House rent payment treated as rent, not salary income, where deputation terms gave no house rent allowance.

A payment described in a salary certificate as arrears of house rent allowance was held not to be salary income where the deputation terms granted only a free-furnished house and no house rent allowance. The later university proceedings showed that, because accommodation was not provided, rent was payable for the house occupied by the assessee. Since the heads of income are mutually exclusive, the same receipt could not be taxed as salary and as house property income. On the facts, the amount was rent for the house and its addition as HRA or salary income was unsustainable.

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Issues: Whether the sum of Rs. 35,700 paid to the assessee was taxable as arrears of house rent allowance forming part of salary or was only rent for the house occupied by him, assessable under the head income from house property.

Analysis: The deputation terms entitled the assessee only to a free-furnished house and did not confer any house rent allowance. The University's later proceedings recorded that, because such accommodation had not been provided, rent would be paid for the house occupied by the assessee at Rs. 1,000 per month. The heads of income under the Income-tax Act are mutually exclusive, and a single receipt cannot be assessed simultaneously under salary and house property. The payment could not, therefore, be treated as HRA merely because it was described that way in the salary certificate. On the facts and the governing proceedings, the amount represented rent for the house and not salary income by way of HRA.

Conclusion: The addition of Rs. 35,700 as arrears of HRA or as salary income was not sustainable, and the amount was directed to be excluded from the assessed income.

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