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TMI Blog1984 (7) TMI 68X X X X Extracts X X X X X X X X Extracts X X X X ..... emises or residing in their own residential accommodation. The question raised in these petitions is that the amount of H.R.A. received by the officers who are actually residing in their own residential houses/flats is not liable to be included in computing the total income of a previous year under the I.T. Act, 1961 (hereinafter referred to as " the Act "). The plea of the petitioners is that the amount received is exempt in view of the provisions of s. 10(l3A) read with r. 2A of the I.T. Rules, 1962 (hereinafter referred to as " the Rules "). It is apposite to reproduce those provisions : " 10. (13A) any special allowance specifically granted-to an assessee by his employer to meet expenditure actually incurred on payment of rent (by w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per month in respect of the relevant period, whichever is the least. Explanation.-In this rule (i) 'salary' shall have the meaning assigned to it in clause (h) of rule 2 of Part A of the Fourth Schedule; (ii) 'relevant period' means the period during which the said accommodation was occupied by the assessee during the previous year. " The submission of Shri Chandrasekharan, the learned counsel for the petitioners, is that on a combined reading of s. 10(l3A) of the Act and rule 2A of the Rules, the fact that an assessee was living in his own residential accommodation does not take the H.R.A. paid to him by his employer out of the purview of clause (13A) of s. IO of the Act, firstly, because by living in his own house/flat and by payi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion occupied by him and if he is compensated by his employer in that case, subject to the limitations imposed under the Act and the Rules, the allowance paid to him by the employer shall be exempt from income-tax. An assessee, who occupies his own house, has disentitled himself from the rent (allowance) which he would have been entitled to if he had not occupied the same himself, and in that sense he suffered expenditure in that regard. In that sense, an assessee occupying his own house, if compensated by the employer by payment of special allowance (HRA), subject to the restrictions as imposed under the Act and the Rules, the compensation paid to the assessee by his employer cannot be subjected to tax. The Tribunal accepted the interpretat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g be added nor subtracted unless there are adequate grounds to justify the inference that the legislature clearly so indicated. Clause (13A) grants exemption from tax of the allowance which falls within the four corners of the conditions laid down. It is not any allowance or any special allowance but an allowance, I may be permitted to split, (i) specifically granted, (ii) to meet expenditure, (iii) actually incurred, (iv) on payment of rent. The intention of the legislature is clear from the words employed. The first requirement is met in these cases, viz., that it is house rent allowance specifically granted under the service contracts, but the other conditions are not fulfilled. " To meet " suggests that the special allowance should be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ). Those officers do not come within the specific words of the statute. Clause (13A) provides that the limit up to which such allowance may not be included from the total income will be prescribed having regard to the area or place in which such accommodation is situate and other relevant considerations. " Prescribed " means prescribed by rules made under the Act (section 2(34)). Therefore, rule 2A only prescribes the extent of exemption under the powers conferred by s. 295 of the Act read with clause (13A). Rules under the statute may be treated for all purposes of construction or obligation exactly as if they were in the Act and are to be of the same effect. But the rules cannot travel beyond the Act and have to be read subject to its p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6, 1980, No. 290, dated April 15, 1981, and No. 291 dated April 15, 1981 and No. 342, dated May 19, 1983, in which the income-tax authorities have stated that they have not accepted the decisions of the Punjab and Haryana High Court referred to above and have moved appropriate proceedings in the Supreme Court against the same. In this view of the matter, the circulars proceed to say that income-tax would be deductible from employees in respect of H.R.A. if such employees are residing in houses/flats owned by them. I grant that, there is power in the Board under s. 119 of the Act to issue orders, instructions and directions to other income-tax authorities for the proper administration of the Act and such authorities and all other persons emp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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