Category: News

Dishonouring cheque given as security cannot be held liable: Apex court

February 17, 2013: Business Line

The rule that a cheque should not be dishonoured on presentation at the pain of being penalised is not cast in stone.

The Negotiable Instruments Act itself contemplates the presumption of a cheque having been issued for consideration or discharge of debt being amenable to rebuttal.

In Vijay v. Laxman, the Apex Court was satisfied with the statement of the respondent as corroborated by a witness that he did issue a cheque for Rs 1,15,000 but only as a security for advance payment towards milk to be supplied by him to the appellant’s father. The milk having been supplied, he had demanded the cheque given as security back but was refused.

In fact, it was this very cheque that was presented and a case filed for its dishonour. The Supreme Court was satisfied that the appellant had, with a view to wrecking vengeance, given an altogether different colour to the transaction by calling it a loan for which there was no evidence.

In the event, the Apex Court upheld the High Court judgment that the cheque was given only as a security and not in repayment of loan and hence its dishonour was not liable to be visited with a penalty under Section 138.

SARE Homes inks pact with ICICI Bank to offer special finance schemes

10 Jan 2013, PTI.

CHENNAI: SARE Homes has inked a Memorandum of Understanding with ICICI Bank to offer special finance schemes for the real estate developer’s two upcoming projects.

For launching the two projects, SARE Homes has offered customers an option to pay 20 per cent of the booking amount for an apartment, an offer which would be available for a limited period in association with ICICI Bank, a company statement said.

“The present scheme is in association with one of the country’s banking institutions, ICICI Bank, which will further facilitate home buying for a large number of customers”, SARE Homes, Executive Director, David Walker said.

SARE Crescent ParC is part of a 112-acre residential township coming up at Old Mahabalipuram Road, with prices beginning from Rs 38.5 lakh onwards.

SARE MeadowVille is another project offering expandable villas coming up at GST Road, with prices beginning from Rs 32.5 lakh onwards. The project, in the second phase of development, offers different type of expandable villas, the statement added.

Why invest in properties?

People often looking for investment options to double their money and try to invest in Commodities, shares, NSC Bonds, Mutual funds, Gold and in many other ways, but most of these investments have risk factor included in them which can increase your amount and decrease your invested amount.

To increase the investment amount over the years with the possibility of getting tax deductions and the possibility of taking advantage is only possible with the investments in properties. It is accepted that investing in properties is not a simple task to do it and is not affordable to everyone. People that have the affordability, income and who pay higher taxes can plan for a investment in property.

With the booming real estate sector and with the rising demand of luxury properties one can easily gets benefited if they plan to invest at early stages. For Ex. A builder will sell a flat at lesser price at the initial stages of construction and raises the cost at the completion stage. It is advisable to invest in property at this point of time where the property can be obtained at lesser price and there is no need to pay complete amount of money towards the purchase.

If one invests in property at the starting stage of construction the benefits are high for any customer. A customer need to pay margin amount of 20% of property cost on his own and can avail home loan for remaining 80% of the property cost. The home loan interest rate charged on fresh purchase of property starts at 10.50% and it varies depending on loan amount. Most of the projects will have a pre approval from banks and it will not take much time for any customer to complete the process. At this stage banks will not charge any EMI and only charge PRE-EMI which will not come under repayment tenure but which surely give tax benefit. The Pre-EMI gets increased depending on the loan amount disbursed and the construction stage. The maximum tax benefit one can avail on home loan under section 80© of Income Tax Act is Rs. 1, 50,000 /- on interest paid on home loan and Rs. 1,00,00 on principal amount repaid on home loan.

Housing prices up in 9 cities, down in 11 places: National Housing Bank

23 Nov 2012, PTI.

NEW DELHI: Showing a mixed trend, housing prices in 11 cities, including Bangalore and Kolkata, declined by up to 5 per cent in July-September, while rates in nine other places increased by up to 10 per cent, according to National Housing Bank (NHB).

Kochi saw the highest price rise of 10.1 per cent, followed by Jaipur with 9 per cent during the second quarter of this fiscal compared with the previous quarter.

In Delhi-NCR, Mumbai and Chennai, prices rose by 3.8 per cent, 0.5 per cent and 1 per cent, respectively, NHB data showed.

NHB RESIDEX tracks the movement in prices of residential properties on a quarterly basis. It covers 20 cities. From January next year, it plans to cover 6 more cities.

“Overall, there is a price correction. Even in nine cities where prices have gone up, there will be net decline if we factor in the rise in input cost and inflation,” NHB Chairman and Managing Director R V Verma told PTI.

Asked about falling prices, he said, “Builders cannot sustain at current prices because of oversupply. So, they are decreasing the price to clear inventory and boost sales.”

Housing demand has been affected for last few years due to high interest rates on home loans.

“The movement in prices of residential properties has shown marginally declining trend in eleven cities, ranging from -0.4 per cent in Faridabad to -4.8 per cent in Surat, and rise in nine cities ranging from 0.5 per cent in Mumbai to 10.1 per cent in Kochi during July-September, 2012 in comparison to the previous quarter April-June 2012,” NHB said.

Ahmedabad saw 3 per cent rise, Bhubaneshwar 2.3 per cent, Lucknow 2.2 per cent, Chennai 0.8 per cent, Pune 0.7 per cent.

Prices fell the maximum in Surat (-4.8 per cent), followed by Indore at -3.54 per cent, Kolkata -2.4 per cent, Vijayawada -2.4 per cent, Patna -1.8 per cent, Ludhiana -1.7 per cent, Bangalore -1.7 per cent, Hyderabad -1.3 per cent, Guwahati -0.7 per cent, Bhopal -0.5 per cent and Faridabad -0.4 per cent.

On the overall trend, NHB said that prices have started to decline in some smaller towns and the increase in other cities is mostly marginal, barring Kochi and Jaipur.

“There is some signs of convergence of prices around this level across the 20 cities,” it added.

Portman Holdings picks up 26% stake in Tata Housing’s Bangalore project

23 Nov 2012, ET Bureau.

 MUMBAI: Portman Holdings has picked up a significant minority stake in a Bangalore project of Tata Housing, the real estate arm of the Tata Group, for 65-83 crore.

The investment by the AtlantaBSE 0.38 %, US-based integrated real estate development, investment and management company, will be the first private equity investment in Tata Housing.

A senior executive at Portman said that the company, which has investments in two projects being developed by Kolte Patil Developers in Pune, will hold between 26% and 30% in Promont, a high-end residential project being developed by Tata Housing. The equity valuation of the project is 250 crore. Portman will invest anywhere between 65 crore and 83 crore, he said.

“Our strategy has been to invest in and develop residential projects with marquee developers in urban cities. We have worked with the Tata Group in the past, having partially designed and executed the Taj Welligton Mews service apartments in Mumbai. Promont fits our investment thesis well,” Rahul Anand, managing director of Portman Holdings India, told ET.

Tata Housing managing director and CEO Brotin Banerjee said: “Portman Holdings clearly recognises the opportunity for long-term and sustained growth in the Indian housing market.”

Portman has been investing proprietary money, but had plans to raise a $300-million fund from third party investors.

“We are looking at another transaction in Bangalore. There are 3-4 more deals in the pipeline. By the first half of 2013, we should be able to close six investments,” Anand said. Portman’s first investment in India is already three-year old and Anand is confident of achieving a 25% IRR (internal rate of return) on that.

Located at the highest altitude point of Bangalore, Promont is a high-end, gated, luxury community of terraced hillside residences with four apartment towers, villas and row houses.

Tax rebate allowed on capital gains after property sale

22 Nov 2012, ET Bureau.

MUMBAI: Income-Tax Appellate Tribunal (ITAT) of Chennai has held that interest on home loans will continue to remain out of the tax net even if the house is sold later.

The tribunal clarified that the interest paid on loans is certainly an expenditure that should be taken into account while computing the income from house property as well as in computing capital gains arising from sale of the same property. The order was given on October 31 by a two-member bench comprising OK Narayanan and SS Godara.

In this case, the taxpayer C Ramabrahmam borrowed money for buying property and claimed deduction for interest paid for the borrowed funds, while computing income from house property.

However, when the house was sold, the taxpayer treated the interest paid on loan as “cost of acquisition” for the purpose of computing capital gains and claimed deduction there too.

The assessing officer, however, refused to accept the claim on the ground that interest has been allowed as deduction under section 24 (b) of the Income-tax Act that deals with income from house property and the deduction cannot be allowed again while computing capital gains arising from the sale of house.

The first appellate authority, Commissioner (Appeal), allowed the claim of the tax payer but the income-tax department moved the Income-tax Appellate Tribunal (ITAT), the second appellate authority for deciding tax disputes.

The ITAT dismissed the appeal, holding that deduction under section 24 (b) of the Income-tax Act and computation of capital gains under section 48 of the Income-tax Act are covered under different heads of income.

The first section deals with house property and the other section deals with capital gains. The first deduction was claimed when the taxpayer computed income from house property, while the second claim was made when the house was sold and capital gains were computed.

The ITAT held that both these provisions of the Income-tax Act are altogether different, the taxpayer is entitled to claim deduction of interest paid on borrowed loans while computing capital gains too.

Ezzy Group enters Indian realty market, sets aside Rs 500 crore for projects

10 Nov 2012, PTI.

BANGALORE: Ezzy Group, an infrastructure and property management company, today announced its foray into the Indian realty market with an investment of Rs 5,000 crore spread over the next two years.

“Our objective is to offer something unique to the Indian realty market. We have set aside Rs 500 crore for our projects, both residential and commercial projects in the next two years,” Ezzy Group Chairman Shabbir Saifuddin Ezzy told reporters here.

Ezzy Group has raised funds internally to fund its projects and will invest in Bangalore and Mumbai, he said, adding the company also plans to bring in funds through FDI. “The projects will be in over a million square feet,” Saifuddin added.

The company will invest Rs 500 crore in next fiscal year in luxury real estate projects in Bangalore, a major share of which will be through equity investors, he said.

Ezzy Group has plans to issue an IPO in the long term, he added.

The project comprises 25 boutique row villas built to the highest specifications on par with international standards, Ashai Design Corporation (USA) CEO Tony Ashai said.

The company has invested close to Rs 150 crore in the two projects – Corinth and The Avenue – comprising luxury residential villas and apartments, Ashai said.

Both the properties have been priced between Rs 6,000 and Rs 7000 per square foot, he said.

Ezzy Group and Ashai Design Corporation (ADC), California, USA, will set up several such luxury residential projects in the country going forward, Ashai said.

Bangalore’s residential realty market defies downturn

9 Nov 2012, TNN.

BANGALORE: The city’s residential real estate market continues to remain robust and has bucked the slowdown that’s being felt in Mumbai and the National Capital Region. Bangalore is seen to be holding out because of more realistic pricing and end-user demand.

Data from research and consulting firm PropEquity showed that between January to August this year, the total number of residential units absorbed in Bangalore was 24,734.

That’s a 3% drop from 25,460 units that were absorbed in the same period a year ago. However, in the same period, NCR reported a 42% drop and Mumbai Metropolitan Region a 34% drop in absorption.

“Bangalore is mainly end-user driven and that has led to lesser volatility in this market,” said Samir Jasuja, founder and CEO of PropEquity.

Godrej Properties, which has launched a slew of projects ranging in price from Rs 30 lakh to over Rs 1 crore in the last one month, has already reported sales of 200 units.

“We have seen good sales in other markets (Mumbai and NCR) as well, but Bangalore has certainly been one of the strongest real estate markets in India in the recent past,” said Pirojsha Godrej, CEO, Godrej Properties.

J C Sharma, MD, Sobha Developers, said the current real estate environment was promising as banks had slashed their home loan charges and were offering competitive interest rates. “Since pre-payment charges have also been abolished, there is increased affordability ,” said Sharma.

Last week, Gurgaonbased textile company Bhartiya Group forayed into the real estate market with the launch of its first project, a 125-acre township , Bhartiya City, near Hebbal in north Bangalore.

Snehdeep Aggarwal, chairman, Bhartiya Group, said that the first phase of the township consisting of over 600 units – priced between Rs 29 lakh and Rs 1 crore — was close to selling out. “Ground reports say the demand is completely end-user driven ,” said Aggarwal.

Mayank Ruia, head-residential , The Phoenix Mills, said, “Sales off-take in the city has been impressive thus far. We have sold over 300 units since September, and the off-take continues at a healthy pace.”

The Mumbai-based developer has launched an ultra-high end residential project, One Bangalore West, in Rajajinagar, which has apartments priced at Rs 2 crore and more.

First generation entrepreneurs , senior management from the IT/ITeS sector , and non-resident Indians are fuelling the demand for luxury projects.

Property prices firm despite high interest rates: Nomura

4 Nov 2012, PTI.

MUMBAI: Housing prices remained firm following limited supply, despite the slowdown and high interest rates, according to a Nomura report.

“House prices remained on an uptrend despite weak transaction in volumes, high interest rates and slowing economic growth, as supply has been limited with fewer projects being added, especially in key markets such as Mumbai and Delhi due to delays in the government approvals,” Nomura said in a report.

According to the Reserve Bank’s latest housing price index, house prices remained on an uptrend, up 24.1 per cent in Q1, compared to an average of 20 per cent over the last two years, it said.

The metro markets of Delhi, Mumbai, Kolkata, and Chennai saw the sharpest price increases of 21-42 per cent, said the Nomura report.

The steady rise in house prices is one of the many reasons why consumption has remained well supported and inflation expectations have remained elevated, despite the stress in other segments of the economy, it pointed out. The report further said steady gains in physical assets have also encouraged households to divert savings away from financial assets.

The RBI’s national house price index takes into account price situations in the nine cities–Mumbai, Delhi, Bangalore, Ahmedabad, Lucknow, Kolkata, Chennai, Jaipur and Kanpur–it said.

Housing prices in Mumbai grew at a tepid 3.1 percent in June quarter, while in Kolkata was the fastest at 28.9 percent, it said, adding Bangalore and Kanpur witnessed a fall.

Going by transaction volumes, there was a 6.4 per cent rise on a sequential basis, the quarterly index showed, while on a y-o-y basis it stood at 9.3 per cent, it said.

According to a report by property consultant Jones Lang LaSalle, seven major metros including Bangalore, Chennai, Delhi, Hyderabad, Kolkata, Mumbai and Pune, capital values rose marginally or remained more or less stable in September.

While capital value in Bangalore during the month ranged between Rs 3,000-6,000 per sq ft, the rentals fluctuated between Rs 8,000 and Rs 15,000.

Mumbai continued to top the list in terms of capital value in the range of Rs 4,800-32,000 per sq ft while the rentals touched Rs 95,000 per month for a 1,000 sq ft flat.

In Chennai and Delhi the capital value too saw a marginal rise ranging from Rs 9,000-17,000 and Rs 3,500-16,000 per sq ft, respectively. Similarly, the rents ranged between Rs 9,000 and Rs 30,000 and Rs 10,000 and Rs 23,000 (for 1,000 sq ft area) respectively.

In Hyderabad, Kolkata and Pune, capital values remainded stable ranging from Rs 2,000-20,000, Rs 1,800-15,000 and Rs 3,300-4,000 per sq ft, respectively.

Rents in these three cities ranged between Rs 5,000 and Rs 20,000 in Hyderabad, Rs 5,000 and Rs 45,000 in Kolkata and Rs 8,000 and Rs 12,000 in Pune.

Sobha inks JV with PE firm SUN-AREA for Bangalore housing project

31 Oct 2012, PTI.

NEW DELHI: Realty firm Sobha Developers today announced an equal joint venture with private equity firm SUN-AREA Property Partners to develop a luxury housing project in Bangalore at an estimated investment of about Rs 260 crore.

Sobha Developers and SUN-AREA would have an equal stake in the JV and both the companies would invest Rs 50 crore each in the special purpose vehicle (SPV) Sobha Highrise Ventures Ltd, which has been formed to develop this project.

“SUN-AREA Property Partners will invest about Rs 50 crore into the SPV with an equal commitment by Sobha,” Sobha said in a BSE filing.

The project, which is spread over 5.6 acres with a built up area of more than 50,000 square meters, is expected to be launched within the next two quarters.

When contacted, Sobha Developers CFO S Baaskaran said the total investment would be about Rs 260 crore to develop this super-luxury housing project.

The Bangalore-based Sobha Developers said that it has so far delivered 53 million sq ft area and the company’s net profit has improved from about Rs 108 crore in 2008-09 to Rs 206 crore in 2011-12.

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