House rent allowance exemption fails where no rent is actually paid and the accommodation is owned by the assessee under the retrospective explanation.

House rent allowance exemption under section 10(13A) is unavailable where the assessee occupies residential accommodation owned by himself or does not actually incur rent expenditure. A retrospective Explanation inserted by the Taxation Laws (Amendment) Act, 1984, effective from 1 April 1976, clarified that such cases fall outside the exemption. On the stated facts, the assessee lived in family property belonging to a Hindu undivided family and paid no rent, so the statutory condition for exemption was not met and the earlier contrary view could not stand.

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Issues: Whether house rent allowance received by an assessee who occupied residential accommodation belonging to a Hindu undivided family and did not actually pay rent was exempt under section 10(13A) of the Income-tax Act, 1961.

Analysis: The assessment year was 1982-83. An Explanation was inserted to section 10(13A) by the Taxation Laws (Amendment) Act, 1984 with retrospective effect from 1 April 1976. That Explanation excluded the exemption where the assessee occupied accommodation owned by him or had not incurred expenditure by way of rent. On the facts, the assessee occupied family property and had incurred no rent expenditure, so the statutory condition for exemption was not satisfied. The retrospective amendment also neutralised the earlier contrary view relied on by the Tribunal.

Conclusion: The assessee was not entitled to exemption under section 10(13A), and the question was answered against the assessee and in favour of the Revenue.

Ratio Decidendi: The exemption under section 10(13A) is unavailable where, by reason of a retrospective statutory explanation, the assessee occupies accommodation owned by him or does not incur rent expenditure for the residential accommodation occupied.

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