My date of birth is 15-04-1940. I shall complete the age of 80 on April 15, 2020. Am I eligible to get the benefit available to super senior citizen while filing tax returns for FY19-20?

Suresh Handiekar

An individual will be eligible to claim the higher basic exemption threshold of ₹5 lakh provided he/she is of the age of 80 years or more at any time during the relevant tax year.

Based on the details provided, you have completed 79 years on April 15, 2019. As you have not reached the age of 80 years or more during 2019-2020, you will not be able to claim the higher exemption threshold.

I have made an investment in a Portfolio Management Scheme (PMS) of an AMC. The PMS is held in my name and the AMC has taken a power of attorney from me in favour of their fund manager to buy, sell and hold equity shares in the PMS. For FY2018-19, the PMS generated long- as well as short-term capital gains and dividend income, which I will be disclosing in my income tax return. The long-term capital gains are more than ₹1 lakh and hence taxable; the dividend income is less than ₹10 lakh and hence tax exempt. As per the terms of the PMS, the AMC is entitled to certain expenses such as management fee, audit fee and custodian fee, which they deduct from the PMS amount. As these expenses are wholly laid out in order to earn income in the nature of long- and short-term capital gains and dividend income, can I claim deduction of these expenses in my income tax return. If yes, under what section of the Income Tax Act?

Krishnamoorthy Sridhar

Section 48 of the I-T Act provides for mode of computation of capital gains. Any expenditure incurred wholly and exclusively in connection with the transfer of an asset or acquiring the asset or for making any improvement to the asset shall be deducted to arrive at the taxable capital gains.

Allowing portfolio management service fees as a deduction while computing taxable capital gains has been a subject matter of diverse interpretation. Courts have allowed deduction for PMS expenses as long as there was a direct nexus between the expenditure and the purchase/sale transaction.

However, where the PMS fees could not be treated as incurred wholly and exclusively in connection to such purchase/sale, courts have taken a view that it is not an allowable deduction while computing capital gains income.

Can long-term capital loss (LTCL) on equity be set off against long-term capital gains (LTCG) on sale of house plot (real estate)?

Kasiraj G

As per Section 70(3) of the I-T Act, LTCL can be set off against LTCG derived from other capital assets.

Besides, the CBDT (Central Board of Direct Taxes) on February 4, 2018, clarified that LTCL arising from transfer of equity shares made on or after April 1, 2018, will be allowed to be set off and carried forward in accordance with the existing provisions of the I-T Act.

Therefore, LTCL from the sale of equity on or after April 1, 2018, can be adjusted against LTCG arising from the sale of a house plot.

Is a substantial amount transferred to my bank account from my paternal uncle’s account considered a gift? Do I have to pay tax on it?

Manveen Kaur

As per Section 56(2)(x) of the I-T Act, any amount in aggregate exceeding ₹50,000 received without consideration by an individual would be regarded as income and taxable under the head ‘Income from other sources’, subject to certain exceptions. One of the exceptions is when money is received as gift from a relative. For the purpose of this section, brother of either of your parents is considered as your relative. Accordingly, gift received from paternal uncle is not taxable in your hands.

The writer is Partner, Deloitte India. Send your queries to taxtalk@thehindu.co.in

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