I am an NRI and my wife stays in India. She is into share trading and incurred a loss of about Rs 3 lakh in 2009-10. She has no other income. During 2009-10, she was staying abroad with me for about two years. I have two questions:

n Do I have to file income-tax returns? I did not file returns for the last five years since I was out of India. However, I had worked in India on deputation from my Dubai-based company in Dubai. For that period, the tax has been deducted at source by the company. I still have my PAN card.
n My wife did not have any income since 2007 and hence did not file any return. But now she is involved in share trading from the money that I send her. Is it necessary to file IT-returns even if she has incurred a loss?
B.K. Khaitan
Via e-mail

According to Section 139 (1) of the Income-Tax Act, an individual is required to furnish a return of total income within the due dates if his total income exceeds the maximum amount which is not chargeable to income tax. It is not mandatory for your wife to file her return of income but it is suggested that she files it since she has incurred losses. A loss return needs to be filed before the due dates stipulated under the Income-Tax Act since the benefit of carrying forward the loss incurred during the year to be set-off against subsequent years income, will otherwise have to be foregone. So, she is advised to file her return of income before the due date, clearly specifying the loss incurred in share trading.

I have taken a loan for the construction of my house in 2003. I have been claiming deduction for interest and principal repayment in my returns every year. The total repayment for FY 2009-10 is Rs 1.22 lakh, which consists of an interest of Rs 83,000 and a principal amount of Rs 39,000. I have renovated my house during FY 2009-10 by obtaining another loan and the total repayment of this loan is Rs 90,000 comprising of Rs. 59,000 and Rs 31,000 towards interest and principal. Am I eligible to claim the entire interest and principal repayment as the deduction. The house is self-occupied from the beginning.
Ramnik Mehta
Via e-mail

Section 24 provides for the deduction of interest on housing loan taken for the purpose of purchase, construction, repairs, renewal or reconstruction of house. If the property is self-occupied, the maximum deduction permissible in respect of loan taken for extension, expansion, repairs or renovation cannot exceed Rs. 30,000. It is pertinent to note that the principal re-payment on the loan taken for renovation does not qualify for deduction under Section 80C. Hence, you can claim deduction towards interest payment of Rs 83,000 and re-payment of Rs 39,000 in respect of loan taken during 2003. The deduction towards interest will be restricted to Rs 30,000 for the loan taken for renovation of your house. Therefore, the total eligible deduction in your case towards interest u/s 24 will be Rs 1.23 lakh and for re-payment of principal u/s 80C will be Rs 39,000.
(Kamal Rathi is a
chartered accountant,
representing Rathi & Malani, a Hyderabad-based
accounting firm. Readers can mail their queries on income tax to kamalrathi.ca@gmail.com.)