London stock market welcomes two new listings in tech and property

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A video technology company and a property services supplier join the London Stock Exchange this week

Two firms join the London stock market this week, a video technology company and a property services supplier.

Falcon Media House, which owns patented technology that prevents buffering when streaming video online, listed this morning at a valuation of £14m after raising £4m.

The business, which already has deals in place with Tata, intends to use the funds to grow its content, scale and reach. It also plans to develop one of its distribution platforms into the “Netflix of sports”.

The “over-the-top” streaming market, online videos that do not require the viewer to subscribe to a traditional TV provider, is forecast to grow from $28bn in 2015 to $62bn by 2020. It has “ushered in a broadcasting revolution that has irrevocably transformed the way that millions of people across the globe choose, access and watch multimedia content”, according to executive chairman Gert Rieder. “We are tapping into the insatiable demand for a more personalised and flexible multimedia experience, and in turn establish Falcon into a UK leader in the market.”

Netflix 
Video tech firm Falcon Media House wants to build the “Netflix of sports”

On Wednesday, Dukemount Capital, a property and investment services company, will follow suit with a flotation valuing the company at approximately £1.5m.

The group intends to raise £1m, which will be used to source and structure its first real estate acquisitions and cover its listing costs.

The UK-based company plans to acquire, manage and develop UK residential and hotel properties, which are for the most part already pre-leased to housing associations on a long-term consumer price index-linked basis. Dukemount will then agree a sale and leaseback with institutions. These leases, typically more than 30 years long, are called as long-dated income.

Last year, a report published by Schroders showed that the potential demand for long-dated income could be on the order of £1.6 trillion. Dukemont chairman Geoffrey Dart, who has an established record in hotel development, said: “The board have identified a unique opportunity which we expect will help close the growing demand and supply gap for long-dated income by providing institutions such as pension providers higher income yields.”

Dukemount expects to be profitable within the first 12 to 18 months of ­listing.

[“Source-telegraph”]

Gains from sale of inherited property taxed as capital gains

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I am selling my ancestral residential property, which will fetch around Rs.30 lakh. This will be equally divided among all the heirs. What will be the tax liability of this transaction? Can this money be deposited in a savings bank account?

—Jay Sinha

In the absence of complete facts, we have assumed that the ancestral residential property is already inherited by all the children.

Further, we also assume that all the children are majors (i.e., above the age of 18 years). The gain, if any, resulting from the sale of inherited residential property shall be taxable under the head ‘capital gains’.

For computing capital gains in case of such inherited property, the period of holding is reckoned from the date of purchase of property by the owner who actually acquired it, other than by inheritance or gift.

Assuming that the said property had been acquired and held for more than 36 months from the date of acquisition, the resulting gains shall be classified as long-term capital gains (LTCG).

In case of an inheritance, the cost of acquisition should be the cost at which your ancestor had bought the property.

The cost of acquisition and improvement, if any, made after the purchase should be increased using the applicable Cost Inflation Index (CII) notified by the income tax department with respect to the base financial year (FY), i.e., the FY in which cost of improvement is used, and the FY of the sale.

In your case, if the property was bought before 1981, the CII of base FY82 (i.e., 100) should be considered as the cost of acquisition. CII for FY 2016-17 is 1,125.

LTCG should be computed as the difference between net sale proceeds and the indexed cost of acquisition and improvement. And this will be taxable in the hands of each of you, to the extent of the individual share of each child.

You can each avail an exemption from LTCG tax to the extent of each individual share of LTCG by reinvesting the LTCG in one new residential property situated in India, within the specified time—within one year prior to the sale date, or two years from sale date, or within three years of the sale date for an under-construction property.

All this is further subject to the fulfilment of conditions specified under section 54 of the Income-tax Act, 1961.

Each of you could also invest the LTCG in specified bonds under section 54EC. The investment should be made within six months from the sale date, subject to a threshold ofRs.50 lakh. The balance amount of capital gains, if any, will be taxable at 20%.

If the total taxable income during FY 2016-17 is likely to exceed Rs.1 crore, one would be required to pay a surcharge at 15% on the basic rate (20%).

An education cess of 3% on basic as well as surcharge (if applicable) would be levied.

If the total income for the FY, as reduced by the LTCG, is below the applicable (depending upon age) basic income exemption threshold for that year, the LTCG shall be reduced by the amount by which the total income so reduced falls short of the basic income exemption limit. The balance LTCG shall be taxed at a flat rate of 20%. Education cess of 3%, and surcharge (if applicable) would be levied.

However, if the sale proceeds are deposited into savings bank account and not invested in another residential house or specified bonds, as specified above, the aforesaid tax benefit will not be available. Accordingly, each of you would be required to pay tax on the net taxable LTCG to the extent of each share.

[“Source-Livemint”]

A benami property can be solely bought for personal benefit

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I had bought a flat and added my wife as a joint holder, but she did not make any payment towards it. In my Will, can I bequeath 100% of the property, or since my wife is the joint holder, only 50%?

—Ravindra Gupta

As per the provisions of the Benami Transactions (Prohibition) Act, 1988, when a property is transferred to a person for a consideration, paid or provided by another person, then such a transaction is known as a benami transaction.

The person in whose name the property is recorded, becomes the real owner and the person who actually paid the consideration is prohibited from bringing any kind of action to recover such property. Benami transactions are prohibited by law and are punishable under the Act.

But an exception is given under section 3(2) of the Act, for transactions where the property is purchased by any person in the name of his wife or unmarried daughter. Section 3(2) also provides that, unless the contrary is proved, there is a presumption that such property had been purchased by such person for the benefit of the wife or the unmarried daughter.

Thus, a person who has purchased such a property in the name of his wife or unmarried daughter can, by appropriate evidence, prove that the property was not purchased for the benefit of his wife or unmarried daughter, and assert his true ownership rights in the property.

So, if the husband is able to prove that the property he purchased, in his wife’s name, is for his sole benefit, then he can claim the property completely, and can dispose it as per his wish. (Please see Nand Kishore Mehra v. Sushila Mehra (AIR 1995 SC 2145) and Nand Kishore Mehra v. Sushila Mehra (80 (1999) DLT 670.)

In such a situation, the intention of the husband will be ascertained from the surrounding facts and circumstances, to determine the real ownership. Some of these would be: the source of purchase money; the nature and possession of the property, after the purchase; the motive or reason for giving the transaction a benami colour; the custody of title deeds after the sale; and the conduct of parties concerned in dealing with the property after the sale, including whether the husband accounted for the property in his own tax returns and not that of his wife.

Thus, if you are able to prove that the property was not purchased for the benefit of your wife, and it was always intended that the real ownership lies with you, you would have the right to bequeath the entire property in your Will to a person of your choice. You should specifically state in your Will that the property was purchased out of your personal funds and that your wife’s name was added only for convenience and not purchased for her benefit.

Maintain appropriate records that are available to your executor and heirs, to prove your real ownership of the property, if your Will is challenged.

[“Source-Livemint”]