1979 (11) TMI 54 - HC - Income Tax

High Court rules in favor of retired judge on HRA tax exemption dispute

The High Court ruled in favor of the assessee, a retired judge, regarding the inclusion of house rent allowance (HRA) in taxable income. The issue was ... Exclusion, Total Income Issues:- Interpretation of tax law regarding the inclusion of house rent allowance in taxable income.- Whether the assessee living in his own house qualifies for exemption under section 10(13A) of the Income Tax Act, 1961.Analysis:The judgment dealt with the question of law regarding the inclusion of house rent allowance (HRA) in the taxable income of the assessee, a retired judge of the Punjab and Haryana High Court. The Income-tax Appellate Tribunal had to determine whether the HRA received by the assessee should be included in his taxable income for the assessment years 1972-73 to 1975-76. The Income Tax Officer (ITO) had taxed the HRA on the grounds that the assessee lived in his own house and was not entitled to exemption under section 10(13A) of the Income Tax Act, 1961, along with rule 2A of the Income Tax Rules, 1962.Upon appeal, the assessee argued that he should be entitled to the exemption as he incurred expenses by living in his own house and paying tax on the annual letting value. The assessee also highlighted a similar case where the HRA was not taxed under similar circumstances. The Appellate Authority Commissioner (AAC) accepted the pleas raised by the assessee, leading to the revenue filing an appeal before the Tribunal.The Tribunal dismissed the revenue's appeal, emphasizing the importance of rules framed under a statute and their alignment with statutory provisions. It was acknowledged that there was no conflict between section 10(13A) of the Act and rule 2A of the Rules. The Tribunal noted that in a prior case involving a different judge, similar exemption was granted. Citing another judgment in a related case, the Tribunal answered the question in the negative, ruling against the revenue and in favor of the assessee.In conclusion, the High Court answered the question referred to them in the negative, aligning with the previous judgment and ruling in favor of the assessee. Justice G. C. Mittal agreed with the decision.