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Issues involved: Interpretation of provisions of s. 10(13A) of the Income Tax Act, 1961 and rule 2A of the Income Tax Rules, 1962 regarding the exemption of House Rent Allowance (H.R.A.) received by officers residing in their own residential accommodation.
Judgment Summary: The judgment dealt with the entitlement of officers of two banks to House Rent Allowance (H.R.A.) as per their service contracts, with a maximum limit of Rs. 400 per month, irrespective of whether they reside in tenancy premises or their own accommodation. The main issue was whether the H.R.A. received by officers residing in their own houses/flats should be included in computing their total income under the Income Tax Act, 1961. The petitioners argued that the H.R.A. received should be exempt based on the provisions of s. 10(13A) read with r. 2A of the Rules. The court analyzed the literal interpretation of the clause and ruled that the officers residing in their own residential accommodation cannot claim exclusion of the H.R.A. received from their total income under clause (13A) as they do not fulfill the conditions of the statute. Regarding the circulars issued by income-tax authorities, the court held that while the authorities have the power to issue orders for proper administration, they must respect the law laid down by the High Court. The circulars, which stated that income-tax would be deductible from employees residing in their own houses/flats, were not quashed as the court's view differed from that of the Punjab and Haryana High Court. In conclusion, the writ petitions were dismissed, and the officers were not granted the exemption sought for the H.R.A. received while residing in their own residential accommodation.
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