Is Legal heir and Nominee the same?

I wonder how many of us are aware of this legal twist.Read on...

Will your Nominee get the money on your death ?

Did you think that your nominee is the person, who will get all the money legally from your Life Insurance Policy and Mutual funds investments ?

Ha! That is exactly what you think if you are not aware of the legal aspects.

We assume a lot of things which sounds like they are obvious, but are not true from the legal point of view.

Today, we all concentrate on nominations in financial products

For whom are we earning ?

For whom are we investing ?

Who, do we want to leave all our wealth to, in case something happens to us ?

It might be your children, your spouse, parents, siblings etc., or just a subset of these.

You also might want to exclude some people from your list of beneficiaries!.

So you think you will nominate person X in your Insurance policy, and when you are dead and gone, all the money goes to person X and he/she becomes the sole owner ? You are wrong, dude !

It does not work that way.

Let us see how it actually does!

What is a Nominee ?

According to law, a nominee is a trustee, not the owner of the assets.

In other words, he is only a caretaker of your assets.

The nominee will only hold your money/asset as a trustee and will be legally bound to transfer it to the legal heirs.

For most investments, a legal heir is entitled to the deceased's assets.

For instance, Section 39 of the Insurance Act says the appointed nominee will be paid, though he may not be the legal heir.

The nominee, in turn, is supposed to hold the proceeds in trust and the legal heir can claim the money.

A legal heir will be the one who is mentioned in the will.

However, if a will is not made, then the legal heirs of the assets are decided according to the succession laws, where the structure is predefined on who gets how much.

For example, if a man during his lifetime executes a will... In the will, he mentions his wife and children as legal heirs, then after his death, his wife and children are the legal owners of his assets.

It is essential that one needs to execute a will.

It is the ultimate source of truth and replaces the succession law.

Nominee can also be one of the legal heirs.

Important :

Mention the Full Name, Address, age, relationship to yourself of the nominee.

Do not write the nomination in favour of wife and children as a class.

Give their specific names and particulars existing at that moment.

If the nominee is a minor, appoint a person who is a major as an appointee giving his full name, age, address and relationship to the nominee.

Why is the concept of Nominee ?

So you might be wondering, if the nominee does not become the sole owner, why does such a concept of a nominee exist at all ?

It is pretty simple. When you die, you want to make sure that the Insurance company, Mutual fund or your Shares should at least get out of the companies and go to someone you trust, and who can further help, in process of passing it to your legal heirs.

Otherwise, if a person dies and has not nominated anyone, your legal heirs will have to go through the process of producing all kind of certificates like death certificates, proof of relation etc., not to mention that the whole process is really cumbersome! (For each legal entity! The insurance company, the mutual funds, for the shares, for the real estate..) .

So, to simplify, if a nominee exists, these hassles do not happen, since the company is bound to transfer all your money or assets to the nominee.

The company then goes out of scene & then, it is between nominee and legal heirs.

Example of Nomination :

Ajay was 58 years old who died recently in an accident. As his children were settled, he wanted to make sure that his wife is the sole owner of all the monetary assets. This includes his insurance policy and mutual funds. So during his lifetime, he nominated his wife as a nominee in his term insurance policy and mutual funds investments. However, after Ajay's death things did not turn up the way he wanted. The reason being Ajay did not leave a will. Though his wife was the nominee in all his movable assets, as per the law, his wife, along with children, were the legal heirs and all of them had equal right to Ajay’s assets.

One simple step which could have saved the situation was that Ajay should have made a will which clearly stated that only his wife was entitled to get all the money and not his children.

Nomination in Life Insurance :

A policyholder can appoint multiple nominees and can also specify their shares in the policy proceeds. Nomination in life insurance has one limitation, as insurance policies are bought to secure your financial dependents, your first choice of nominee has to be your family members. In case you want to nominate a non-family member like a friend or third party, you will have to show/PROVE the insurance company that there is some insurable interest for the person. This happens because of a Clause called PRINCIPAL OF INSURABLE INTEREST in insurance. Note that provision of nomination in life insurance is related to Section 39 of the Insurance Act.

Note that as per LIC website –....

Nomination is a right conferred on the holder of a Policy of Life Assurance on his own life to appoint a person/s to receive policy moneys in the event of the policy becoming a claim by the assured’s death. The Nominee does not get any other benefit except to receive the policy moneys on the death of the Life Assured.
A nomination may be changed or cancelled by the life assured whenever he likes without the consent of the Nominee.

Make sure, you have a nominee for your policy for easy settlement of the claim, if you do not have any nominee mentioned in the policy, it can turn out to be a disaster for your dependents to get a claim.

Nomination in Mutual Funds :

In case of mutual funds, you can nominate up to three people, who can be registered at the time of purchasing the units. While filling in the application form, there is a provision to fill in the nomination details.

Even a minor can be a nominee, provided the guardian is specified in the nomination form.
You can also change nomination later by filling up a form which is available on the mutual fund company website.
Nomination in mutual funds is at folio level and all units in the folio will be transferred to the nominee(s). If an investor makes a further investment in the same folio, the nomination is applicable to the new units also.
A non-resident Indian can be a nominee, subject to the exchange control regulations in force from time to time.

Nomination in Shares :

Quiz for you...
Now you know what a Nominee means and who actually gets the money.
So if there is a husband H, with wife W and nephew N, and he has nominated his nephew N to be the nominee of his shares in demat account, who will have the legal right to own the shares after husband’s death ? If you answer is wife, you are wrong in this case!

In case of stocks, it does not work the usual way, if a will does not exist.

In the verdict, Justice Roshan Dalvi struck down a petition filed by Harsha Nitin Kokate, who was seeking permission to sell some shares held by her late husband.
The Court noted that as she was not the nominee, she had no ownership rights over the shares. Ms Kokate’s lawyer had argued that as she was the heir of her husband who had died intestate (without a will), she should have ownership rights of the shares, and be able to do anything with them as she wished.

In this case, Ms Kokate’s husband had nominated his nephew in favour of the shares. Justice Dalvi however noted that under the provisions of the Companies Act and the Depositories Act, Acts which govern the transfer of shares, the role of a nominee was different.

A reading of Section 109(A) of the Companies Act and 9.11 of the Depositories Act makes it abundantly clear that the intent of the nomination is to vest the property in the shares which includes the ownership rights there under in the nominee upon nomination validly made as per the procedure prescribed, as has been done in this case.

It means that if you have not written a will, anyone who has been nominated by you for your shares will be the ultimate owner of those stocks... The succession laws on inheritance will not be applicable... but, in case, you have made a will, that will be the source of truth.

Nomination in PPF :

Let me give you some shock first. If you have Rs 10 lakh in your public provident fund (PPF) account and you have not nominated anyone for your PPF account, your legal heirs will get maximum of Rs1 lakh only!

Yes, it is so important to have a nominee, now you get it .

You can nominate one or more persons as nominee in PPF. Form F can be used to change or cancel a nomination for PPF.

Also note that you cannot nominate anyone if you open an account for a minor.

Nomination in Saving/Current/FD/RD Account in Banks :

FD's also come with nomination facility. While opening a new account, there is a column for nomination in the same form and you should fill it. You can nominate two persons with first and second option. Note that in case you have not done any nomination till now, you should request Form No DA-1 from your Bank which is used to assign a nominee in future. (Examples of ICICI Bank , HDFC Bank , Canara Bank) .

In the same way to change/cancel the nomination, you need to fill up Form no DA-2.

Read about Corporate Fixed Deposits :

As per a famous case, A Bench of Justices Aftab Alam and R M Lodha in an order said that the money lying deposited in the account of the original depositor should be distributed among the claimants in accordance with the Succession Act of the respective community and the nominee cannot claim any absolute right over it.

Section 45ZA(2)(Banking Regulation Act) merely put the nominee in the shoes of the depositor after his death and clothes him with the exclusive right to receive the money lying in the account. It gives him all the rights of the depositors so far as the depositors account is concerned. But, it by no stretch of imagination make the nominee the owner of the money lying in the account, the Bench observed.

CONCLUSION :

Now you know!

Taking Personal finance for granted can be fatal!!!!!

Just investing knowledge, is not enough to have a great financial life.

You also need to be well versed with basic legal aspects and make sure you carry out all due arrangement .

Nomination is one important aspect you should seriously consider, when checking for the financial products you have bought or plan to buy in future.

Mistakes in Personal Finance :

It's important to make sure that your loved ones do not face legal issues and only say and think lovely thoughts about you when you are not around, rather than crib & grumble.

Property settlement among family members and others

S SELVAKUMAR

Settlement of property among family members and others is a mode of distributing both movable and immovable properties and has been defined under Section 2 (24) of the Indian Stamp Act and Karnataka Stamp Act.

A settlement deed is a non-testamentary disposition, in writing, of movable, or immovable property made -

a) in consideration of marriage,

b) for the purpose of distributing properties of Settler among his family or those for whom he desires to provide for, or for the purpose of providing for some person dependent on him, or

c) for any religious or charitable purposes;

Settlement also includes an agreement in writing to make such a disposition or where a disposition is not made in writing, any instrument recording, whether by way of a declaration of a trust or otherwise, the terms of any such disposition. The Karnataka Stamp Act has similarly defined settlement.

The essential ingredients are:

(1) It is a non-testamentary disposition, that is it is not a Will, as such it operates immediately on execution, where as a Will comes into operation only after the death of its author. However, a settlement may also contain a clause for reservation of life estate.

(2) The Act specifies it must be in writing; so an oral disposition is not a settlement

(3) There may be an agreement to make such a disposition

(4) If it is not in writing, any record, providing evidence for such disposition, is also a settlement

(5) There must be a settler i.e. the owner of a movable or an immovable property.

(6) There must be people that is family members or other persons who are dependent on the settler in whose favour the property is to be settled. It may be for religious or charitable purposes.

Trust v/s settlement

A settlement deed should not be mistaken for a trust deed. In case of trust, the author vests the property in favour of its trustees, who manage, and administer the property /properties as per the direction of the author for the benefit of third person/s called beneficiaries. The trustees will act only as per the directions of the author of a trust deed and the beneficiaries do not have any say in the management of the said properties.

However, in settlement, there is no intermediate person, like a trustee and the beneficiaries have complete control over the administration, management of the property settled in their favour and enjoy the property as absolute owners, subject to the conditions of the settlement deed.

Will v/s settlement

Settlement deed is different from Will, since a Will is a testamentary document, which becomes operative after the death of its author, where as a settlement becomes operative immediately. Another distinguishable feature is that a Will is revocable and that any number of Wills may be executed its author in respect of a single property during his life time, though only the last Will executed becomes operative. Whereas, settlement is not revocable and after the proper execution of a settlement deed, the Settler relinquishes all his rights, title and interest over the said property, subject to the terms conditions contained in the settlement deed.

Partition v/s settlement

Usually partition of joint properties is mistaken for settlement. However, partition constitutes division of properties between the joint owners as well as the division of joint interest ownership in the property. Thus, the division amounts to severance of the joint interest in the ownership of the common properties and the common property is thus divided among them.

Each partner becomes the absolute owner of his share and each partner’s share is subject to a pre-determined percentage, governed by either the inheritance laws or by the partnership deed as the case may be.

In settlement, however, the property is owned by a third person and his settled in favour person’s who do not have any previous interest in the said property and the share of the beneficiary is as per the wishes of the settler.

Gift and settlement

There are marked differences between gift and settlement. Gift is not made for any consideration, where as settlement may be in consideration of marriage. Like-wise gift may be made to any person, where as a settlement is mostly made in the favour of dependents. Also gift requires acceptance whereas settlement does not. The gift is revocable or may be suspended as per section 126 of the Transfer of Property Act on happening of any specified event, which does not depend on the will of the donor unlike that of settlement, which is final & binding once it is executed by the settler.

Advantages

Settlement is very simple procedure, where the properties are distributed to the dependents or for religions charitable purposes during the lifetime of the settlor. This avoids future misunderstanding between the beneficiaries/recipients. Settlement can be made only in respect of self-acquired properties.

Stamp duty

The deed of settlement attracts stamp duty and registration of the settlement deed is compulsory. The Article 58 of Indian Stamp Act and Article 48 of Karnataka Stamp Act refer to stamp duty payable on execution and registration of settlement deeds.

Since, settlement amounts to conveyance of property, the stamp duty payable is similar to that payable on a sale deed, i.e. based on the market value of the property. However, concessions are available in case of settlement made in favour of family members, i.e. Rupees One thousand as stamp duty and a cess of Rupees Fifty. Family members include the spouse, son, daughter-in-law and grand children of the Settler.

Family agreement vs will: Which one holds in the case of Shroff brothers - Shardul and Cyril - Amarchand & Mangaldas & Suresh A Shroff & Co

The sibling dispute between the Shroff brothers - Shardul and Cyril - who together run the country's largest law firm, Amarchand & Mangaldas & Suresh A Shroff & Co, has put the spotlight on the legal status of a will vis-à-vis a "family settlement agreement". The two brothers are fighting over the ownership of the company, of which their late mother Bharti Shroff's will bequeaths 22 per cent to Shardul. However, a family agreement singed in 2001 entailed equal distribution of Bharti Shroff's interest in the firm between the brothers.

Without going into the merit of the case which is sub-judice, Business Standard explains the legal position that a will and a family settlement agreement enjoy, along with the limits and obligations that come with them.

Legally enforceable

A will and a family agreement are legally enforceable documents provided that the requirements under law for their execution are met. A will has been statutorily defined under Section 2 (h) of the Indian Succession Act, 1925, to mean the legal declaration of the intention of a testator, or the person making the will, on how he or she wants his or her property to be treated after his or her death. A person can only will away a property that he or she owns or has the power to dispose of at the time of death.

"A will has to stand the test of law," says Anupam Srivastava of The Chambers of Law, a Delhi-based law firm. While a court generally does not get into the merits of a will, the document could get nullified if it is proved in a court of law to have been made under suspicious circumstances, adds Srivastava. In the absence of a will, the legal heirs are governed by the personal laws of the faith that the deceased professed.

A family agreement or arrangement has not been defined statutorily under Indian laws, points out Aakanksha Joshi, associate partner at law firm Economic Laws Practice. However, Joshi says that Halsbury's Laws of England defines it as an agreement among members of the same family, intended to be generally and reasonably for the benefit of the family, either by compromising doubtful or disputed rights or by preserving the family property or the peace and security of the family by avoiding litigation or by saving its honour.

In other words, it is an arrangement - whether written or verbal - by which members of a family settle their inter se ("among themselves") rights in relation to a property to avoid disputes. As Jeevesh Nagrath, a lawyer in law firm Nagrath & Nagrath, says, "The purpose of a family agreement is to resolve a dispute or avert a future dispute, and to maintain peace and harmony in the family."

Legal experts explain that a family agreement is a valid, legally-binding and enforceable contract, applicable to all the signatories of the agreement. "Since consideration for a promise is essential, hence an agreement, unlike a will, is found on some consideration," points out senior advocate Ashwini Kumar Mata. While a will relates to a bequest of an estate, a family agreement provides for an arrangement by which some rights are created or declared (or assigned/ extinguished) whether in present or in future, he adds.

Equal rights

On its own, neither a family agreement nor a will is superior or of greater legal character than the other, says Mata. However, legal experts point out that it is the cast and terms of the family agreement that will determine if there are any bequeathable assets or titles that can become the subject of a will.

"Since both a family agreement and a will operate on different time planes, no occasion arises for conflict or preponderance of one over the other," says Mata. But legal opinion appears divided on this point. "Even if there is a family agreement, a portion to be transferred on a future date is not a valid contract for reasons of uncertainty, and at best should be seen as a desire, which one is entitled to change whenever one wants to," contends Srivastav.

Indian courts seem to give greater legal sanctity to a family agreement. Courts have upheld family arrangements that also include those who are not members of a joint family, or those whose entitlement to inheriting a property is doubtful. "Courts lean in favour of upholding a family arrangement instead of disturbing the same on technical or trivial grounds even if they suffer from a legal lacunae or a formal defect," says Joshi of Economic Laws Practice. Experts point out that the courts have applied the rule of estoppel - a legal bar to alleging or denying a fact because of one's own previous actions or words to the contrary - to prevent the unsettling of a family agreement. "The Supreme Court has held that there are special equities attached to such agreements, and courts should always lean in favour of giving full effect to them," says Nagrath.

In sharp contrast, there are strict requirements under law for the making of a will and for its subsequent execution.

Safeguards for a family agreement

According to Kavil Ramachandran, Thomas Schmidheiny Chair Professor of Family Business and Wealth Management, Indian School of Business, there are two dimensions to any family agreement. One, a legally binding shareholders agreement, and second, a set of policies, rules and restrictions that provide clarity on what is acceptable and what is not. The trouble is that most families have piecemeal awareness about a family agreement, shareholder agreement, family constitution or a will, says Ramachandran. To ensure the preponderance of a family agreement, the makers should specifically mention that it is superior to a will, says Ramachandran. His contention is that in the normal course, a legally signed family agreement should supersede a will, irrespective of whether the will was written prior to or after the family agreement.

Legal experts also say that any family agreement must clearly state how the asset or title is to be divided and that each person to the settlement is absolutely entitled to the same. "If it is intended that the property is to be held jointly, the family arrangement should clearly specify this and mention that the property is held as joint property and whether it is intended for the heirs of any members to succeed to their share or not," says Joshi.

Mata adds that it is important to appropriately structure a family agreement so as not to leave any disposable residuary bequeathable title or asset with the transferor that can become the subject matter of a will. At the end of the day, it is, of course, harmony among family members that is perhaps the best safeguard for the proper execution of a family agreement.

Sudipto Dey / New Delhi 11 Dec 14

Smart Investor

Importance of writing a will

Will is a legal declaration of the intention of a testator with respect to his property, which he desires to be carried into effect after his death. It includes codicil and every writing making a voluntary posthumous disposition of property. It is testamentary instrument by which a person makes disposition of his property to take effect after his death, and which, in its own nature, is ambulatory and revocable during his life. Thus, a Will can be changed by the executant as and when he so likes. It is a secret and confidential document which the executant is never ordered to produce.

There are tow essential characteristics of a Will:-

(i) It must be intended to come into effect after the death of the testator; and

(ii) It must be revocable by the testator at any time. Although Wills are usually made for disposing property, they can also be made for appointing executors, for creating trusts and for appointing testamentary guardians of minor children. In one case, the Andhra Pradesh High Court has held that contents of the Will must indicate that it is intended to come into effect after death of testator and that it is revocable at any time prior to his death and a document cannot be treated as a Will by a mere reading of heading of it.

A gift to take effect the life lime of the donor is a deed of settlement and not a Will. Section 63 of the Indian Succession Act, 1925 provides that a Will is liable to be revoked or altered by the maker of it at any time when he is competent to dispose of his property by Will.

When a person dies without having made a Will, he is said to have died intestate. His property is then inherited by his legal heirs in accordance with the law of inheritance applicable to him. It must be noted here that legal heirs generally include close family members such as one’s spouse, children, parents, brothers and sisters.

If one does not make a Will then his property will be inherited by legal heirs in accordance with the laws of inheritance applicable to him. However, most of the people would like to dispose of their property according to their own wishes. Thus, there arises the need for making one’s Will. Apart from it there are certain distinct advantages of making a Will.

1. When a person dies without having made a Will, there is often confusion amongst the family members and relatives as to whether the deceased did make any Will prior to his death or not, but if a Will is available, the only question that needs to be ascertained is whether it is the last Will of the testator.

2. A Will be absolutely personal document. More than anything it is an expression of the relationship with the members of family or relatives, etc. The views, opinions and feelings, etc., are indicated in this document. A Will allows the devolution of property in a personalized manner rather than letting the impersonal rules of inheritance take effect.

3. Many disputes can be resolved at the very outset if there is a clear disposition of one’s property in a Will. It will not be out of place to mention the imbroglio of Late Mrs. Indira Gandhi and her daughter-in-law Manekar Gandhi, who were embroiled in a litigation concerning the assets of the late Sanjay Gandhi. Had Sanjay Gandhi left behind a Will, the possibility of any dispute surfacing between the mother and his wife would have been very remote.

4. By means of a Will, one can appoint in writing, a testamentary guardian for his infant children. A testamentary guardian is person, who is appointed b a testament or a Will. This point needs further clarification. In the event of the death of a parent the law would ordinarily uphold the right of surviving natural parent to be the guardian of the child. However, if there is no surviving parent, the law attaches great importance tot eh Will of a parent in deciding who to appoint as a guardian. This is a matter of great importance with regard to the future of the children and therefore, this issue must be discussed in details with the proposed guardian before appointing him testamentary guardian.

5. A Will provides more room inter se the laws of inheritance, which sometimes do not cater to the special needs and requirements of the members of a family. For instance, a father has two sons. One is healthy but the other is handicapped due to any chronic disease since childhood. The laws of inheritance would treat both these children on an equal footing. But by means of a Will one can have somewhat greater provision for a handicapped son, a widowed daughter or an invalid parent. Not only that by means of a Will, one can make some provision for a faithful servant, a nurse a friend in need of money, and so on. All such people could never receive any benefit whatsoever under the laws of inheritance in the absence of a Will.

6. In the absence of a Will even the most unwanted son, who had left the house for disobedience, fraud, violence, etc. may turn up to claim his share of estate from his father’s property. Similarly, an adulterous wife might demand her share as per inheritance laws.

There are however, some disadvantages also in making a Will and they are mostly psychological. In many cases it has been observed that people lose all their interests in life and idem such before the time they would have lived.

If there is no Will, the property would be dealt with as per the laws of inheritance. For Hindus, Buddhists, Jains and Sikhs the laws of inheritance have been codified in the Hindu Succession Act, 1956. For Christians the Indian Succession Act, 1925 will be applicable. Parsis have a different law of inheritance. Similarly, Muslims have their own law. That has, however, not been codified in nay legislation but is based on their religious texts. There are tow major sects of Muslims – Shias and Sunnis. Both of them have different laws of inheritance.

No Need to mention here that Wills are always effective after death, never in the life time of the testator. Section 63 of the Indian Succession Act, 1925 provides that a Will is liable to be revoked or altered by the maker of it at nay time when he is competent to dispose of his property by Will, Therefore, the essential characteristic of a Will is its revocability.

Privileged and Unprivileged Wills Wills executed according to the provisions of section 63 of the Indian Succession Act are called Unprivileged Wills and Wills executed under section 66 of the Act, by a soldier employed in an expedition or engaged in actual warfare, or by an airman so employed or engaged, or by mariner being at sea, are called Privileged Wills. It is provided in the Act that such a Will may be written wholly by the testator with his own hands and, in such a case, it need not be signed or attested; or it may be written wholly or in part by another person, in which case, it may be signed by the testator but need not be attested. If, however, an instrument purporting to be a Will is written wholly or in part by another person and is not signed by the testator, it shall be deemed to be his Will, if it is shown that it was written by the testator’s directions or was recognised by him as him Will. if, on the face of it, the instrument appears to be incomplete, it shall nevertheless, be demand to he the Will of ht testator, provided the fact that it was not completed, can be attributed to some cause other than the abandonment of the testamentary intentions expressed in the instrument. Further, if such a soldier, airman or mariner has written instructions for the preparation of his Will, but has not died before it could be prepared and executed, the instructions shall be deemed to be his Will; and if such a person has, in the presence of two witnesses, given verbal instructions for the preparation of his Will, and such instructions have been reduced to writing in his lifetime, but he has died before the Will could be prepared and executed, then such instructions are to be considered to constitute his Will, although they may not have been reduced into writing in his presence, nor read over to him. It is also provided that such a soldier, airman or mariner may make a Will by word of mouth by declaring his intention before two witnesses present at the same time, but such a Will shall become null at the expiration of one month after the testator, being still alive, has ceased to be entitled to make a privileged Will.

An unprivileged Will like Codicil can be revoked by the testator only by another Will or by some writing declaring an intention to revoke the same and 3executed in the manner in which an unprivileged Will can be executed under the Act or by burning, tearing or destroying of the same by the testator or by some other person in his presence and by his directions with the intention of revoking the same.

Mere loss of a Will does not operate as a revocation but where a Will is destroyed by the testator or with his privacy or approbation, it is to be deemed to have been revoked.

No obliteration, interlineations or other alternation made in any unprivileged Will after the execution thereof, can have any effect except so far as the words or meaning of the Will have been thereby rendered illegible or unidiscernible, unless such alteration has been executed in the same manner as is required for the execution of the Will; but a Will, as so altered, shall be deemed to be duly executed if the signature of the testator and the subscription of ht witnesses is made in the margin or some other part of the Will opposite or near to such alternation, or at the foot or end or opposite to a memorandum referring to such alteration, and written at the and or some other part of the Will.

A privileged Will or Codicil may be revoked by the testator by an unprivileged Will or codicil, or buy any act expressing an intention to revoke it and accompanied by such formalities as would be sufficient to give validity to a privileged Will, or by the burning, tearing or otherwise destroying the same by the testator or by some person in his p[resence and by his direction with the intention of revoking the same. In such cases, it is not necessary that the testator should, at the it time of doing the act which has the effect of revocation of the Will or Codicil, be in a situation which entitles him to make a privileged Will.

Every Will is revoked by the marriage of the maker, except a Will made in exercise of a power of appointment, when the property over which the power of appointment is exercised, would not, in default of such appointment, pass to his or her executor or administrator, or to the person entitled in case of intestacy.

This rule as to revocation of a Will by marriage, does not, however, apply to Wills and codicils executed by Hindus, Buddhists, Sikhs or Jains.

An unprivileged Will which has once been validly revoked cannot be received otherwise than by the re – execution thereon with the prescribed formalities, or by a codicil executed with such formalities and showing an intention to revive the same. When a Will or a codicil, which has been partly revoked and afterwards wholly revoked, such revival cannot extend to so much thereof as has been revoked before the revocation of the whole thereof, unless and intention to the contrary is shown by the Will or codicil.

It has already been stated that in the case of Hindus, Buddhists, Sikhs and Jains a Will could validly be made orally and no formalities for the execution of a Will are required. This rule, however, did not apply to Wills made by Hindu, Buddhists, Sikhs or Jains, on or after the 1 st of September, 1870, within the territories which were subject to the Provincial Government of Bengal or in the local limits of the ordinary civil jurisdiction of the High Courts of Judicature at Madras and Bombay, and also, to all such Wills and codicils made outside those territories or limits so far as they related to immovable property situated within these territoes or limits. The execution of such Wills was previously regulated by the Hindu Wills Act (XXI of 1870). Except in the cases mentioned in that Act, oral Wills could be made by person’s professing the Hindu, Buddhist, Sikh and Jain religions. A question, however, arises whether the Indian Succession Act, 1925 has the effect of depriving such persons of the privilege of making oral Wills, or whether the previsions of section 63 of the Act do not merely provide for the formalities which must be observed, if any of such persons chooses to ‘execute’ a Will, i.e., chooses to reduce his testamentary dispositions to writing. It will be observe that section 63 of the Act provides for the manner of ‘execution’ of unprivileged Wills, it does not deal with the question of the ‘making’ of such Wills.

That the Act seems to make a distinction between the ‘execution’ and the ‘making’ of Wills, will appear from a comparison of the phraseology of sections 63 and 66 of the Indian Succession Act, 1925. While section 63 refers to the ‘execution’ of unprivileged Wills, section 63 refers to the ‘execution’ of unprivileged Wills, section 66 prescribes the ‘mode of making’ and rules for executing Privileged Wills’. A distinction, therefore, seems to be contemplate between the ‘execution’ and the ‘making’ of a Will. The former expression apparently applies to cases where the Will is to be reduced to writing, and the expression ‘making of a Will’ includes the execution of a Will and also an oral declaration by the testator of his testamentary disposition of his estate, if such declaration legally amounts to a Will. The matter is a debatable one, and no definite opinion, therefore, need be expressed on it at this stage.

Conditional or Contingent Wills A Will may be expressed to take effect only in the event of the happening of some contingency or condition, and if the contingency does not happen or the condition fails, the Will is not be legally enforceable. Accordingly, where A executes a Will to be operative for a particular year, i.e.,. if he dies within that year. A lives for more years, after that years. Since A does not express an intention that the Will be subsisting even intestate. A Conditional Will is invalid if the condition imposed is invalid or contrary to law.

Joint Wills A Joint Will is a testamentary instrument whereby two or more persons agree to make a conjoint Will. Where a Will is joint and is intended to take effect after the death of both, it will not be enforceable during the life– time of either. Joint Wills are revocable at anytime by either of the testators during their joint lives, or aster the death of one, by the survivor.

A Will executed by two or more testators as a single document duly executed by each testator disposing of his separate properties or his joint properties is not a single Will. It operates on the death of each and is in effect for tow or more Wills. On the death of each testator, the legatee would become entitled to the properties of the testator who dies.

Mutual Wills A Will is mutual when two testators confer upon each other reciprocal benefits by either of them constituting the other his legatee. But when the legatees are distinct form the testators, there can be no position for Mutual Wills.

Duplicate Wills A testator, for the sake of safety, may make a Will in duplicate, one to be kept by him and the other to be deposited in the safe custody with a bank or executor or trustee. If the testator mutilates or destroys the one which is in his custody it is revocation of both.

Concurrent Wills Generally, a man should leave only one Will at the time of his death. However, for the sake of convenience a testator may dispose of some properties in one country by one Will and the other properties in another country by a separate will.

Sham Wills If a document is deliberately executed with all due formalities purporting to be a Will, it will still be nullity if it can be shown that the testator did not intend it to have nay testamentary operation, but was to have only some collaterally object. one thing must be born e in mind that the intention to make the Will is essential to the validity of a Will.

Holograph Wills Such Wills are written entirely in the handwriting of the testator.

Note on Certain Agreements related to Personal Finance

Agreement to Sale VS Sale Deed

An agreement to sell is an important document in the process of sale and purchase of property. This agreement contains the terms and conditions agreed upon between the parties, and binds them. An agreement to sell is the basic document on which a conveyance deed is drafted. It is always advisable to have an agreement to sell in writing.

It precedes the execution of a sale deed. This agreement is signed and executed by the seller and buyer on a non-judicial stamp paper. It has legal value and if need be can be produced as evidence in a court. The agreement specifies the procedures to be followed leading to the execution of the conveyance or sale deed. It records the understanding reached between the parties, and is binding on both

An agreement to sell protects the interests of both parties and spells out in clear terms the conditions under which the seller is intending to sell the property and those under which the buyer is intending to purchase it. This facilitates smooth culmination of the transaction without dispute, confusion and misunderstanding

AGREEMENT OF SALE

This AGREEMENT OF SALE is made and executed on this the _____ day of March, 2014, by and between.,

1. Sri MOLUGU PRAKASH RAO, S/o. Sri M.LINGA RAO, aged about 53 years, Occupation : Business, R/o. H.No.5-3-106/1, Kukatpally, Hyderabad.

Represented by their Development Agreement Cum-GPA Holder : M/s.MAHATHI BUILDERS PRIVATE LIMITED., Represented by its Managing Partner : Sri B.RAM CHANDER, S/o. Sri RAMAKRISHNA, aged about 39 years, Occupation : Business, R/o. Plot No.328, Jalvayu Vihar, Near Sivaparvathi Theatre, KPHB Colony, Kukatpally, Hyderabad. Vide Registered Development Agreement-Cum-GPA Document No.2424/2013, Dated : 26-03-2013, Registered at S.R.O. Kukatpally, Ranga Reddy District.

Hereinafter called the "VENDORS" of the first part which term shall mean and include all their heirs, executors, administrators, legal representatives, nominees and assignees etc.,

IN FAVOUR OF

Sri TUMULURI VENKATESH PRASAD, S/o. Sri TUMULURI DAKSHINA MURTHY SASTRY, aged about 35 years, Occupation : Employee, R/o. 202, Anjaneya Nagar, Moosapet, Hyderabad-500018.

Hereinafter called the "VENDEE" of the second part which term shall mean and include all his heirs, executors, administrators, legal representatives, nominees and assignees etc.,

WHEREAS the Vendors herein are the sole and absolute owners and peaceful possessors of Land admeasuring 1516 Sq.yds., or equivalent to 1267.37 Sq.mts., in Survey Nos. 681/A and 682, Situated at KUKATPALLY VILLAGE, Balanagar Mandal, under GHMC Kukatpally Circle, Ranga Reddy District., (Hereinafter called the Schedule Property) having acquired the same through a Registered Gift Settlement Deed vide Doct.No.4395/2011, Registered at SRO Kukatpally. And the same is rectified through a Rectification Deed, vide Regd.Doct.No.5182/2011, Registered at S.R.O. Kukatpally.

AND WHEREAS the vendors entered into Development Agreement with M/s.MAHATHI BUILDERS PRIVATE LIMITED., and obtained permission from GHMC, Vide Permit No.23423/HO/WZ/Cir-14/2013, for construction of a building complex on above said Land admeasuring 1516 Sq.yds., or equivalent to 1267.37 Sq.mts., in Survey Nos. 681/A and 682, Situated at KUKATPALLY VILLAGE, Balanagar Mandal, under GHMC Kukatpally Circle, Ranga Reddy District., and building is named as “MAHATHI VIBHAVA”. According to their Development Agreement the Schedule mentioned Flat No.402 (in Fourth Floor) fallen to the share of Developer.

And whereas the Vendors through DAGPA Holder (Developer) has offered and agreed to sell the Semi-Finished Flat No.402 (in Fourth Floor), of “MAHATHI VIBHAVA”, with built up area of 1525 Sq.Feet, (including common area) and One Car Parking Slot, along with an undivided share of land admeasuring 50.00 Sq.yards (Out of 1516.0 Sq.yards) on Open Land, in Survey Nos. 681/A and 682, Situated at KUKATPALLY Village, Balanagar Mandal, under GHMC Kukatpally Circle, Ranga Reddy District., to the VENDEE, for a total sale consideration of Rs.55,00,000/- (Rupees Fifty Five Lakhs only) the VENDEE has agreed to purchase the same, hereinafter called the 'Schedule Property' and more fully described in the 'SCHEDULE PROPERTY' annexed hereto.

NOW THIS AGREEMENT OF SALE WITNESSESTH AS FOLLOWS :

1. In pursuance of the agreement of sale the VENDEE has paid an amount of Rs.11,00,000/-(Rupees Eleven Lakhs only) to the Developer as advance as follows :

(i) Rs.50,000/- by way of cash on Dated : 13-03-2014.

(ii) Rs.5,00,000/- by way of Cheque No.____________, Dated : 19-03-2014, Drawn on _____________________________________________.

(iii) Rs.5,50,000/- by way of Cheque No.____________, Dated : 22-03-2014, Drawn on _____________________________________________.

And the Developer do hereby admits and acknowledges the receipt of the said sum. And balance amount of Rs.44,00,000/- (Rupees Forty Four Lakhs only) will be paid by the VENDEE to the Developer as per progress work.

2. THAT the Vendors/Developer has agreed to deliver the vacant, physical and peaceful possession of the scheduled mentioned property to the VENDEE at the time of registration “TO HAVE AND TO HOLD“ the same absolutely and forever.

3. THAT the Vendors/Developer have paid all the taxes and dues, etc., in respect of the scheduled of property upto the date of this sale of agreement.

4. THAT the rights, titles, interests, easements, privileges, liberties, enjoyment and possession hereby transferred in favour of the Vendees absolutely and forever.

5. THAT the Scheduled of property hereby sold is free from all encumbrance charges, prior sales, mortgages, gifts, liens court attachments and litigations etc., and the Vendors/Developer have full power to sell the Scheduled of property to the VENDEE absolutely and forever.

6. THAT the Vendors/Developer hereby indemnify and keep the VENDEE indemnified from against all the losses, costs, expenses, damages sustain if any to the VENDEE on account of any defect in the title of the Vendors/Developer or from any third party’s claim or the VENDEE is deprived from the part or whole of the Scheduled of property.

7. THAT the Vendors/Developer further undertakes to execute a Sale Deed in faovur of VENDEE or to whomsoever he may propose, and the stamp duty, registration fee etc., shall be born by the VENDEE and the Vendors/Developer shall sign all the papers and documents etc., Required for the purpose of registration in favour of the VENDEE or nominee/nominees.

SCHEDULE OF PROPERTY

All that Semi-Finished Flat No.102 (in Fourth Floor), of “MAHATHI”, with built up area of 1525 Sq.Feet, (including common area) and One Car Parking Slot, along with an undivided share of land admeasuring 50.00 Sq.yards (Out of 1516.0 Sq.yards) on Open Land, in Survey Nos. 681/A and 682, Situated at KUKATPALLY Village, Balanagar Mandal, under GHMC Kukatpally Circle, Ranga Reddy District., and bounded by:

BOUNDARIES FOR LAND

NORTH : DRIVE WAY

SOUTH : NEIGHBOUR’S LAND

EAST : TOT-LOT

WEST : DRIVE WAY

BOUNDARIES FOR FLAT NO.402

NORTH : LIFT & OPEN TO SKY

SOUTH : OPEN TO SKY

EAST : OPEN TO SKY

WEST : CORRIDOR

IN WITNESSES WHEREOF, the Vendors through DAPGA Holder and Vendee have signed on this Agreement of Sale with their own free will and consent on attachment this day, month and year first above mentioned before the following.

WITNESSES :

V E N D O R S

(Through DAGPA Holder)

V E N D E E

POWER OF ATTORNEY

Authentication by Notary: It must be signed and notarised by a certified notary advocate, who is able to declare that you are competent at the time of signing the document to issue the said power of attorney. You will need to show your ID to the notary advocate before he/she is able to certify and issue the document.

Registration: A power of attorney is not compulsorily registrable unless it creates an interest in any immovable property i.e. charge in favour of donee. Registration of power of attorney is optional In India.

Stamp Duty: A power of attorney is chargeable under Section: 48 of Schedule 1 of the ‘Indian Stamp Act, 1899’. A stamp duty has to be paid compulsorily by the principal or donor in the jurisdictional registrar’s office.

Legal Powers Which Can Be Granted To The Attorney: Broadly speaking a power of attorney provides an agent “all powers that the principal has” to manage the principal’s financial affairs or make health care decisions may be enough for many purposes. An agent may be authorised to:

i. To execute all contracts, deeds, bonds, mortgages, notes, checks, drafts, money orders.

ii. To manage, compromise, settle, and adjust all matters pertaining to real estate.

iii. To lease, collect rents, grant, bargain, sell, or borrow and mortgage.

iv. To sell any and all shares of stocks, bonds, or other securities.

v. To file, sign all tax returns, insurance forms and any other documents.

vi. To enter into contacts, and to perform any contract, agreement, writing, or thing to make, sign, execute, and deliver, acknowledge any contract, agreement.

vii. To make health-care decisions for the donor or his minor children.

viii. To sue on behalf of the principal.

PARTNERSHIP DEED

This DEED OF PARTNERSHIP made this --- day of-------------- between ----------

Here in after called the partners of the first part and Second Part respectively

AND

A company registered under the provisions of the Companies Act 1956 and having its registered office at------- hereinafter called the party of Third part

WHEREAS the Parties of First and Second Part by virtue of their partnership deed dated have been carrying on the business of manufacturing and marketing paints, colors and varnishes etc. under the name and style of-------------- with factories at---------------------under the same name and style.

AND WHEREAS the Party of Third Part Viz. the company is formed with the objects of manufacturing dealing and marketing in paints, varnishes, colors etc.

------- AND WHEREAS the Party of the Second Part has expressed its desire and willingness through the director-------------- to enter into Partnership and parties First, Second part have mutually decided that the Party of the third Part shall be taken as Partner.

AND WHEREAS it is deemed necessary and desirable that a regular Deed of Partnership be reduced in writing and executed on the terms and conditions mentioned hereunder.

NOW THIS DEED WINTESSETH AS UNDER: -

1. The Partnership shall come into effect from------- and shall be for an indefinite period unless it is determined.

2.That the name and style of the Patnership firm hereby formed shall be-------------- with factories at-------------- under the same names and style or with branch or branches at such place(s) as the parties may mutually decide.

3. That the business of the Partnership Firm hereby formed shall be that of manufacturing and marketing of paints, colors and varnishes etc., as hereto before. The parties may, however, with their mutual consent embark upon a new line or lines of business and may open branch or branches or new factory.

4. That the amount standing to the credit of the personal accounts of the Parties of First and Second Part in the books of above firm as on------- shall be treated as contribution by them to the capital of the Partnership and the Party of the Third Part shall bring Rs.-------------- as his share towards the capital of the firm.

5. That further finance required for the purpose of business of the firm shall be contributed by the parties in such rate as may be mutually agreed upon. Interest at the rate of------- or at a rate as may be mutually agreed upon between the parties from time to time shall be allowed on the capital standing to his/her credit for the time being in the books of the partnership.

6. That the regular accounts books shall be kept in due course of business in which shall be faithfully recorded all the transactions enter into by the firm and such books shall be closed on-------------- or/on any other convenient or auspicious day as may be mutually agreed upon between the parties hereto from time to time.

7. That on closing the account books in the aforesaid manner, a regular profit & Loss Account shall be prepared and a balance sheet shall be drawn up.

8. That the Profits & Losses shall be divided between and borne by parties hereto in the following proportions:

9. That the partners will be paid a Salary of Rs.2500/- per month for the services rendered to the rim and they will also be entitled to a bonus @ 12% on their salary.

10. That all the assets and liabilities of the firm as on-------------- tangible or otherwise, would be taken over by the Partnership at its book value and shall be deemed to be assets and liabilities of this Partnership and all the Parties hereto will have equal rights/liabilities thereon.

11. That all rights of the firm as on--------------------- namely ISI marketing license, Trade marks, Sales Tax registration, Telephone connections, Tenancy rights, Lease rights, Ownership right etc. shall be deemed to be the rights of the partnership and all the parties hereto will have equal rights/liabilities thereon.

12. That each partner shall: -

(a) Diligently attend to the business of the Partnership and devote his/her necessary time and attention thereto.

(b) Punctually pay her/his separate debts and indemnify the other partner and the Assets of the firm against the same and all expenses therefore.

(c) Upon every reasonable request inform the other Partner of all letters, accounts, writings and such other things which shall come to her/his hands or knowledge concerning the business of the Partnership.

13.That neither Partner shall without the consent of the others: -

(a) Lend any of the money or deliver upon credit any of the goods of the firm to any person or persons whom the other Partners shall have previously in writing forbidden her/him to trust.

(b) Raise or advance any loan in the name of or on behalf of the firm.

14. That the account in the name of the firm------- shall be opened with the Banks or bankers as the Parties may mutually decide and the same shall be operated upon by the Parties hereto singly.

15.That any partner may retire from the Partnership firm, hereby formed by giving two months notice in writing to the others but none shall leave the firm until or unless all the pending commitments are carried out, liabilities paid off, assets realized and accounts are rendered fully and settled finally to the entire satisfaction of each of the parties hereto.

16.That the parties hereto may, however, with their mutual consent pay remuneration to any of the parties hereto at a rate that may be mutually agreed upon between them from time to time. They shall be at liberty to increase or decrease such rate of remuneration with their consent from time to time.

17.That in the event of death or retirement of any of the parties hereto the partnership firm hereby formed shall not dissolve, but shall continue. The legal heir or the representative of the deceased shall step into her/his shoes.

18.That upon the dissolution of the partnership in any even not hereinafter provided for the said business, the assets, goodwill and liabilities thereof should absolutely vest on any one partner mutually decided by the parties to the partnership.

19.That it will always remain open to the parties hereto to amend, annul or change any term or terms of this Deed of Partnership in the course of its business and in that event of amending, annulling or changing any term or terms of this deed of Partnership no fresh deed shall be required to be executed.

20.That without prejudice to the above terms and conditions the parties hereto in all other matters shall be governed by the provisions of Indian Partnership Act, 1932.

21.That all the disputes or differences arising out of it and connected with the Partnership shall be referred to the arbitrator in accordance with the Indian Arbitration Act.

IN WITNESS WHRE OF, the parties of the first and Second parts here have put their respective hands on this DEED OF PARTNERSHIP on the day, month and year first mentioned above.

IN WITNESSES WHEREOF, the common seal of the Third Partner viz.-------------- was pursuance to the resolution of the Board of Directors passed in that behalf on--------------------- here into affixed in the presence of-------------- and signed these presents in token thereof in the presence of the Witnesses:

WITNESSESS:----------------------------------- Partners

------------------------------------------------- 1.

RENT AGREEMENT

This Rent Agreement is made on this the 1st day of November, 2013 at Udumalpet between:

Mr.:U.S,Sridhar, S/o, Shanmuga Sundaram,aged about 52 years, Occupation: Business Man, presently residing at D.No:48,Big bazaar Street,Udumalpet,Thirupur-Dist(hereinafter referred as "Owner", which expression, unless repugnant to the context thereto, shall mean and include her legal heirs, successors, nominees, assignees, administrators and executors) of the FIRST PART.

AND

M/s GVPR Engineers Ltd, a limited company duly incorporated under the provisions of the Companies Act, 1956 having its Corporate office at #8-2-293/82/a, Plot No: 739-A, Road No: 37, Jubilee Hills, Hyderabad-33, Andhra Pradesh (State) represented By Mr.K.Vijay Vardhan Reddy (Project Manager) which expression unless repugnant to the subject and context shall mean and include all its successors-in-interest, assignees and attorneys (hereinafter referred to as "Tenant" of the SECOND PART.

The Owner and the Tenant are hereinafter jointly referred to as the "Parties" and individually as the "Party".

WHEREAS:

A. The Owner is the absolute owner and possessor of all that Mr.:U.S,Sridhar, S/o, Shanmuga Sundaram,aged about 52 years, Occupation: Business Man, presently residing at D.No:48,Big bazaar Street,Udumalpet,Thirupur-Dist , admeasuring 1.0 Acres area situated in 7^th Street,Gandhinagar 2^nd Colony Extension,Udumalpet,Thirpur Dist-642126, which is more fully described in the Schedule of Property at the foot of this indenture and hereinafter referred to as the "Schedule Premises".

B. The Owner is desirous of letting out the Schedule Premises on rental basis. The Tenant is intending to take the Schedule Premises on rental basis for storing of electrical material for executing the work of R-APDRP Project. The Parties herein above are now intending to reduce the agreed terms and conditions into writing as follows:

NOW THIS AGREEMENT WITNESSETH AS FOLLOWS:

The owner declares/ represents that he is the absolute owner, possessor and landlord of the Schedule Premises and no person/entity has any right, title or interest, of whatsoever nature thereon.

The permission to occupy and use the premises is period of 6 months commencing from 1st November' 2013 and expiring on 30th April, 2014. This may be extended for a further term as per the requirement of the Project execution if the parties extend the Deed as per the requirement of the Project.

1. The Tenant is granted to occupy and use the premises for storing of electrical material and using water and common Toilets for regular use only. The Tenant shall use the Schedule Premises solely for undertaking Storing of Electrical material and shall use the Schedule Premises in a legitimate manner only.

2. The Rent amount fixed Rs:-8000/-(Eight Thousand Only) per a month up to completion the Deed.

3. The Tenant shall pay a sum of Rs.30000/- (Rupees Thirty thousand only) by Cheque No: DT: Bank Name: favor Name: in advance rent Deposit. This amount is refundable at the time of vacant the land and shall not carry any interest.

4. The Parties agree that Tenant is not responsible for any other taxes or charges levied upon the Schedule Premises. The Owner undertakes to pay/clear all existing and future taxes (TDS, Property Tax, Etc.) levied by or payable to any Local or Public Body or Authority as applicable to the Schedule Premises (the "Taxes") from time to time and absolve the Tenant from the responsibility towards the same. In the event of the Tenant making the payment for any as above mentioned of the Taxes on behalf of the Owner, the Owner agrees that the Tenant shall be entitled to deduct the same from the Rental Amount payable to the Owner.

5. Separate electricity connection to be applied by owner and the Tenant is responsible for paying the applicable charges at every month.

6. The owner covenant that:

a. The Owner is the sole and absolute owner and is absolutely seized and possessed of the Schedule Premises with uninhibited rights. The Owner is otherwise well and sufficiently entitled to the Schedule Premises and is fully capable of letting out the Schedule Premises on rent.

b. The occupation of the Schedule Premises shall be on an "as is where is" condition. The Owner expressly permits the Tenant to make such temporary or permanent modifications to the Schedule Premises as may be incidental and necessary for its purposes, at its own cost. It is however, clearly agreed and understood that the Tenant shall not be entitled for any reimbursement of the expenses incurred for such modifications to the Schedule Premises and that at the time of vacating the same; the Tenant shall restore the Schedule Premises in a good tenantable condition subject to normal wear and tear.

c. On paying the rental amount, the Tenant shall be entitled to the peaceful and quiet occupation of the Schedule Premises during the rental period.

7. The Owner hereby indemnifies and holds the Tenant harmless from and against any claim, cost, expense, liability, demand, loss, damage, judgment, order, award or other obligation or right of action, which may arise as a result of the Owner's defect in the title of the Schedule Premises.

8. The Tenant covenants that:

a. Het shall maintain the Schedule Premises in good condition subject to normal wear and tear;

b. He shall not sublet or otherwise transfer, convey, assign its interest or part with the occupation of the Schedule Premises or any part thereof in favor of or to any other person whomsoever;

c. He shall, at the expiration or earlier termination of the Agreement, leave the Premises in good condition, subject to normal wear and tear;

d. He shall not store any hazardous or inflammable substances in the Schedule Premises other than what is required for Storing of Electrical material purpose;

e. He shall not carry out any illegal activity on the Schedule Premises.

f. The Tenant shall put the Temporary sheds in schedule Premises for their works and it will remove at the time of vacating the Lease hold premises.

g. The Tenant shall put the Outer fencing to schedule Premises for their safety and it will be remove at the time of completion of the Lease.

9. The Owner and or his authorized representatives shall be at liberty to inspect the Schedule Premises on all working days during day hours with prior intimation to the Tenant.

10. The Tenant shall provide prior intimation of one month, to the Owner if he intends to renew the Agreement. In the absence of such prior intimation, this Agreement shall be deemed to have expired on the end of the Rental Period; and the Tenant shall vacate the Schedule Premises on the said expiry date.

11. The Parties agree and understand that at the time of determination of the Rent Agreement and vacating the Schedule Premises, the Tenant shall not be responsible for any amount other than the Rental Amount as applicable till then.

12. Notwithstanding anything contained herein, the Parties shall be entitled to terminate this Agreement by giving to the other Party, one month prior written notice.

13. If any dispute or difference shall at any time arise between the Parties pertaining to this Agreement, it shall be subject to the exclusive jurisdiction of the courts at Coimbatore.

14. The Parties confirm and acknowledge that this Agreement shall constitute the entire agreement between them and shall supersede and override all previous communications, either oral or written, between the Parties with respect to the subject matter of this Agreement, and no agreement or understanding varying or extending the same shall be binding upon any Party unless arising out of the specific provisions of this Agreement.

SCHEDULE OF PROPERTY

All that constructed area admeasuring 1.0 Acres in the area bearing situated in Mr.:U.S,Sridhar, S/o, Shanmuga Sundaram,aged about 52 years, Occupation: Business Man, presently residing at D.No:48,Big bazaar Street,Udumalpet,Thirupur-Dist-642126 and bounded by:

North : Open Land of Owner

South : Open land of Owner

East : Open land of Owner

West : Open land of Owner

IN WITNESS WHEREOF, the Parties have signed this Agreement on the , , 2013 aforesaid in the presence of the following:

……………………… ……………………….

Owner Tenant

Witness:

Is it compulsory to register lease deed and pay stamp duty on the same.

17. Documents of which registration is compulsory

The following documents shall be registered, if the property to which they relate is situate in a district in which, and if they have been executed on or after the date on which, Act No. XVI of 1864, or the Indian Registration Act, 1866, or the Indian Registration Act, 1871, or the Indian Registration Act, 1877 or this Act came or comes into force, namely:-

(a) instruments of gift of immovable property;

(b) other non-testamentary instruments which purport or operate to create, declare, assign, limit or extinguish, whether in present or in future, any right, title or interest, whether vested or contingent, of the value of one hundred rupees, and upwards, to or in immovable property;

(c) non-testamentary instruments which acknowledge the receipt or payment of any consideration on account of the creation, declaration, assignment, limitation or extinction of any such right, title or interest; and

(d) leases of immovable property from year to year, or for any term exceeding one year, or reserving a yearly rent;

18. Documents of which registration is optional

Any of the following documents may be registered under this Act, namely:-

(a) instruments (other than instruments of gift and wills) which purport or operate to create, declare, assign, limit or extinguish, whether in present or in future, any right, title or interest, whether vested or contingent, of a value less than one hundred rupees, to or in immovable property;

(b) instruments acknowledging the receipt or payment of any consideration on account of the creation, declaration, assignment, limitation or extinction of any such right, title or interest;

Hindu Undivided Family : Tax Planning in income tax and implications for estate planning

A common request faced by chartered accountant is to reveal some tax
planning tips ” One of the legal way is creating HUF What is HUF ? In India there is a culture of joint families and there are many Income which arise to family as a whole and not to a single person.

WHAT IS A HINDU UNDIVIDED FAMILY?

1. In general, HUF means a body of persons lineally descendant from a common ancestor including their wives and unmarried daughters, who are staying jointly.

2. The head of the family who is the eldest male member generally is treated as Karta of the HUF. Karta is entrusted with the duty of management of the HUF assets for the benefit of the family.

3. Members lineally descended from the common ancestor up to four degree are Coparceners of HUF. Any coparcener can ask for partition of HUF.

4. After amendment to Hindu Law in 2005, daughter born in the family also acquires same right as son of being a coparcener and continues to be so even after her marriage.

5. Wives and mother are only members of the HUF but not coparceners.

WHY – ?

Because you can save up to INR 5.5 Million in Present Value Terms!!

Assumptions:

1. Your current age is 30 years and your life expectancy is 70 years

2. Government increases the basic exemption limit by average INR 30 k per year and deductions by average INR 4 k per year with no other significant change in tax rates or slabs (which is quite conservative).

3. Inflation / Post tax rate of return on investment is 7% p.a. for discounting purpose.

4. You are able to utilize the full potential of savings available through HUF.

HOW – ??

1. An HUF is treated as a separate entity under the Income Tax Act, 1961;

2. Basic Exemption Limit of INR 200 k;

3. Benefit of slab rate of tax of 10% on incremental income up to INR 500 k and 20% on further incremental income up to INR 1 Million.

4. Deduction under section 80C of the Act of INR 150 k for certain investments in the name of its members (LIP, DAP, PPF, ULIP) as well others like under section 80D, 80 TTA, etc.

Other Benefits:

1. Income received by members from HUF property or income, exempt u/s. 10(2) in the hands of member.

2. Benefit u/s. 23(2) of the Act for one self occupied property for the own use of the family.

3. Deduction u/s. 24(b) of the Act up to INR 200 k for interest on loan for acquisition of self occupied property.

4. Presumptive taxation of business income u/s. 44 AD.

5. Distribution of capital assets on total or partial partition of HUF not regarded as transfer u/s.47(i) – no capital gain to HUF.

6. Exemption from capital gains u/s.54 (residential house property), 54B (rural agriculture land), 54F (investment in first or second residential house), 10(37) (compulsory acquisition of urban land).

How can it come in existence?

1. HUF is creature of law and automatically comes into existence on the marriage of a Hindu male.

2. Birth of a child is not necessary for the purpose of recognition of the status of HUF.

3. HUF can acquire properties by partition of larger HUF or ancestral property or by way of Gift (however gift by members attracts clubbing provision) So if you are married and does not have any capital into your HUF, your HUF still subsists and you can infuse capital by way of gifts.

How can you create & other compliance requirement ?

1. Make a declaration of HUF (an affidavit on a stamp paper of INR 100).

2. Apply for a PAN card in the status of HUF.

3. Open a separate bank account in the name of Karta on behalf of HUF.

4. Make formal gift deeds in respect of gifts received from relatives of member (the source of gift for the donor should also be recorded).

5. Maintain Separate books of accounts for HUF.

6. Keep the individual money and property separate from those of HUF.

7. File annual return of income for the HUF claiming the benefits.

Negative Aspects – Involved Risks:

1. HUF property cannot be transferred by WILL, Karta cannot sell the property and dispose the proceeds in his individual desire.

2. Family can decide mutually for disproportionate distribution among members by partition through mutual consent.

3. Any coparcener can ask for partition and equal share from the family property.

4. In case of court dispute provision of Hindu Law shall apply.

5. Therefore, there are chances that you may end up spending more rather than saving, this aspect needs to be kept in mind while indirectly throwing personal property into family net.

UNDERSTANDING TAXATION OF TRUST IN INDIA.

India follows the English concept of a trust as a vehicle under which property is alienated from the original owners and held by a trustee for the benefit of others. The law governing trusts is codified and contained in the Indian Trust Act.

A “trust” is an obligation annexed to the ownership of property and arising out of a confidence reposed in and accepted by the owner, or declare and accepted by him, for the benefit of another, or of another and the owner.

Author of trust:- the person who reposes or declares the confidence is called “author of the trust”. Trustee:- The person who accepts the confidence is called the “trustee”.

Beneficiaries:- The person for whose benefits the confidence is accepted is called the “beneficiary”.

Trust property:- The subject matter of the trust is called the “trust property” or “trust money”.

Instrument of trust:- The instrument, if any, by which the trust is declared is called the “instrument of trust”.

Public trust are generally formed for charitable or religious purposes, and are not intended to do commercial activities. A public charitable trust is one, which benefits the public at large, or some considerable portion of it. While, the income from private trusts is available to specified beneficiaries and not to the public at large.
A charitable trust is defined to include relief of the poor, education, medical relief, and the advancement of any other object of general public utility. Promotion of sports and games is considered to be a charitable purpose.

The public or private trust, differ in the process of their creation. In creating a charitable or religious trust, a formal deed or any other writing is not necessary, even if it involves immovable property. It may be created by use of words, but what is necessary is that there should be divestment of property on the part of the author or the settlor of the trust and should vest in the trustee, a third person.

Private trusts are created and governed by the provisions of the Indian Trusts Act, 1882 , whereas charitable trusts are beyond this Act. The Act applies to whole of India except when specifically amended by any State Government.

Trusts, whether public or private are subjected to taxation under the Income Tax Act,1961. It is the umbrella Act for all the matters relating to income tax and empowers the Central Board of Direct Taxes (CBDT)to formulate rules (The Income Tax Rules,1962) for implementing the provisions of the Act. The CBDT is a part of Department of Revenue in the Ministry of Finance. It has been charged with all the matters relating to various direct taxes in India and is responsible for administration of direct tax laws through the Income Tax Department. The Income Tax Act is subjected to annual amendments by the Finance Act, which mentions the ‘rates’ of income tax and other taxes for the corresponding year.

Taxation of Private Trust.

· When the shares of the individual beneficiaries are determinate:-

· The shares falling to each of the beneficiaries are liable to be assessed, either in the hands of the trustee(s) as a representative assessee or directly in the hands of the beneficiary entitled to the income. Such assessment is made at the rate applicable to the total income of each beneficiary.

· Where the income of the trust consists of or includes profits and gains of business, income tax shall be charged in the hands of trustee(s) on the whole of the income at the maximum marginal rate. This provision is not applicable, in the case of a trust which has been declared by any person exclusively for the benefit of any relative dependent on him and also such trust is the only trust so declared by him.

· When the individual shares of the beneficiaries are indeterminate or unknown [under section 164]:-

· Trustee(s) is liable to tax as a representative assesses.

· Where the income consists of, or includes, profits and gains of business, the entire income of the trust is charged at the maximum marginal rate of tax, except in cases of the a trust which has been declared by any person exclusively for the benefit of any relative dependent on him and also such trust is the only trust so declared by him.

· Where the income does not consist or include profits and gains of business, income is chargeable at the maximum marginal tax rate.

· However, the maximum marginal rate of tax is not applicable in the following cases, and the income will be chargeable to tax as if it were income of an association of persons(AOP) :-

1. Where none of the beneficiaries has any other income chargeable to tax under the Income Tax Act and none of the beneficiaries is a beneficiary under any other trust or

2. Where the relevant income or part of relevant income is receivable under a trust declared by any person by will and such trust is the only trust so declared by him or

3. Where the trust is a non-testamentary trust created before March 1, 1970 for the exclusive benefit of relatives of the settlor mainly dependent on him for their supporter maintenance or, where settlor is a Hindu undivided family, for the exclusive benefit of its members so dependent upon it or

4. Where the trust is created on behalf of a provident fund, superannuation fund, gratuity fund, pension fund or any other fund created bona fide by a person carrying on a business or profession exclusively for the benefit of persons employed in such business or profession.

In cases of (a), (b) and (c) supra, the relevant income is taxable in the hands of trustees as if it were the total income of an association of persons, while income falling under (d) supra is exempt from tax.

More Illustration on Taxation of Private Trusts:

Income from private trusts is available to specified beneficiaries and not the public at large. Private trusts are of two basic types for Income tax purposes:

· Specific trusts- where the individual shares of the beneficiaries are known and ascertainable for e.g. Mr. X creates a trust for his 5 sons and the share of each son is mentioned in the deed as 20% each, then such trust is known as specific trust.

· Discretionary Trust: In this no individual shares of the beneficiaries are mentioned in the deed and income is distributed to them on the “discretion” of the trustee.

Needs for creating a private trust?

Trusts are created for multifarious purposes though the major reasons being the following:

· To hold property for present or future needs of dependents and family members. A common example is a trust that provides for the accumulation of income and capital for specified infant children. Subject to their maintenance during this period, the accumulation must be handed over to them upon their attaining a specified age or, in the case of a female beneficiary, upon marriage; and

· Sometimes to reduce the burden of tax.

· Retirement trusts are commonly set up be employers to provide retirement benefits to employees

Tax treatment of trusts:

· Approved retirement trusts are also exempt from tax.

· In the case of private trusts, if the individual shares of the beneficiaries are ascertainable, they are included in the individual taxable incomes, the tax assessment being made either directly on the beneficiary or on the trustee as a representative of the

beneficiary. However, if the trust has income from business, the entire income from the trust is taxed in the hands of the trustee at the maximum marginal rate applicable to individuals unless the trust is created by will for the benefit of relatives. When the individual shares of the beneficiaries are indeterminate (i.e., discretionary trust), the entire income is taxed in the hands of the trustees, in most cases at the maximum marginal rate applicable to individuals.

See the diagram for better understanding.

Notes:

Point 1: in the following case rates applicable to Individuals will be charged:

· If the trust has been declared by way of a will from which business income is derived; and

· It is exclusively declared for the benefit of any relative dependent on the settlor for support and maintenance; and

· The trust is the only trust so declared by the settlor.

Point 2: in the following cases rates applicable to Individuals will be charged:

1. Where none of the beneficiaries

_ Has taxable income exceeding 50000.00 (for A.y.

2006-07 1 lac)

_ Is a beneficiary under any other private trust; or

2. Where the relevant income or part of the relevant income is receivable under a trust declared by any person by will and such trust is the only trust so declared by him; or

3. Where the trust yielding the relevant income or part thereof was created by a non-testamentary instrument before 1-3- 1970 and the A.O. is satisfied that it was created bona fide for the benefit of the dependant relatives of the settlor, or where the settlor is HUF, exclusively for the benefit of the dependant members.

4. Where the relevant income is receivable by the trustees on behalf of a provident fund, superannuation fund, gratuity fund or pension fund or any other fund created bona fide by a person carrying on a business or professional exclusively for the benefits of his employees.

Tax treatment of settlor / grantor

· If the trust effectively alienates income from the settlor/grantor, income tax liability thereon will be avoided.

· However, the settlor/grantor continues to be liable to income tax on income from the settled property to the extent that it is for the immediate or deferred benefit of a spouse or minor child.

· Stamp duty is payable on the transfer of immovable property.

REGISTRATION OF MINOR TRUST: Trust can be formed for a minor by executing a deed for a specific period, say 21 years. This trust can be registered under the Indian trust Act.

TAX IMPLICATION:

1 Tax implication every year during the period of trust: This private trust will be taxed at a slab rate applicable for individual provided it does not have business income.

Any business income may be taxed @ 30% or at slab rate.

2 Tax implications at the end of specified periods: At the end of the specific period, the trust property will be transferred to the beneficiary minor (who become major till that period) and will be a capital receipts in the hand of beneficiary and hence not taxable.

BENEFITS:

1 Enjoy tax exemption limit and lower tax rate applicable for individual every year.

2 Transfer of the assets of trust to beneficiary at no cost/ negligible cost.

3 Transfer of the assets of trust to beneficiary will be tax neutral provided he attains majority.

LIMITATIONS: Any business income of trust may be taxed @ 30% or at slab rate.

INFORMATION AND DOCUMENTS NEEDED: Details about trustee, beneficiary and settlor.

Taxation of Public Trust.

To find out the taxable income of a charitable or religious trust:-

· Compute the income of a trust. Here, “income” includes voluntary contributions received by a trust/institution created wholly or partially for charitable or religious purposes. The income of a trust/institution is required to be computed as per the provisions of the Income Tax Act.

· Find out the part of income exempt under section 11 or section 12 of the Act. Trusts/Institutions are required to register themselves under Section 12AA in order to avail the exemptions. This can be done by writing an application in Form 10A within a year from the date of setting of trust/institution. Broadly, the scheme of the provisions regarding the exemptions may be summarized as follows:-

· The creation of trust must be wholly for charitable purposes and the objectives of the trust should be for charitable purposes, as defined under the Act.

· The trust should not be created for the benefit of any particular religious community or caste.

· The trust should not be created for carrying on business for profit.

· The properties settle upon the trust must be held in trust. It would not suffice if only the income is held in trust.

· The trust deed must contain a provision that the income of the trust or the property held in trust would be utilized, for charitable purposes in India.

· It should be ensured that income or property of the trust does not ensure for the benefit of the settlor/ author of the trust or his relatives.

· Charitable or religious trusts, which may otherwise be eligible for tax exemption, are liable to forfeit this exemption under Section 13of the Act. It is applicable in the following circumstances:-

· Where the trust is created after March 31, 1962, any part of the income of the trust ensures, under the terms of the trust deed, directly or indirectly, for the benefit of specified categories of persons such as, the author of the trust, trustee or manager of the trust, substantial contributor to the trust and any relative of such author, trustee, etc.

· Any part of the income or any property of the trust is used or applied during the relevant year, directly or indirectly, for the benefit of specified categories of persons.

· The trust funds(with certain exceptions) are invested in contravention of the investment pattern of such funds.

Where a charitable or religious trust forfeits tax exemption in the circumstances mentioned at (a) to (c) above, the trust shall be charged to tax at the maximum marginal rate. A trust will attract the maximum marginal rate of tax only on that part of income which has forfeited exemption under the above circumstances and not on the entire income of the trust.

· Besides there are other provisions of the Act, which are relevant to the taxability of the income of charitable or religious trusts. These provisions are summarized as follows:-

· Filing of return of income [Under section 139(4A)] by trustees of charitable or religious trusts if the total income of trust exceeds the minimum amount which is chargeable to income-tax without giving effect to provisions of Section 11 and 12. Also, trusts/institutions whose income is exempted under Section 11 and Section 12 are also required to file a return as assessee’s claim for exemption would be decided by the Income Tax Department only after it has received the relevant material from the assessee.
The return of income has to be filed along with the audit report submitted by chartered accountants in Form 10B after auditing accounts of various trusts/institutions.

· Liability of trustees as ‘representative assessees’ [Under section 161] wherein they are liable to tax in their representative capacity in respect of income of trust.

· Under section 80G, deduction (special exemptions) in respect of donations to certain funds, charitable institutions, etc is granted. In order to be eligible under this section, the charitable trusts/institutions need to obtain a valid certificate by making an application to them in Form 10G . The form should be accompanied by following documents:-

· Copy of registration granted under Section 12A

· Notes on activities of institutions/fund/trusts since the time of its inception or during last three years, whichever is less and

· Copies of accounts of trust/institution since the time of its inception or during last three years, whichever is less.

· Wealth tax is also not charged on properties held under trust, or other legal obligation, for public purposes of a religious or charitable nature under Section 5(i) of Wealth Tax Act. In certain cases, however, Section 21A of the Wealth Tax Act lays down that wealth of trust is chargeable to tax as if the property is held by an individual who is a citizen of India and resident in India for the purpose of Act.

· Donors are given relief from income tax in respect of donations made to institutions established in India for charitable purpose.

· There are specific provisions relating to public charitable/religious trusts under section 10 of the act. The incomes of these trusts do not form part of total income or the income of such trusts is exempt from income tax.

· The trustees of a charitable or religious trust are required to make an application to the prescribed authority for allotment of a Permanent Account Number (PAN) under the provisions of Section 139A of the Income Tax Act.

· In certain cases, income of a charitable/religious trust, which is not subject to exemption under section 11 or section 12, may be chargeable to tax as if it is the income of an association of persons(AOP):-

· Income from property held under trust wholly for charitable or religious purposes

· Voluntary contributions without any direction that they shall form part of corpus of trust or

· Income of trust or institution being profits and gains of business which is incidental to the attainment of the objectives of trust and separate books of account are maintained.

Taxation of Charitable Trust.

Any income which comes from property held under any trust or institution which works for charitable or religious purposes is exempt from income tax point of view if the 85% of the income is spent on the charitable or religious purposes. If the amount spent on the religious and charitable purpose goes short to 85%, the shortfall is taxable under income tax act.

Charitable purpose has a vast topic and it includes:-

1- Relief to the poor persons

2- Educational relief

3- Medical relief

4- And the advancement for the object of general public utility.

5- Preservation of environment.

6- Preservation of places and monuments

However if advancement of general public utility carries some business or trade and charges some fees etc, this will not be regarded as general public utility if the total receipt of these activities exceeds Rs. 10 lakhs.

Any voluntary contribution made to hospitals and universities or educational institution will be considered as the income of these trusts under section 10(23C) (6) of income tax act.

Registration Process: – any registration for charitable trusts comes under section 12AA of income tax act and it is granted from the first day of the financial year of which the application is made for registration. The commissioner looks all the details and then allows registration, he has the power to cancel the registration if he is not satisfied by the nature of work or finds work in not going accordance to the objects of trust.

The commissioner has also the power to cancel the registration of registered trust if finds something wrong under Section 12A of income tax act.

All the charitable trust are notified by prescribed authority and also notified by Central Government of India. This rule starts from June, 2007.

Sometimes the application of charitable trusts and relief for 80G for the contributors rejects. If the trust wants to re appeal for the registration, the trust can appeal lies to the income tax appellate tribunal.

The approval under section 80G in which the contributors has income tax relief, once granted to the trusts is for lifetime unless the commissioner of income tax cancelled the registration finding something wrong under the section 80G(5)(6) of income tax act.

The entire charitable institute which has the income more than the basic exemption limit of income tax must audit all its account by a C.A.

For Charitable Institute investment, income tax act defines a section 11(5) and all the investment of charitable trusts must be according to this act. Modes of investment under section 11(5) are as follows.

1- Any investment in government certificates (saving/ small saving).

2- Deposit in post office.

3- Deposit in scheduled banks.

4- Investment in debentures whose principal and interest amount is fully guaranteed by government.

5- Investment in unites of U.T.I.

6- Investment in purchasing some property(immovable)

7- Investment in the shares of Public limited company of which the shares must be retained for three years from the date of purchase.

8- Investment in bonds of any public limited company engaging in industrial development or residential purpose and urban infrastructure.

9- Investments in KISAN VIKAS PATRA.

10- Investments in INDRA VIKAS PATRA.

Deposit in industrial development bank of India

Any investment which a trust made which not includes in section 11(5) of income tax act, the trusts must bring conformity with in a year from which the investments made. Income tax will be charged at maximum marginal rate for the non-obey results. However, this rule will not apply to

1- Any assets of the trusts and any increment of the shares held by trusts or corpus by the way of bonus shares as on 01-06-1973.

2- Any debentures purchased by the trusts before 01-03-1983.

If a group of people do voluntary contribution to the trusts for specific purpose, it won’t be include as the income of the trusts under section 11(1) (d) of income tax act.

Any business income of any trust is not come into exemption unless the business is incidental. The profit of the business income of any charitable trusts will be taxable and the trusts need to maintain separate books for the business income.

Capital Gains: – profit arising from sale of long term capital assets is called capital gains. Exemption available to charitable trusts only when the whole net consideration is used to buy new fixed assets. If the partial amount is invested, the remaining part of the consideration is taxable under the income tax act.

GUPTDAN: – Guptdan is the voluntary contribution of which the trusts have no records of the contributors. This is also called ‘anonymous donations’. Such contribution is taxed at the rate of 30%. However, in some cases they are exempted which are as follows.

1- Trusts or institution wholly for religious purpose.

2- Anonymous contribution made with specific direction that donation is for educational or medical institution runs by the trusts.

3- In the case of partly religious, partly charitable trusts, where donation is anonymous contribution are made for specific educational or religious purpose; it is exempt up to 5% of the total income of the trusts or Rs. 1 lakh whichever more is.

Electoral trusts: – electoral trusts are the trusts of political parties and it is approved by CBDT. Any voluntary contribution made to electoral trusts is income of the trusts and exempted from income tax from 1, April 2010.

INCOME TAX CASE LAWS ON TRUSTS:

Now let us anaylse the case laws related to trust in summarized form.

· The CIT rejected the application for condonation of delay in filing Form No. 10, before the expiry of time allowed u/s. 139(1) of the Act, being notice for accumulation of income by the trust. On writ filed by the assessee trust the High Court considering the fact that the assessee was a State Government undertaking and has been registered u/s. 12A of the Act since many years and also the fact that the delay in filing Form No. 10 was because the chartered accountant of the trust was not able to finalize the accounts in time, the High Court quashed the order of the CIT and directed him to pass appropriate orders. Refer, Kerala Rural Employment & Welfare Society, 18 DTR 300.

· A trust established to carry out partly charitable purposes and partly religious purposes would be entitled to exemption u/s. 11. Refer, Society of Presentation Sisters, 121 ITD 422.

· Advance paid by assessee an educational institution registered under 12A, to a club towards membership fee for providing certain amenities to the staff and students of the assessee did not attract the provisions of section 13 (1 ) (c) rws 13 (2 ) (a) as the said club is not a prohibited person as specified in section 13 (3), .Provisions of section 13 (1 ) (d ) were also not attracted as the said advance was neither a deposit nor an investment and therefore , exemption under section 11 is allowable to the assessee more so when the AO has allowed assessee’s claim of exemption under section 11 on the same set of facts in the preceding year. Refer, Vidya Pratishthan v Dy CIT, 44 DTR 145.

· Assessee trust established for the purpose of running hospitals, nursing home etc, spending the income for construction of hospital building, is an application of income for the objects of running hospitals and entitled to exemption. Refer, CIT v Mool Chand Sharbati Devi Hospital Trust, 41 DTR (All) 153.

· Non-filing of audit report with ROI not fatal to s. 11 exemption. Report filed in the course of assessment proceedings should be considered. Refer, ITO vs. Sir Kikabhai Premchand Trust.

· Section 11(4A) and section 11(4) are complimentary to each other and section 11(4A)n does not restrict power under section 11(4). Refer, DIT v Willington Charitable Trust.

· For accumulation of income under section 11(1)(a) it is to be computed on commercial principals and not on gross receipts. Refer, ITO vg Secretary Agriculture Produce Marketing Committee.

· Object of setting up an educational institution is by definition ” Charitable ” and such an entity will essentially be of Charitable Purpose. Refer. Sikkim Manipal University of Health Medical & Technological Sciences.

· There is no scope to invoke provisions of section 11-4 vis a vis net profit of GIDC. Refer, Gujrat Industrial Development Corporation v ACIT.

· Running of an old age home with no profit motice could not be said to be an activity in nature of trade. Refer, Kamalakar Memorial Charitable Trust v DIT.

· Transfer of funds by a Charitable Society to another charitable institution is application of income as per section 11, ACIT v U P Cricket Association.

· Merely because surplus has arisen to assessee during its educational activity does not mean that assessee is not existing solely for education purpose. Refer, Gagan Education Soceity v Addl CIT.

· Hyderabad Stock exchange is not entitled to exemption under section 11 even though its dominant purpose is general public utility. Refer, Hyderabad Stock Exchange Limited v ADIT.

· In the case of CIT v. Agricultural Market Committee (AP), 336 ITR 641, it was decided that Agricultural marketing committee constituted by State to protect agriculturists-is with the object of general public utility and Agricultural marketing committee is a person. Hence, entitled to registration under section 12A/12AA.

· In the case of Director of Income tax (Exemption) vs. Sahu Jain Trust, 56 DTR 402, it was held that exemption u/s 11 cannot be denied on the ground that trust had let out the property for efficient utilization of its assets.

· In the case of Mehta Jivraj Makandas & Parekh Govindaji Kalyanji Modh Vanik Vidyarthi Public Trust vs. DIT(E), ITA No. 2212/Mum/2010, dt. 11‐03‐2011, `G’ Bench, Mumbai ITAT, BCAJ pg. 32, Vol. 43‐A, Part 1, April 2011 it was held that Application for renewal of exemption certificate rejected for the reason that changes made in object clause of trust without following the required procedure, hence the trust became invalid. The Tribunal observed that only one addition was made in the object clause, and even that remained charitable and did not cause any detriment to original object. There was no statutory requirement of intimating the changes except the one mentioned in the Form 10A, and even there was no time limit. Held that revenue was not justified in refusing to renew exemption certificate..

· In the case of Chinnammal ENT Medical Education and Research Foundation v. Asst. CIT (Exemption) (Chennai), it was found that Medical equipments of the assets are being use by Private Hospitals and hence denial of exemption u/s 11 and levy of penalty is justified.

· Form no 10 was available with the assessee before passing of the original assessment order, hence claim of the assessee for accumulation of income cannot be rejected merely on the ground that form no 10 was not filed along with the return of income. Matter remanded with the direction to verify whether assessee has made investment in accordance with the condition of cl (b) of section 11 (2). ( A.Y 1994-95). Refer, Kandla Dock Labour Board v ITO, 62 DTR 234.

· Imparting education with the primary purpose of earning profits cannot be said to be a charitable activity for the purpose of Registration u/s. 12AA. Refer, National Institute of Aeronautical Engineering, 226 CTR 582.

· The Tribunal is fully justified in observing that the manner of application of funds and as to whether the applicant-assessee can claim benefit of exemption in terms of s. 11 and 12 is a question which has to be examined by the AO at the stage when it is urged and not by the CIT when such question is not before the CIT. The emphasize that while registration is accordance with the provisions of s. 12, it is a condition precedent for claiming the benefits u/s. 11 and 12, a registration itself as per s. 12A will not automatically confer the benefits of s. 11 and 12 on a trust, but the trust will get the benefit only on complying with the requirements of s. 11 and 12 which compliance can be examined by the assessee authority, while processing the return filed by the trust. Refer, Garden City Education Trust, 28 DTR 139.

· Provision of teaching to students in preparation after admission to professional institutions. No evidence to show registration obtained by fraud or forgery. Cancellation of registration on ground of profit motive not permissible. Refer, Oxford Academy, 315 ITR 382.

· No distinction is made between charitable and religious purposes in s. 11(i)(a), and therefore, a trust which is partly religious and charitable is entitled to exemption u/s. 11(1)(a), even otherwise, maintenance, of mosque and church is to be treated as charitable purpose and not purely religious purpose and therefore, exemption u/s. 11(1)(a) could not be denied to the assessee trusts which exist for various charitable purposes besides maintenance of chapels and mosques, on the ground they are partly charitable and partly religious trusts, once no case is made out for application of provisions of s. 13. Refer, The Society of Presentation Sisters, 30 DTR 1.

· In the case of Span Foundation, 17 DTR 283, it was held that, Assessee a charitable trust constructed a building by borrowing funds from outside as well as investing its own corpus funds. The building so constructed was let out to a concern in which its trustees were directors. The rental income so received by the trust was utilised for the purpose of repaying the loan. AO held that the assessee was not entitled to benefit u/s. 11 and 12 of the Act as the rental income received by the assessee was not utilised for the object of the trust and also that the building so constructed was let out to the concerned in violation of s. 13(1)(c) of the Act. On these facts the Hon’ble High Court held that the income derived from renting out the building was used for repayment of loans with the ultimate object of applying the income, after the loans had been fully repaid, towards charitable objects of the trust. Therefore the application of rental income for the repayment of loan was towards charitable object. Further, the rent received by the trust was more than the standard rent as computed under the rent control laws, as such, no benefit was derived by any interested person, therefore provisions of s. 13(1)(c) were also not attracted.

· Since objects of trust and genuineness of its activities were not in doubt in as much as registration was granted with retrospective effect from 1-4-2007 and reasons for delay for filing of application were not false or untrue delay was required to be condoned. Refer, Church of Our Lady of Grace, 34 SOT 315.

· As per section 12AA(3), registration granted to any trust or society under section 12AA(1)(b) can be cancelled only if the CIT is satisfied that the activities of such trust or institution are not genuine or are not being carried out in accordance with the objects thereof; registration could not be cancelled under section 12AA(3) by merely re-examining the objects of the trust or society. Refer, Chaturvedi Har Prasad Education Society vs. CIT, 134 TTJ 781.

· Insertion of new clause in section 12AA(3) with effect from 1-6-2010, by which Commissioner has got power to cancel registration granted earlier to assessee–trust under section 12A, is not applicable retrospectively and its operation has to be effective from date it was introduced and onwards. Merely by granting a registration under section 12A/12AA, a trust ipso facto is not entitled to exemption prescribed under section 11 and 12. Refer, Ajit Education Trust vs. CIT, 42 SOT 415.

· DIT(E) has no power to cancel the registration granted u/s 12A prior to 1-6-2010. Refer, K Verma Charitable Trust v DITE.

· Where an assessee is registered under section 25 of Companies Act, 1956, it in itself shows that the company intends to apply its profit in promoting charity. And where the object of the assessee states that it shall promote micro finance services to poor person and help them arise out of poverty, mere surplus from such micro finance service cannot by itself be a ground to say that no charitable purpose exists. Followed Thanthi Trust 247 ITR 785 (SC) and Agricultural produce and market committee 291 ITR 419 (Bom.). Refer, Dish India Micro Credit vs. CIT.

· Rejection of application for grant of exemption u/s 10(23)(c) cannot be a basis for cancelling registration under section 12A. Refer, The sunbeam English School Society v CIT.

· Loan given by educational soceity to another educational society does not violate section 13(1)(d) read with section 11(5). Refer, Kanpur Subhash Shiksha Samita v DCIT.

· Donation by a charitable trust to other charitable institution cannot result in same becoming income of assessee- trust. Refer, D D Foundation Trust v ITO.

· A company is also entitled to registration under provision of sec 12A. Refer, Sri Venkateswara Bhakti Channel v ACIT.

· Assessee engaging manufacturing and trading activities. Assessee converting incidental objects as main objects. Assessee not satisfying first condition of section 11(4A) – Cancellation of registration valid. Refer, Aurolab Trust v. CIT, 12 ITR 74.

· Registration under section 12A was rightly refused to the trust where the trust has carried out commercial activity and did not apply the income to fulfil the object of the trust. Refer, Society for the Small & Medium Exporters v. Director of IT (Exemptions), 139 TTJ 218.

FAQ on TRUST.

· Why should I create a private trust

A Private trust is created for the following reasons:

· How do I register a trust:

Ø If trust property happens to be immovable property: A registered document (trust deed) is necessary to set up a trust if immovable property is being transferred to it. The deed should be made out on stamp paper (for stamp duty consult your civil lawyer) and registered with the Registrar of Assurances under the Registration Act.

Ø If trust property happens to be movable property If only movable property is settled upon the trust, no formal document or written agreement is necessary. All the same, it’s advisable to prepare a trust deed on a stamp paper and have it signed by the settlor and the trustees in the presence of a witness to avoid any subsequent disputes.

Ø Once the trust is set up, the settlor can contribute more funds to it as and when he wants to. Even trustees, as also friends and relatives, can gift funds to a trust. Since gift tax has been abolished, no such tax is payable on the amount gifted to the trust.

· FAQs:

1. What do you mean by Trust?

· A Trust is a transfer of property of a person to another with the intention that it is administered for the benefit of the owner and/ or others.

· The person who transfers the property is called a “Settlor” or “Author of the trust” and

· The person to whom the property is transferred is called the Trustee.

· The person for whose benefit the trust is created is called the “beneficiary”.

· The property transferred for the trust is called the “Trust Property”.

2. How can I create a trust?

A Trust is created when the Settlor indicates his intention to create a trust. In order to create a trust you must

· Clearly specify the trust property,

· The purpose of the trust and

· The beneficiaries of the Trust.

3. Who can be a settlor?

Any person

· Who is a major, not legally insane, insolvent or a minor may create a trust.

· However a minor can create a Trust with the permission of Court.

4. Who can be a trustee?

A trustee is a person,

· To whom the settlor transfers his property.

· Anyone can be a trustee, but if he has to administer the properties of the trust, then he should be eligible to enter into contracts.

· A minor, insolvent or an insane person cannot be a trustee.

· A person has the right to reject his trusteeship.

· If a person accepts the trusteeship voluntarily, according to reasonable terms he becomes a trustee and assumes all the rights, liabilities and duties of a trustee.

5. My father bequeathed certain property to our auditor through a will and declared the auditor to be trustee of the property for me. After my father’s death, the auditor had the will probated. Does that mean the auditor has accepted to be the Trustee?

A trust is accepted either by an act or expression of an intention to be a trustee. Here the auditor accepted to be trustee by probating the Will.

6. “A” bequeaths ships to “B” to carry on smuggling business and use the profits arising out of it for maintaining A’s children. Is the Trust valid?

The Trust is not valid because a Trust can be created only for a lawful purpose.

7. What constitutes trust property?

Trust property can be moveable or immovable property.

1. If the trust constitutes immovable property then its transfer to the trustee must be through a written and registered document, signed by the settlor.

2. If the trust constitutes moveable property, delivery of such property to the trustee is enough and there is no need for a written document.

3. What are the duties of a trustee?

A Trustee has to:

1.fulfil the purpose of the trust.

2.obey the directions given by the settlor.

3.get acquainted with the nature and circumstances of the trust property.

4.take required steps to preserve and protect the trust property and defend any legal proceedings against it

5.not derive any advantage from the trust property for himself.

6.deal with the trust property as carefully as if it were his own

7.be impartial to all beneficiaries when there are more than one

8.maintain true accounts of the trust property and furnish information to the beneficiaries on request.

9. Can a Trustee invest the trust money?

The trustee is bound to invest the trust money when it cannot be immediately applied to the purpose of the trust. It can be invested only in the following manner:

1.In promissory notes, debentures, stock or other securities of any State Government or of the Central Government of India or of the United Kingdom of Great Britain and Ireland.

2.In bonds, debentures and annuities charged or secured by the Parliament of UK.

3. In stock or debentures or of shares in railway or other companies the interest of which is guaranteed.

4. In debentures or other securities for money issued under the authority of any Central or Provincial or State Act.

5.On a first mortgage. If the mortgaged property is a vacant land then the mortgaged money cannot exceed one third and if it is a building it cannot exceed one half of the property value.

6.In units issued by the Unit Trust of India.

7.On any other security expressly authorized by the instrument of trust or by the Central Government by notification in the Official Gazette or by any rule which the High court may from time to time prescribe.

10. When is the trustee liable for breach of trust?

A trustee is liable for a breach of trust only when the beneficiary or the trust property suffers losses as a result of the breach. However when the beneficiary fraudulently induces the trustee to commit breach of trust, or concurs in the breach of trust or if the

beneficiary assents to the breach after it has been committed, then the trustee is not liable for the breach of trust.

11. What are the rights of a trustee?

The following are the rights of a trustee:

1. To have possession of the trust property.

2. To get reimbursement of expenses incurred in maintaining the trust property.

3. To apply to the court, for its opinion, advice or direction in the management of the trust property.

4. To have the accounts of the trust property examined and settled on completion of the duties.

5. On completion of his duties, to have a written acknowledgement from the beneficiaries saying there are no dues from him to the beneficiaries.

6. What are the powers of the trustee?

The trustee is empowered to take action for the welfare of the trust property to:

1.sell the trust property together or in lots, by public auction or private contract. This can be sold together or at different times.

2. Do the above within a reasonable time, i.e. sell the property and invest the trust money to purchase any other property.

3. Convey the trust property through a valid and registered sale deed.

4. Invest the trust money and monitor the investments.

5. Use the trust property for the maintenance, education or advancement of a minor beneficiary, if any.

6. Give a written receipt for any money, securities or other movable property, which is paid, transferred or delivered, to him.

When there are two or more trustees, any one may be authorized to execute the trust. In that case the authorized trustee can:

1. Accept security for a debt,

2. Allow time for payment of a debt,

3. Compromise, abandon, submit to arbitration or settle any debt relating to the trust.

4. What happens if one of several trustees dies?

If a co-trustee dies, then the remaining trustees can exercise the powers relating to the trust and trust property.

14. What are the disabilities of trustees?

The disabilities of a trustee are:

1.Once he has accepted the trust; he cannot refuse to act as a trustee.

2. A trustee cannot delegate his duties to another or a co- trustee.

3. A trustee should not use the trust property for his own profit or any other purpose, unconnected with the trust.

4. A trustee cannot buy the trust property on his own account or as an agent of a third person.

5. A trustee cannot act unilaterally but must consult his cotrustees ,if any.

6. Co-trustees should not lend the trust money to each other.

7. How does a trust cease to exist?

A trust ceases to exist:

1. When its purpose is completely fulfilled; or

2. When its purpose becomes unlawful; or

3. When the fulfillment of its purpose becomes impossible by destruction of the trust property or by any other cause; or

4. When the trust is expressly revoked.

5. What are the rights of a beneficiary?

The beneficiary has the right to:

1. Enjoy the rents and profits of the trust property.

2. Expect the trustee to transfer the trust property to one or more beneficiary.

3. Inspect and take copies of the instrument of trust, the documents relating to trust property and the accounts of the trust property.

4. If for any reason the execution of the trust by the trustee becomes impracticable the beneficiary may institute a suit for the execution of the trust.

5. To expect the trustee to properly protect and administer the trust property.

6. To compel the trustee to perform his duty properly.

7. To transfer the benefits arising out of the trust to any other person after the beneficiary attains majority.

8. When is a trust revoked?

When a trust is created by will, it is revocable at the pleasure of the testator, because it does not become effective during the lifetime of the testator.

Any other trust can be revoked in the following ways:

1.By the consent of all the beneficiaries.

2.By the settlor in exercise of powers of revocation expressly reserved to him.

3.If the trust was created for repayment of debts, the settlor can revoke the trust at any time irrespective of whether the debt is repaid or not. However, if the debt is not repaid and the creditor has knowledge of the creation of the trust, then, the trust cannot be revoked without the consent of the creditor.

18. When can a trustee be discharged from office?

A trustee may be discharged from his office when:

1. The trust is dissolved.

2. The trustee completes the duties of the trust under the terms of the trust deed.

3. A new trustee is appointed to carry on the duties of the trust.

4. There is mutual consent between the trustee and the beneficiary.

5. There is an order of Court discharging the trustee of his duties.

6. When can a new trustee be appointed?

A new trustee can be appointed when the trustee already appointed:

1.Either disclaims being a trustee or is dead.

2.Is not in India for a continuous period of six months or leaves India for the purpose of residing abroad.

3. Is declared an insolvent.

4. Desires to be discharged from the duties of the trust.

5. Becomes incapable of acting as trustee.

Private Trust – Succession Planning as well as Ring Fencing, Tax Planning

Unlike a Will, a Private Trust works during one's lifetime and can be easily structured to meet specific requirements. Jigar Pathak Business today 24 march 2019

The world over there are two preferred modes for succession planning - writing a Will or creating a Private Trust. Both are used in India, but with increasing entrepreneurship and complicated asset holding patterns even within families, Trusts are gaining popularity.

A Private Trust's ability to ring fence assets against third-party claims, especially with the Bankruptcy Law being active since 2016, further explains the heightened interest among wealthy Indians for setting up Private Trust.

Will Versus Trust

Private Trusts also have an edge in some areas over traditional modes of succession planning like a Will.

When asset-mix and family structure is straight forward, a Will can be a simple and effective tool for an individual to use. But, if there are many branches in a family tree and assets are spread out across geographies, it makes sense to set up a Private Trust. A Will needs a probate (a court certificate confirming that the Will is genuine) after the death of the Will maker. The process to get one may be tedious and expensive. A probate is a public document, which means it exposes the family to public glare should there be a dispute over the assets. In such a scenario, a Trust offers privacy.

A Will can be challenged in the Court by any heir who is unhappy with the asset distribution. Unfortunately, the Will drawer will not be there to clarify his choice. This can result in bitterness among family members and lead to protracted legal disputes. On the other hand, grounds on which a well executed Trust can be challenged are fewer. A Will becomes active only on a Will-drawer's death, but a Trust can be created when the person is alive.

Setting Up a Trust

A Trust is a special vehicle in which assets are transferred by the person setting the Trust (called settlor). Trustees manage the assets for the sole benefit of the beneficiaries. So, the ownership of the assets moves from settlor to the trustees.

Assets or benefits arising out of the property held by the Trust are then passed on to the beneficiaries as spelled out in the Trust deed.

A Trust deed is an agreement that unambiguously specifies the objective and purpose behind the Trust. It clearly states, without any mistakes, the name of the settlor, the trustees and the beneficiaries, as well as a list of all the assets the Trust would hold. Assets could include immovable property, cash, car, jewellery, art and antiques, shares, fixed deposits, among others.

The Indian Trusts Act, 1882, governs the formation of a Private Trust. To complete the legal formality, the Trust deed has to be signed by the settlor; at least two trustees and by at least two witnesses. The deed needs to be registered with an appropriate authority only if an immovable property is passed on to the Trust. It is highly advisable to take the services of a lawyer to ensure the legal validity of the Trust deed.

A Trust ceases to exist when its purpose is fulfilled or when it is revoked by the settlor.

A Trust can be formed to take care of the needs of family members in the event of untimely death or physical incapacity of the settlor. The objective may also include taking care of a special needs child after the settlor's death. The Trust deed can provide for milestone-based payments to cater to health, education, maintenance or support needs of beneficiaries.

The Trust can also have conditions - they have to be legal - that have to be met before the trustees can pass on the benefit. "Specific conditions when the beneficiary may, at the discretion of the trustee, be excluded as a beneficiary, can also be defined in the Trust deed," says Gautami Gavankar, Executive Director - Trusteeship Services, Kotak Mahindra Trusteeship Services. For instance, there may be a condition to cut off a family member who is a spendthrift or a substance abuser. The purpose of such conditions would be to avoid wastage of the settlor's wealth.

A Trust can also be formed to protect assets in cases such as paying alimony in a divorce or third-party claims, as long as the assets are not transferred fraudulently or with the intent to defraud the creditors.

"Many also create a Trust for their children to protect them from a failed marriage," says Amit Pathak, Managing Director, Warmond Trustees & Executors. "Some parents don't want their children to receive assets quite early in their lives, but when they attain maturity. There can be conditions to this effect," Pathak adds.

All this means that a trustee's role is very important in any Trust. The Trust deed has to make clear the duties, power, function, manner of replacement and disqualification of trustees. A trustee can be a family member, a friend or a third-party professional. Corporate trustees are also gaining popularity. To avoid disputes, it is critical to appoint a trustee who is unbiased and has no vested interest. "The dispute could be related to management of the Trust's property and exercise of discretion (by Trustees); beneficiaries could claim that the Trustees are not fulfilling their duties," says Varghese Thomas, Partner at law firm J. Sagar Associates.

Trustees have a fiduciary responsibility towards beneficiaries, and they have to act as per the Trust's objective.

Right Structure

For a Trust to fulfil its purpose, the structure has to be appropriate. There are various ways in which a Trust can be designed, and there is no one size fits all. "The dynamics of no two families are the same and therefore, the structures will have to be decided in discussion with the family members. Typically, Indian laws recognise the creation of revocable and irrevocable Trusts," explains Gavankar.

In a revocable Trust, the settlor can recall the assets parked in the Trust at any point in time. This means the settler doesn't lose control over the assets. In an irrevocable Trust, assets once transferred to the Trust cannot be called back by the settlor. Such a Trust is effective in preventing any third-party claims as the property now belongs to the Trust and not to the settlor.

A Trust can also be discretionary - trustees can decide the beneficiary's share. In a non-discretionary Trust, a beneficiary's interest is pre-determined by the Trust deed.

"An irrevocable and discretionary Trust can protect assets from creditors, current or potential, provided the assets have been transferred two years prior to the bankruptcy being declared," says Sandeep Nerlekar, Managing Director and Chief Executive Officer, Terentia, a Mumbai-based estate planning firm. He adds that such a structure can ring fence assets against genuine business risk, but not against fraud.

Looking at the Tax Angle

Currently, India does not have inheritance tax, and the income generated from the Trust is liable to taxation. Tax on the income earned from a Trust's property may be levied in the hands of the settlor or the Trustee or the beneficiary, depending upon the structure of the Trust used.

"Trusts do not provide for any tax efficiency and they are more of an alternative to writing a Will from a succession planning perspective. A Trust is only a vehicle to ensure consolidation of assets in a single pool and therefore, the tax rates that would be applicable in the hands of the individual would also apply to the Trust," says Gavankar. For instance, in the case of a non-discretionary irrevocable Trust, beneficiaries are liable to pay tax according to their tax bracket. In a revocable Trust, the settlor is liable to pay tax according to his tax bracket. In case of a discretionary Trust, it is the Trustees.

The primary benefit of setting up a Trust are that the settlor can himself be one of the beneficiaries, and be able to witness the seamless succession of wealth to the next generation and also iron out any disputes.

A well chalked out succession plan can help avoid family conflicts. Even worse is the possibility that the person of your choice is deprived of the assets that you wanted to bequeath. Anyone with a high net worth should consider setting up a Private Trust. People spend all their lives creating assets, so it's important that succession planning in done the right way.

Legal Paper stationary no more required

Simple format for Rental Agreement

RENTAL DEED

This Deed of Rent made and executed at Hyderabad on 27th day of Apr 2011 by and between: Sri M. Praneetha, aged about: 30 years, Occ: Housewife, H.No.4-1'19, Flat No. 1102, Ramanthapur, Hyderabad,

(Hereinafter called the "OWNER" which expression shall mean and includes her heirs legal representatives and assignees etc; of the One Part)

AND

M/s. MERIT INFRASTRUCTURES, represented by its Proprietor Sri M Ramanjaneya Reddy S. Sri Obula Reddy, aged about: 43 years, Occ: Business, H.No.4-119, Flat No. 1102, Ramanthapur, Hyderabad,

( Hereinafter called the "TENANT" which expression shall mean and includes their heirs, legal representatives and assignees etc; of the Other Part)

Whereas the Owner is the sole and absolute owner of the No.4-119, Flat No. 1102, Ramanthapur, Hyderabad,

Whereas the Tenant approached the Owner to let out the above office premises on rent and the Owner to let out the same on rent for their office M/s. MERIT INFRASTRUCTURES on the following terms and conditions.

NOW THIS RENTAL DEED WITNESSED AS FOLLOWS:

1. The Owner has agree to let out on rent office No.4-119, Flat No. 1102, Ramanthapur, Hyderabad, on a monthly rent of Rs.6000/-(Rupees Six Thousand only)

2. That Rental Deed is with effect from 27`hday of April 2011.

3. That the rental deed shall be for a period of 11 months only and renewal thereafter on mutual understanding amongst the Owner and Tenants

4. That the lessee has agreed to pay monthly rent of Rs. 6000/- (Rupees Fifteen Hundred Only) on or before 10th day of every month and shall obtain the receipt from the Owner

5. The enhancement of rent will be 10% on every year.

6. That the Owner agrees to permit the Tenant to use the premises to carry on the business of Telecommunications. .

7. That the Tenant shall pay the electricity consumption charges in respect of the electricity Consumed for the said premises.

8. That the property tax shall be borne by the Owner

9. The tenant is not allowed to sublet the premises or part of the premises to any third party.

10. That if the Tenant commits defaults in payment of monthly-agreed amount or contravene the terms agreed hereto, the Owner should be entitled to terminate the Tenancy and take back the possession of the premises and recover the amount due.

11. That the Tenant shall not make any structural additions, alterations on the said land expect with the written permission of Owner if, any additions, alteration made by the Tenant with the permission of Owner shall be done, at cost of Owner.

12. On breach of any conditions aforementioned this Rental Deed shall stand revoked at once and shall deliver vacant possession to the Owner with Three months notice on demand of the either side.

In witnesses whereof the parties hereto have signed on the day, the month and the year stated above.

WITNESSES :

1. OWNER

(M.PRANEETHA)

2 TENANT

M/s MERIT INFRASTRUCTURES

(M. Ramanjaneya Reddy)

HOW DOES ONE COUNTRY RECOGNISE OTHER COUNTRIES DOCUMENTS AS IDENTITY PROOF AND ADDRESS PROOF : APOSTILLE STAMP

Drafting Deeds -Difference between nominee,legal heir Partition,Settlement, Gift, Will and Trust, agreement to sale v sale deed

AND

NOW THIS DEED WINTESSETH AS UNDER: -