House Rent Allowance exemption requires actual rent expenditure; self-occupation without rent payment does not qualify for relief.

House rent allowance exemption under section 10(13A) is available only where the assessee actually incurs rent expenditure for residential accommodation. The provision, read with rule 2A, requires real rent outgo and not merely a notional saving from occupying one's own house. On that interpretation, self-occupation without paying rent does not satisfy the statutory condition, so the HRA amount remains taxable. The contrary view that exemption could be claimed without actual rent payment was rejected, and the addition made by the assessing authority was restored.

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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) read with rule 2A.

Analysis: Section 10(13A) grants exemption only to a special allowance specifically paid to meet expenditure actually incurred on rent for residential accommodation, and the monetary limits in rule 2A proceed on the same footing. Reading the provision with the rule, the essential condition is actual incurring of rent expenditure. The authority relied on the meaning of "incurred" and "expenditure" and held that a mere saving by occupying one's own house does not satisfy the statutory requirement. The contrary view treating exemption as available even without actual rent payment was not accepted.

Conclusion: The assessee was not entitled to exemption under section 10(13A), and the house rent allowance formed part of taxable income.

Final Conclusion: The exemption claim failed because actual rent expenditure was a necessary condition for relief under the provision, so the addition made by the assessing authority was restored.

Ratio Decidendi: Exemption for house rent allowance is available only where the assessee actually incurs rent expenditure on residential accommodation; self-occupation without rent payment does not satisfy section 10(13A).

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