 residential units, by engaging a contractor for construction of the said residential complex, the contractor in his capacity as a taxable service provider (to the builder / promoter / developer / any such person) shall be liable to pay service tax on the gross amount charged for the construction services under 'construction of complex' service [section 65(105)(zzzh)].

(b) If no other person is engaged for construction work and the builder / promoter / developer / any such person undertakes construction work on his own without engaging the services of any other person, then in such cases,-

(i) service provider and service recipient relationship does not exist,

(ii) services provided are in the nature of self-supply of services.

Hence, in the absence of service provider and service recipient relationship and the services provided are in the nature of self-supply of services, the question of providing taxable service to any person by any other person does not arise.

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TIP# 34

EXCHANGE OF PROPERTY

1. When two persons mutually transfer the ownership of one property for the ownership of another property, the transaction is called exchange.

2. Exchange of immovable property can be made only in the manner provided for the transfer of such property by sale.

3. It requires registered deed and the stamp duty involved is same as provided for sale.

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TIP#35

Apartment owners association

1. Under the Karnataka Ownership Flats Act, 1972, the promoter of an apartment, building or flats, intended to be used for residence or office or showroom or shop or godown shall submit an application for formation and registration of co-operative society or company as the case may be within four months from the date of which the minimum members required to form such an organization have taken the flats.

2. The other option is for residential apartment is by executing and registering a declaration (by sole owner or of all the owners) for submitting the property under the Karnataka Apartment Owners Act, 1972. The contents of the declaration are prescribed under this Act including various aspects of the land, building, apartment, common area facilities etc. Further, for governing and managing the apartments, rules under the said Act also requires a Deed of Apartments along with the declaration to be registered before the sub-registrar under the Indian Registration Act. This Act is an elaborate provision of law provided for administration and total management of the association.

3. The association can also be formed and registered under the Karnataka Societies Registration Act.

4. It is obvious that the obligation of formation of association initially is on the promoter, i.e., the builder of the project.

5. That unless a valid association of members is formed, usually, the management and maintenance of the multistory complexes have faced serious problems and utter chaos.

6. Hence, every purchasers of apartment must make an endeavor to ensure that the promoter of their project undertake to form the association within the stipulated period.

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TIP NO. 36

PARTNERSHIP DEEDS

1. Instrument of Partnership: the stamp duty is Rs. 1000/-.

2. Reconstitution Deed: the Stamp duty is Rs. 500/-.

3. Reconstitution Deed when an outgoing partner/s leaves the immovable property with the firm, which was contributed as share/s by the said partner: the Stamp duty is payable of the market value of the Immovable Property remaining with the firm at the same rate of conveyance i.e. 7.5% of the value.

4. Dissolution of the firm when the property belonging to one partner, when the partnership commence is distributed/ allotted given to another person/s: the Stamp duty is payable on the market value of the property distributed/allotted.

5. In other cases of Dissolution: the Stamp duty is Rs. 500

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TIP NO. 37

AMALGAMATION OF COMPANIES (STAMP)

If an order is passed by the High Court u/s 394 of the Companies Act for Amalgamation of two companies or Subsidiary Amalgamation with Parent Company:

(i) the Stamp Duty is payable at the rate of conveyance i.e. 7.5% on the market value of the Property of the transferor company, located in Karnataka, transferred to the transferee company Or

(ii) An amount equal to 0.7% of the value of the shares allotted or issued in exchange, Or in case of Subsidiary Company

(iii) An amount equal to 0.7% of the Shares merged or cancelled with parent company and the amount of consideration if any, paid for such amalgamation. The stamp duty is payable which ever is higher.

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TIP NO. 38

DEMERGER OF COMPANIES (STAMP)

If an order is passed by the High Court u/s 394 of the Companies Act for Reconstruction or Demerger of a company (i) the Stamp Duty is payable at the rate of conveyance i.e. 7.5% on the market value of the Property of the transferor company, located in Karnataka, transferred to the resulting company Or (ii) An amount equal to 0.7% of the value of the shares allotted or issued to the resulting company and the amount of consideration if any, paid for such Demerger or Reconstruction. The stamp duty is payable which ever is higher.

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TIP NO. 39

CAVEAT

1. Where any person apprehends that some other person is likely to file a civil suit or proceeding in Civil Court, then he/she (caveator) can file a Caveat Petition before the court.

2. In the said Caveat Petition it can be prayed that the person specified in the Caveat as the Opponent, is likely to file a suit or proceeding against the Caveator and that in case such a suit if filed, then the court may afford an opportunity of hearing the Caveator before passing any ex-parte order in the suit or proceeding.

3. The Caveat Petition is valid only for a period of 90 days and thereafter another Caveat Petition can be filed from time to time.

4. Caveat can be lodged only in Civil Courts. No Caveat is permitted in Criminal Courts.

5. Caveat can also be filed in Trial Courts, Appellate, including High Courts and Supreme Court.

6. During the Caveat period, the court shall be obligated to issue notice to the Caveator of the suit, proceeding and interlocutory application etc., filed by the Opponent.

7. Caveat is filed U/s. 148 of CPC. The person who files the Caveat is known as the Caveator.

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TIP NO. 40

CAPITAL GAIN

Under Section 2(47) of the Income Tax Act, under any agreement of transfer of immovable property, if possession of the property is delivered to the intending transferee, then for the purpose of Section 45 of the Income Tax Act, it amounts to transfer and gives rise to capital gain.

Therefore, under any sale agreement or joint development agreement of immovable property, if possession is delivered to the purchaser or the developer, it gives rise to capital gain.

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TIP NO. 41

ATTACHMENT OF PROPERTY

i) Civil Courts have power to attach immovable properties belonging to the Defendants/Judgment Debtors in various types of Suit and Execution proceedings, under the civil procedure code.

ii) (Karnataka) State Finance corporation can approach Civil Court for Recovery and attachment of property U/S 31 of State .Finance Corporations Act, belonging to the borrowers/ guarantors.

iii) State Governments have powers to attach properties under various State Land Revenue Acts, to recover state dues, public money etc., from defaulters.

iv) Income Tax, V.A.T, central excise authorities also have power to attach immovable properties of the assesses for recovery of Tax dues.

v) Banks have power under Securitization Act, to prohibit sale before taking possession and sell the mortgaged properties of the borrower/guarantor.

Attachment of Immovable property is made by an order prohibiting the owners from selling or transferring or charging the property in any manner. Sale/Transfer in contravention of attachments is void and an unaware Purchaser/Transferee shall not derive title unless the claim against the properties discharged otherwise the same shall be liable to be sold.

Attached property is ultimately sold for satisfaction of dues, loans or court decree, as the case may be.

Beware while purchasing an Immovable property this risk may be involved which is difficult to discover.

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TIP NO. 42

MUSLIM DAUGHTER'S SHARE. ( HANAFI LAW OF INHERITANCE )

On the death of a Muslim father or mother the daughter gets ½ share, if there is no son.

If there is a son daughter gets 1/3 share.

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TIP NO. 43

MUSLIM SON'S DAUGHTER'S SHARE. ( HANAFI LAW OF INHERITANCE )

When there is a son, other predeceased son's daughter gets no share.

If there are two daughters and no son , son's daughter is excluded.

If there is no son, daughter, higher son's son or higher son's daughter, then predeceased son's daughter gets ½ share.

If there is only one daughter then son's daughter gets 1/6 share and the daughter gets ½ share, provided there is no son.

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TIP NO. 44

MUSLIM DAUGHTER IN-LAW. ( HANAFI LAW OF INHERITANCE )

Widow of pre-deceased son has no share in father-in-law's or mother-in-law's estate.

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Tip No 45

Muslim Father. ( Hanafi Law of Inheritance )

When a Muslim child dies father is entitled to 1/6 share, when there is a child or child of a son.

When there is no child left by the deceased married daughter, her husband gets ½ and father gets remaining ½ as residue.

Father gets 2/3 if only mother is left who takes 1/3.

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