Com­pen­sa­tion for de­lay in pos­ses­sion

Of late, many courts have adopted a strict ap­proach for de­lays in pos­ses­sion, terming them ‘de­fi­ciency in ser­vices'

HT Estates - - HTESTATES - Su­nil Tyagi

I pur­chased a flat in Ghazi­abad, Ut­tar Pradesh, in 2011 for which I took a home loan. I have booked another flat in Ghazi­abad which is yet to be reg­is­tered. I hope to get pos­ses­sion of the sec­ond flat by March 2017. I am plan­ning to take a home loan on the sec­ond house too. Once I shift to the new flat, I plan to sell off my old flat. Can I use cap­i­tal gains from the first house to pre­pay my home loan that I in­tend to take for the sec­ond house?

- Swati Jain The cap­i­tal gain on your ex­ist­ing Ghazi­abad flat will be cal­cu­lated on the sale price mi­nus the in­dexed cost of ac­qui­si­tion. As­sum­ing the ex­ist­ing house in Ghazi­abad that was bought any time af­ter April 1, 2011, the in­dexed cost will be 1.43 times the orig­i­nal cost (i.e in­dex value of 1125 for fi­nan­cial year 2016-17 di­vided by in­dex value of 785 in fi­nan­cial year Buy­ing a home of their own is still a dream that eludes many Indians. Book­ing an apart­ment with a builder is the first step to­wards the ful­fil­ment of this dream. De­lays in de­liv­ery of apart­ments even af­ter con­sumers have been pay­ing EMIs reg­u­larly greatly in­con­ve­niences t hem as they have to also pay rent for their tem­po­rary shel­ter. Many peo­ple have been forced to seek l e gal re­course against builders who make false prom­ises and mis­rep­re­sen­ta­tions to them when the prop­erty is be­ing booked and by ex­e­cut­ing builder-buyer agree­ment on terms and con­di­tions that are not com­plied with. Of late, the courts of law have adopted a strict ap­proach for such de­lays in han­dover of pos­ses­sion, terming them ‘ de­fi­ciency i n ser­vices’ by the builders. As in the re­cent case of Sangeeta Jain and two oth­ers ( com­plainants) ver­sus ( i) Ya­muna Ex­press­way In­dus­trial De­vel­op­ment Au­thor­ity ( YEIDA) and two 2011-12). Let’s as­sume that the pur­chase date of the new Ghazi­abad flat is within one year be­fore the date of sale of the ex­ist­ing Ghazi­abad flat. If so, then if the cost in­curred on pur­chas­ing the new Ghazi­abad flat is higher than or equal to the cap­i­tal gain as cal­cu­lated above, it will not mat­ter whether you use the sales pro­ceeds of the old flat to pay the builder or to pay off the home loan.

In ei­ther case, you should be able to claim ex­emp­tion on the cap­i­tal gains I have cho­sen to buy a flat in a city in Ma­ha­rash­tra and have paid oth­ers; and ( ii) Depart­ment of Stamp and Reg­is­tra­tion (op­po­site par­ties), the Na­tional Con­sumer Dis­putes Re­dres­sal Com­mis­sion (NCDRC) or­dered one of the op­po­site par­ties to pay com­pen­sa­tion and granted var­i­ous other re­liefs to the com­plainants be­cause of de­lay in han­dover of the pos­ses­sion of booked res­i­den­tial prop­erty to the buy­ers.

The case i s about al­lot­tees of res­i­den­tial plots in the pre- launched res­i­den­tial plot scheme by YEIDA called Ya­muna Ex­press­way In­dus­trial D e v e l o p m e n t Au t h o r i t y Res­i­den­tial Plot Scheme 2009. The al­lot­tees or com­plainants, un­der the opted plan, were ob­li­gated to pay 30% of to­tal premium up­front and the re­main­der in 16 half-yearly in­stal­ments, with in­ter­est at the rate of 12% pa. It was stated that the scheme pro­vided for pos­ses­sion of the plots to be handed over to the al­lot­tees, upon pay­ment of 75% of premium or af­ter four years from date of is­sue of al­lot­ment let­ter, which­ever ws later. The stamp charges, reg­is­tra­tion charges, etc, were to be borne by the al­lot­tees at the time of ex­e­cu­tion of the lease deed.

The com­plainants al­leged that YEIDA sent ‘ de­faulter no­tices’ with threat­en­ing con­se­quences to al­lot­tees de­spite them duly re­mit­ting the in­stal­ment amount. Ag­grieved by such no­tices, a com­plainant f iled an RTI ap­pli­ca­tion to which YEIDA re­sponded stat­ing that the lease plan was not re­ceived from the Plan­ning 20% of pur­chase value to the builder. The deal amount is de­cided and agreed. The flat will be ready for pos­ses­sion in June-2017. The builder has asked me to reg­is­ter the agree­ment any date be­fore pos­ses­sion. Con­sid­er­ing the GST com­ing into force in April next year, which would be the best pe­riod do you think (be­fore or af­ter GST com­ing into force) to reg­is­ter an agree­ment? I want to save on pay­ing ser­vice taxes.

- Pankaj Mathur The ex­act reg­u­la­tions or even the tax rates of GST or the date of its im­ple­men­ta­tion are still far from clear so it is not pos­si­ble to an­swer your Depart­ment and hence YEIDA was not in a po­si­tion to give pos­ses­sion.

The Com­plainants fur­ther con­tended that YEIDA had the duty to ap­proach the Plan­ning Depart­ment for l ease plan and get their ap­proval which it failed per­form. More­over, YEIDA had not even ini­ti­ated de­vel­op­ment ac­tiv­i­ties and the sta­tus of the land re­mained what it was prior to al­lot­ment of plots. The Com­plainants had al­ready made 75% of the pay­ment and failed to get any re­sponse to sub­se­quent let­ters from YEIDA.

YEIDA called upon one of the com­plainants to ex­e­cute an agree­ment to lease (ATL) and in­formed them that the said agree­ment would men­tion al­lot­ment rates and not cir­cle rates. YEIDA went on to make the ex­e­cu­tion of fresh ATL com­pul­sory for the pur­pose of trans­fer of plots in favour of the com­plainants from the pre­vi­ous al­lot­tee. It was al­leged that that YEIDA did so in ab­sence of own­er­ship, pos­ses­sion and with­out de­mar­ca­tion of plots and for the ben­e­fit of the Depart­ment of Stamp and Reg­is­tra­tion and Reg­istry Of­fice. Fur­ther, the stamp duty on the pre­vi­ous ATL was not ad­justed and was charged at 5% MANY PEO­PLE HAVE BEEN FORCED TO SEEK LE­GAL RE­COURSE AGAINST BUILDERS WHO MAKE FALSE PROM­ISES AND REP­RE­SEN­TA­TIONS ques­tion with cer­tainty. But it is very un­likely that GST rate will lead to any sav­ings over ser­vice tax rates.

In any case leav­ing a prop­erty un­reg­is­tered is ex­tremely risky as far as your ti­tle to the prop­erty is con­cerned. You should be much more con­cerned about the safety of your ba­sic investment rather than try­ing to save on taxes (which in any case is not likely in this case). So, from all ac­counts I would ad­vise you that it is much bet­ter for you to reg­is­ter the prop­erty im­me­di­ately. I’m plan­ning to buy a house in my of the cir­cle rate and not on the orig­i­nal al­lot­ment rate.

NCDRC held YEIDA guilty of un­fair trade prac­tice stat­ing that it should not have an­nounced the scheme with­out having a clean ti­tle of the ac­quired land as it was com­mon knowl­edge that farmers move to High Court and then to Supreme Court for en­hanced com­pen­sa­tion af­ter ap­proach­ing dis­trict/ad­di­tional dis­trict judge.

YEIDA was directed to han­dover pos­ses­sion of the prop­erty to the com­plainants, within one year. In case that was not pos­si­ble YEIDA had to pro­vide al­ter na­tive prop­erty to the al­lot­tees as per their choice. If nei­ther of the given op­tions were pos­si­ble, then YEIDA was to pay back the amount to the com­plainants, along with stamp duty and in­ter­est at the rate of 12% per an­num if de­sired by the com­plainants from the date of de­posit till re­al­i­sa­tion.

YEIDA was also directed not to take in­ter­est for the re­main­der pay­ments to­wards al­lot­ment of prop­erty to al­lot­tees ex­cept for four years till the com­plainants were in pos­ses­sion of their re­spec­tive prop­erty. Fur­ther, YEIDA was de­barred f rom send­ing any “de­faulter no­tice” or forc­ing al­lot­tees to ex­e­cute lease deeds with­out pos­ses­sion of land. wife’s name. She is a house­wife with no source of in­come. How will the Be­nami Prop­erty Amend­ment Act af­fect my pur­chase trans­ac­tion and af­ter-pur­chase trans­ac­tions?

- Rakesh Sharma The Be­nami Trans­ac­tion (Pro­hi­bi­tion) Amend­ment Act does not af­fect prop­erty bought in the name of the spouse. This ap­plies as long as the con­sid­er­a­tion for such prop­erty has been paid out of the known source of such an in­di­vid­ual.


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