1984 (6) TMI 108 - AT - Income Tax

Summary

Issues:
1. Interpretation of section 10(13A) of the Income-tax Act, 1961 regarding exemption of house rent allowance.
2. Application of the law laid down by the Hon'ble Punjab and Haryana High Court and the Hon'ble Supreme Court in similar cases.
3. Analysis of the meaning of "expenditure actually incurred on payment of rent" as per the provisions of the Act and the Rules.

Analysis:
The judgment involves the interpretation of section 10(13A) of the Income-tax Act, 1961 concerning the exemption of house rent allowance. The respondent, an employee, received house rent allowance but did not actually incur any expenditure on rent as he resided in his self-owned property. The assessing authority denied the exemption based on this fact. The Commissioner (Appeals) allowed the exemption, citing decisions of the Hon'ble Punjab and Haryana High Court and the Hon'ble Supreme Court. The revenue appealed, arguing that no rent expenditure was actually incurred, thus the exemption should not apply.

The revenue contended that the decisions cited by the respondent were based on incorrect interpretations of section 10(13A). The respondent's counsel supported the Commissioner (Appeals) order, referencing the decisions of the Hon'ble Punjab and Haryana High Court and a Tribunal decision. The Tribunal considered the submissions and reviewed the relevant court decisions and provisions of section 10(13A) and rule 2A. The Tribunal emphasized that actual expenditure on rent is a prerequisite for exemption under section 10(13A). Referring to past Supreme Court decisions, the Tribunal concluded that no exemption could be granted if no rent expenditure was actually incurred.

The Tribunal disagreed with the Punjab and Haryana High Court's interpretation that an assessee suffering monetary loss would be entitled to exemption under section 10(13A). It emphasized that the exemption applies only when actual expenditure is incurred. The Tribunal also referenced the commentary of Income-tax Law by Chaturvedi and Pithisaria to support its view. Additionally, the Tribunal discussed the Supreme Court decision in Bhagwan Dass Jain's case, which clarified the concept of "income" in the context of property ownership, supporting the Tribunal's interpretation.

In conclusion, the Tribunal held that the house rent allowance received by the assessee, who did not actually incur any rent expenditure and resided in his own property, was not entitled to exemption under section 10(13A) read with rule 2A. Therefore, the Tribunal reversed the Commissioner (Appeals) order and allowed the appeal filed by the revenue.