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Wednesday, May 28

Section 80EE - Final & IPC - Correct Solution & Interpretation - Mistake in Material

Section 80EE
Conditions:
1. The taxpayer is an individual.
2. He has taken a loan from Financial Institution.
3. The loan has been sanctioned by the financial institution during previous year 2013-14.
4. The amount of loan sanctioned for acquisition of the residential house property does not exceed Rs.25 lakhs.
5. The value of the residential house property does not exceed Rs.40 lakhs.
6. The taxpayer does not own any residential house property on the date of sanction of the loan.



Amount of deduction:

(i) If the above conditions are satisfied, interest payable for the previous year 2013-14 on the aforesaid loan shall be deductible under section 80EE upto maximum of Rs.1 lakh.
(ii) In a case where the interest payable in previous year 2013-14 is less than Rs. 1 lakh, then balance deduction shall be allowed under 80EE in the previous year 2014-15. (Point to be noted: Language is “interest payable for the previous year is less than Rs. 1 lakh” and not the “deduction claimed under section 80EE is less than 1 lakh”)
(iii) Further, where a deduction under this section is allowed for any assessment year, in respect of interest on housing loan, deduction shall not be allowed in respect of such interest under any other provision of the Income-tax Act, 1961, for the same or any other assessment year.



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Practical:
Illustration 11 (CA Final Module DT - Pg. 11.23) (Can also be used for IPC students for clarity)-
Mr. A purchased a residential house property for self-occupation at a cost of Rs.30 lakh on 1.6.2013, in respect of which he took a housing loan of Rs.24 lakh from Bank of India@11% p.a. on the same date. Compute the eligible deduction in respect of interest on housing loan for A.Y.2014-15 and A.Y.2015-16 under the provisions of the Income-tax Act, 1961, assuming that the entire loan was outstanding as on 31.3.2015 and he does not own any other house property.

Solution (Wrong - as shown in Module)-


For A.Y.2014-15
(i) Deduction under section 24(b) = Rs. 1,50,000

[Rs. 2,20,000 (Rs. 24,00,000 × 11% × 10/12) Restricted to Rs. 1,50,000]
(ii) Deduction under section 80EE = Rs. 70,000
[Rs. 2,20,000 -Rs.1,50,000]


For A.Y.2015-16
(i) Deduction under section 24(b) = Rs. 1,50,000
[Rs. 2,64,000 (Rs.24,00,000 × 11%) Restricted to Rs.1,50,000]
(ii) Deduction under section 80EE = Rs. 30,000
[Rs. 1,00,000 – Rs. 70,000, allowed as deduction in P.Y.2013-14]


Correct Solution-
For A.Y.2014-15
(i) Deduction under section 24(b) = Rs. 1,50,000

[Rs. 2,20,000 (Rs. 24,00,000 × 11% × 10/12) Restricted to Rs. 1,50,000]
(ii) Deduction under section 80EE = Rs. 70,000
[Rs. 2,20,000 -Rs.1,50,000]


For A.Y.2015-16
(i) Deduction under section 24(b) = Rs. 1,50,000
[Rs. 2,64,000 (Rs.24,00,000 × 11%) Restricted to Rs.1,50,000]
(ii) Deduction under section 80EE = NIL
[Interest payable for the previous year 2013-14 was Rs.2,20,000 (which is more than 1 lac) and therefore, no further deduction is allowed under 80EE during previous year 2014-15.]


IDEAL APPROACH if Asked in Exam-

1. Solve the question correctly i.e. as per Income Tax Provision and not as solved by ICAI Module (as we have shown above)

2. Give below Note-
The question has been solved as per Section 80EE, and hence in AY 2015-16, no deduction u/s 80EE will be allowed as "Interest payable" for the AY 2014-15 was Rs.2,20,000 (which is more than 1 lac). This question could also have been solved using method used in Study Material,i.e.assuming as "Deduction claimed" for the AY 2014-15 was Rs.70,000 (which is less than 1 lac) and therefore, balance deduction of Rs.30,000 is allowed under 80EE during AY 2015-16.

Wednesday, May 21

The 10 year girl concerned about economy receives reply from RBI Guv



Young Girl with Rajan
Young and vibrant Laila Indira Alva, who is currently studying in class VI of Sanskriti School, Chanakyapuri, and is a resident of Gurgaon, was recently in the news when a letter she wrote to RBI governor Raghuram Rajan in September 2013 was made public. She sent the letter along with a $20 note which she had saved during her trip abroad, offering to help the economy, which was in the middle of a financial crisis at that time.

Laila has been an active member of the editorial team in her school and has also interviewed Milkha Singh. Currently learning Spanish, she feels she needs to brush up her spoken Hindi. She's an avid reader, with a keen interest in writing fiction stories, and writes one book per year for her school's collection and calls her mother her publisher. Having volunteered to teach English to underprivileged children in Gurgaon, Laila wants to be a part of an NGO dedicated to child rights in the future. The sports enthusiast who enjoys swimming, and loves to play the piano, which, she says, she learned from her father, hopes to grow up to be an RBI governor herself one day.

Girl's letter to Rajan showing concern for the economy



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Turning eleven this July, Laila was ten when she wrote the letter last September. On asking how she learned about the economic situation of the country, she said, "I recently picked up the habit of reading the newspapers from my father, as I used to only read books earlier. But my father insisted that there are interesting articles in the paper that I should read, and my brother also reads with me. So, all of us read the newspaper everyday now; if I ever have a doubt, my parents explain it to me in detail."

"Last September, one day in the morning, my parents were talking about how weak the economy was, that the dollar was really strong and the rupee had hit a record low, and I heard that Raghuram Rajan was the new RBI governor."
A Kind gesture of Guv



"So, I decided to write a letter to Raghuram Rajan to help save the economy, as I had saved twenty dollars from my trip to Israel with my parents. In the letter, I wrote to him saying that now since he's the RBI governor, I hope he comes with new ideas that'll help our economy since I didn't want people to think that our country is corrupt. I looked up the address on the Internet and after writing the letter, I gave it to my mother to correct the grammar, and I asked her if I should send it. She said it was entirely my choice, but both of them were really proud of me," she adds.



Laila not only received a very humble reply from Rajan himself, but he also sent her an invitation to visit him in Mumbai. "When I sent it, I did not expect a reply. When I was coming back from school one day, my mother told me about it, and I was really surprised. My father and I went to see him in Mumbai; I was really excited as I only had about fifteen minutes with him. I think he's a really good governor and he's doing a very good job," she said, talking like any 10-year-old expressing her excitement about meeting the governor. "I asked him a few questions on inflation, and behind his desk, there was a wall with the pictures of previous governors who were mostly men, so I asked him why there were no women governors. To which he replied, 'May be you can become a governor one day.' He also gave me a few comics, which explained economic concepts such as inflation, setting up a bank account, how to prevent being cheated and exchanging torn notes for new ones in the bank. He also suggested that we visit the coin museum, which was right next to the building. It was a really nice experience as I saw different currencies there. I would like to meet the governor again in the future.


Sources:
1. ToI
2. BBC

Tuesday, May 6

1st Time Facility of checking exemption(s) in papers for CA exams May 2014 is live now

03/05/2014

Hosting of exemption(s) in a paper granted in Intermediate and Final examinations, valid for May 2014.
Exemption(s) in a paper(s) are granted to candidates of Intermediate and Final examinations, in terms of Regulation 37C(8) and Regulation 38C(6), respectively, of the Chartered Accountants Regulations 1988.

The rules in this regard are provided in the Guidance Notes made available to the candidates along with the examination forms and hosted on http://icaiexam.icai.org. The related FAQs are also hosted on www.icai.org.

However, in spite of the information already made available, it is seen that some of the candidates carry a mistaken notion that they enjoy an exemption in a paper(s) whereas in reality they do not and end up absenting themselves in the said paper, resulting in avoidable hardships.

To avoid this kind of situation, exemption(s) granted in a paper(s) which are valid for May 2014 examination are hosted on http://exemptions.icaiexam.icai.org, so that candidates can check their exemption status before the exams and take necessary action.

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Date of hosting the exemption data : 5th May 2014
Last date for emailing discrepancy, if any : 15th May 2014

Hence, candidates are advised to check the details more particularly, the month and year of exam and roll number indicated on the said site, with those contained on the relevant Statement of marks issued to them. Exemptions granted in a paper(s) are indicated by way of “#” against the marks awarded thereon and the Result of the relevant Group is indicated as “F-EX”, in the Statement of Marks.

In case of discrepancy, if any, candidates are advised to write to Exam Dept. immediately, in any case not later than 15th May 2014, at the e-mail address provided herein below, enclosing scanned copy of the relevant mark sheet in which exemption was granted.

Final candidates : final.exemption@icai.in
Intermediate(IPC) candidates : inter.exemption@icai.in

Exam Dept. will respond, within 7 days of the receipt of the e-mail. In case you do not receive any response within 7 days, write to:

Final candidates : final2@icai.in
Intermediate(IPC) candidates : inter7@icai.in


Source : icai.org