TaxTMI 
TaxTMI 
2026 (6) TMI 1458
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....nal was right in law in reversing the order of CIT (A) confirming addition 10 (13A)?" of HRA and of Rs. 16,19,940/ by denying exemption u/s 10(13A)?" 4. Brief facts of the case are as under: 4.1 The appellant assessee was a Chief Operating Officer (COO) & Chief Executive Officer (CEO) of Sterlite Industries India Ltd. For the assessment year 2006-07, return of income was filed by the assessee showing total income of Rs. 2,12,75,910/-. The case of the assessee was selected for scrutiny on the ground that the assessee had shown one house property situated in Delhi claiming the same being exempt as self-occupied property. But the assessee was at Mumbai in a leased premises of Sterlite Industries India Ltd., where he was employed as CEO. 4.2 The asessee for the assessment year in consideration had claimed exemption of House Rent Allowance (for short 'HRA') under Section 10(13A) of the Act amounting to Rs. 16,19,940/-. During the assessment proceedings, it was submitted by the assessee that being an employee of Sterlite Industries India Ltd., Mumbai, he was paid HRA for lease accommodation. The employer had obtained residential flat on leave and licence basis vide Agreement dat....
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....for exemption u/s 10(13A) of the Act in respect of HRA is ill founded. Prima facie, it appears from the facts that the appellant is eligible to claim exemption u/s 10(13A) of the Act in respect of HRA and as such the Assessing Officer was not justified in making addition and rejecting the claim of the appellant for exemption of HRA u/s. 10(13A) of the Act. Thus, in the given facts and circumstances, the AO is directed to allow the claim of the appellant and as such this ground of appeal is allowed." 5. Being aggrieved, the revenue preferred an appeal before the Tribunal. The Tribunal, however, did not agree with the findings of CIT(A) and restored the order passed by the Assessing Officer relying upon the provision of Section 17(2) of the Act relating to perquisite. The Tribunal, while allowing the appeal filed by the revenue, took a different view on the facts that there was no reimbursement of the rent by employer but rent was paid by the employer to the landlord directly and, therefore, the ingredients of Section 10(13A) of the Act would not be attracted and what the assessee was provided was rent free accommodation only. 6. The Tribunal also examined the matter from the t....
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....0 lacs per month and the same amount has been reimbursed by the employee to the employer and, therefore, perquisite value of hosing accommodation provided by the employer company to the employee assessee is 'nil' as per Rule 3 of the Income Tax Rules. But once, the housing perquisite value is worked out as 'nil' after considering this rental payment of Rs.1.70 lacs per month to the employer company, there is no rental payment made by the assessee employee for the purpose of working out exemption of HRA u/s 10(13A) of the Act and, therefore, we are of the considered opinion that the disallowance made by the A.O. regarding the claim of the assessee for exemption u/s 10(13A) is in order and, therefore, the order of Ld. CIT(A) resulting in deletion of disallowance is not sustainable. We, therefore, reverse the order of Ld. CIT(A) on this issue and restore that of the A.O. 9. Now, we consider the applicability of the judgement of Hon'ble Apex Court cited by Ld. A.R. being the judgment of Hon'ble Apex Court rendered in the case of Arun Kumar and others (supra). In that case, the dispute was regarding perquisite value of housing accommodation /provided by ....
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....he assessee is required to pay the rent to the landlord which is to be reimbursed by the employer by way of an allowance and then only such allowance would qualify as exempt income. It was pointed out by learned Senior Standing Counsel Mr. Patel that in facts of the case, it is not in dispute that leave and licence agreement was entered into by the employer Sterlite Industries India Ltd. for the accommodation of assessee and the rent is also paid by the Sterlite Industries India Ltd and not the assessee. It was, therefore, submitted that the Tribunal was justified in restoration of addition of the exemption claimed by the assessee, which was made by the Assessing Officer and deleted by the CIT(A) on the wrong premises. It was submitted that the Assessing Officer has also considered such facts in detail by referring to the provision of Section 17 of the Act. Learned Senior Standing Counsel Mr. Patel referred to and relied upon the order of the Tribunal to submit that when there is no rental payment by the assessee employee for the purpose of working out exemption under Section 10(13A) of the Act, the disallowance made by the Assessing Officer regarding the claim for exemption was ju....
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....n 10(13A) of the Act. 15. Circular No. 90 [F.No. 275/79/72-ITJ] dated 26.6.1972 issued by the Central Board of Direct Taxes (CBDT) also clarifies the entitlement of eligibility of exemption under Section 10(13A) of the Act in Para-4 of the Circular, as under: "4. t is also clarified that the house rent allowance paid to a person, who is living in his own house or in a house for which he does not actually pay any rent, is not exempt from tax in any circumstances. 1. Reference is invited to the Board's letter No. 12/19/64-IT(B), dated 8-1-1965, addressed to all State Governments. A question has been raised whether the house rent allowance at flat rates sanctioned to Central Government servants without verification of rent receipts vide the Ministry of Finance (Department of Expenditure) O.M. No. 2(22) E-II/60, dated 2-8-1960, will be exempt from tax under section 10(134) read with rule 2A of the Rules or it is necessary for the Disbursing Officers to verify in each case whether the employee has paid house rent and the allowance exempted is less than the difference between the actual expenditure on house rent and 10 per cent of the salary? 2. The Boar....