Claims after death

Section 238(2) specifically provides that where through death, incapacity, insolvency, liquidation or other cause a person is unable to claim or receive any refund due to him, his legal representative or the trustee or guardian or receiver as the case may be, shall be entitled to claim or receive such refund. It is therefore possible for the legal heirs of the deceased to receive the refund which is due to them.  The legal heirs must take steps to have themselves brought on record before the Assessing Officer by intimating the death of the assessee to him and also by producing proof of such death and legal heirship before him.  I have been a non-resident in accordance with the Income Tax Act for a period of 25 years beginning from 1982 to 2007. I understand that I will therefore be a 'resident but not ordinarily resident' for the next seven years commencing from the year ended March 2007. Is this correct? Also whether the interest from deposits in returning foreign currency will be eligible for exemption in my hands?

- Mohan Rao, Hyderabad

You will not be a 'resident but not ordinarily resident' for seven years after March 2007 but only for one year thereafter. Your residential status will now be that of 'resident and ordinarily resident'. You therefore cannot claim any exemption in respect of the interest on foreign currency deposits. There has been an amendment in law to curtail the number of years.  I had purchased a land about 18 months back at Navi Mumbai. Prices have shot up in the last six months due to proposal of a second international airport and I am tempted to sell but I understand that if I sell the same now, the gain will be treated as short-term capital gain. Can I avoid the payment of tax on sale of such land by reinvesting in another land?

- Navin Ruparel, Mumbai

No exemption is available in respect of the capital gains from sale of the land which is short-term. Similarly, reinvestment in another land will not entitle you for any exemption.  I purchased 1,000 shares of Infosys before December 31, 2005 through a stock broker and after duly paying the Securities Transaction Tax. In July 2006 I received 1,000 bonus shares. In March 2008, I sold all the 2,000 shares through a recognised stock exchange. What will be the capital gains tax implications on such sale?

- Binoy Bhattacharya, Mumbai

The shares that were originally acquired by you have been held by you beyond 12 months. The gain from the sale of these shares will be long- term and therefore, exempt from tax under Section 10(38). The gains from the sale of bonus shares will also be treated as long-term as these have also been held for a period exceeding 12 months and hence, also exempt.  The writer is a chartered accountant