House rent allowance exemption requires actual rent expenditure; allowance is not exempt when the assessee lives in self-owned premises.

House rent allowance exemption under section 10(13A) applies only where the assessee actually incurs rent expenditure for residential accommodation occupied by him. Rule 2A also assumes actual rent outgo and works within monetary limits for computing the exempt portion. Where the assessee lives in self-owned premises and pays no rent, the statutory condition is not satisfied, so the allowance is not exempt. The Tribunal rejected reliance on earlier decisions to the extent they suggested otherwise and treated actual rent payment as the decisive requirement for exemption.

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Issues: Whether house rent allowance received by an assessee residing in his own house, without actually incurring rent expenditure, is exempt under section 10(13A) of the Income-tax Act, 1961 read with rule 2A of the Income-tax Rules, 1962.

Analysis: The exemption under section 10(13A) is available only where the assessee actually incurs expenditure by way of rent in respect of residential accommodation occupied by him. Rule 2A also proceeds on the basis of actual rent expenditure and prescribes monetary limits for determining the amount exempt. On that construction, the allowance cannot be exempted where no rent is paid and no hired residential accommodation exists, as in the case of an assessee living in his own house. The reliance placed on the earlier decisions was not accepted, and the Tribunal held that the statutory requirement of actual expenditure was not satisfied.

Conclusion: The house rent allowance of Rs. 4,800 was not exempt under section 10(13A) read with rule 2A, and the assessee's claim failed.

Final Conclusion: The revenue's challenge succeeded because exemption for house rent allowance was confined to cases of actual rent outgo, which was absent here.

Ratio Decidendi: Exemption of house rent allowance under section 10(13A) is contingent on actual expenditure on rent for residential accommodation; where the assessee resides in self-owned premises without incurring rent, the allowance is not exempt.

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