House rent allowance exemption depends on actual rent paid; no exemption was available where the assessee lived in his own house.

House rent allowance under section 10(13A) operates subject to rule 2A of the Income-tax Rules, so exemption depends on actual rent expenditure. Where an assessee resides in his own house and does not pay rent, the allowance cannot be treated as exempt because no house rent is incurred and the amount forms part of salary. The contrary view that full exemption is available without regard to rule 2A was rejected, and exemption was denied on these facts.

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Issues: Whether house rent allowance received by an assessee residing in his own house and not paying rent is exempt under section 10(13A) of the Income-tax Act, 1961, having regard to rule 2A of the Income-tax Rules, 1962.

Analysis: The allowance under section 10(13A) was held to operate subject to rule 2A. Since the assessee occupied his own house and did not incur expenditure towards house rent, the allowance could not be treated as exempt. The allowance was viewed as part of salary where no actual rent was paid, and the contrary view allowing full exemption without regard to the rule was rejected.

Conclusion: The assessee was not entitled to exemption under section 10(13A) on the house rent allowance received while residing in his own house and paying no rent.

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