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1996 DIGILAW 751 (MAD)

Commissioner of Income Tax v. V. Karthikeyan

1996-07-25

K.A.THANIKKACHALAM, N.V.BALASUBRAMANIAN

body1996
Judgment :- K. A. THANIKKACHALAM J. At the instance of the Department, the Tribunal referred the following common question for the assessment years 1980-81 and 1981-82 for the opinion of this court, under section 256(1) of the Income-tax Act, 1961 (hereinafter referred to as "the Act") "Whether, on the facts and in the circumstances of the case and having regard to the provisions of rule 2A of the Income-tax Rules, 1962, the Appellate Tribunal is justified in law in holding that the assessee is entitled to exemption under section 10(13A) of the Income-tax Act, in respect of the house rent allowance received by him ?" * The point for consideration is that having regard to the provisions of rule 2A of the Income-tax Rules, 1962, the assessee is entitled to exemption under section 10(13A) of the Income-tax Act, in respect of the house rent allowance received by the assessee The assessee is a Government servant and a member of the Indian Administrative Service. During the relevant period, he was functioning as the chairman of the State Planning Commission, Madras. He was in receipt of Rs. 4, 000 by way of house rent allowance. The assessee claimed the exemption under section 10(13A) of the Act in respect of the house rent allowance received by him. The claim was rejected by the Income-tax Officer on the ground that the claim of exemption under section 10(13A) of the Act is subject to rule 2A of the Income-tax Rules. Under rule 2A of the Income-tax Rules, the exemption available under section 10(13A) should be allowed in cases of persons, who have incurred certain expenditure by way of payment of house rent. It was found that the assessee was residing in his own house and did not incur any expenditure as and by way of house rent. On appeal, the Appellate Assistant Commissioner, following the decision of the Punjab and Haryana High Court in CIT v. Justice S. C. Mittal 1980 (121) ITR 503 , 1980 (15) CTR 294, 1980 (3) TAXMAN 221 allowed the claim for exemption for the full amount. While allowing the claim for exemption, the Appellate Assistant Commissioner has not restricted the amount eligible for exemption up to the limits prescribed under rule 2A of the Income-tax Rules, 1962, subject to which the exemption under section 10(13A) is to be allowed. While allowing the claim for exemption, the Appellate Assistant Commissioner has not restricted the amount eligible for exemption up to the limits prescribed under rule 2A of the Income-tax Rules, 1962, subject to which the exemption under section 10(13A) is to be allowed. On further appeal, following the decision of the Punjab and Haryana High Court cited supra, the Tribunal upheld the view taken by the Appellate Assistant CommissionerA similar question came up for consideration before the Rajasthan High Court in CIT v. Rajeshwar Prasad 1994 (207) ITR 926, 1995 (81) TAXMAN 503 wherein the Rajasthan High Court held that the house rent allowance received by an assessee, occupying his own house and not actually paying rent, is not exempt from tax under section 10(13A) of the Income-tax Act, 1961. A similar view was also taken by the Andhra Pradesh High Court in CIT v. M. Sathyanarayana Sastry1995 (216) ITR 582. In view of the decisions rendered by the Andhra Pradesh and the Rajasthan High Courts, we are of the opinion, that the house rent allowance payable to the assessee while the assessee is residing in his own house cannot be allowed as a deduction, since the house rent allowance paid would form part of the salary. Accordingly, we answer the question referred to us in the negative and in favour of the Department. No costs.