2022 (5) TMI 1656 - HC - Income Tax

HRA Allowances - no letter/application made by the petitioner regarding allotment/non-allotment of company s residence at the new place of posting during the first six months of his posting or even thereafter - accommodation v/s residence - grievance of the petitioner was that since the present employer of the petitioner failed to provide accommodation/quarter to the petitioner. The petitioner was eligible for HRA at the rate of 30 per cent of his basic salary for six months in terms of Rule 3.4 of the said HRA Rules HELD THAT - On a close scrutiny of the said Rule 3.4 of the HRA Rule the same would apply for an employee when such an employee had taken over duty in the new station and not been allotted accommodation by the employer company at the said new station. In case he had been allotted a residence at the new station (place and posting) his entitlement to House Rent Allowance at the old rate would be limited only to the period of joining time in the manner mentioned therein. From a harmonious reading and upon a true construction of the said Rule 3.4 it is clear that in the first paragraph the expression used accommodation and in the second paragraph the expression used residence . The distinction between the two expressions are very clear and obvious. The expression accommodation denotes an immediate one simultaneously with the new posting and the expression residence denotes with some stability of a permanent nature of course limited to the course of his employment only. In the facts of the instant case the petitioner was admittedly accommodated at the said Sitalpur Guest House immediately on his transferred posting where he stayed for a short while and left for a hotel at Asansol at his own expense. Therefore accommodation was duly provided to the petitioner immediately on his transferred posting where he refused to stay after a short while as stated above. Such an act on the part of the petitioner made him ineligible to receive House Rent Allowance from his employer. The House Rent Allowance was therefore not payable to the petitioner as claimed in his writ petition. Ratio decided In the matter of Patil Vijay Kuraar 1984 (8) TMI 68 - KARNATAKA HIGH COURT has no application in the facts of this case as there was no case of tenancy existed or claimed by the writ petitioner. So application of the relevant provision on the rent paid by an individual employee under the said 1961 Act did not arise in the facts of this case. The case of the petitioner was governed by the relevant HRA Rules as discussed above which made the petitioner ineligible from receiving HRA. Even under the communication dated April 03 1987 being Annexure XVI which was issued by Coal India Limited and made a part of the HRA Rules did not make the petitioner eligible to receive HRA because the petitioner did not stay at the said guest house provided by his employer at a transferred place except a short while and not for the required tenure and then he shifted to a hotel at Asansol at his own expense by surrendering the same. Thus the petitioner did not adhere to the relevant HRA Rules as discussed above. WP dismissed.

Summary

Issues Involved:
1. Entitlement to House Rent Allowance (HRA) upon transfer and non-allotment of accommodation.
2. Obligation of the employer to provide accommodation.
3. Eligibility for HRA when refusing or surrendering provided accommodation.
4. Application of relevant HRA rules and statutes.
5. Interpretation of accommodation and residence under HRA rules.

Detailed Analysis:

1. Entitlement to House Rent Allowance (HRA) upon transfer and non-allotment of accommodation:
The petitioner, a Sales Manager promoted to Deputy Chief Sales Manager, was transferred to Eastern Coalfields Limited (ECL) and claimed HRA due to non-allotment of accommodation at the new posting. According to the Coal India Executives House Rent Allowance Rules (HRA Rules), an executive not provided with accommodation at the new station is eligible for HRA for six months, extendable with competent authority approval if the employer fails to provide accommodation.

2. Obligation of the employer to provide accommodation:
The petitioner argued that it was the employer's obligation to provide accommodation automatically without any application from the employee. The employer had promised HRA processing and requested the petitioner to apply for accommodation. Despite the petitioner's application, the employer did not provide the necessary accommodation, forcing the petitioner to stay at a hotel at his own expense.

3. Eligibility for HRA when refusing or surrendering provided accommodation:
The respondents contended that the petitioner's stay at a hotel instead of the provided guest house rendered him ineligible for HRA. Rule 3.1 of the HRA Rules states that an employee who refuses or surrenders accommodation offered by the company is not eligible for HRA. The petitioner stayed at the guest house for a short period and then moved to a hotel, thus surrendering the provided accommodation.

4. Application of relevant HRA rules and statutes:
The court examined Rule 3.1 and Rule 3.4 of the HRA Rules. Rule 3.4 allows HRA for six months if the employee is not allotted accommodation at the new station. However, Rule 3.1 disqualifies an employee from HRA if they refuse or surrender the provided accommodation. The petitioner's act of moving to a hotel after staying briefly at the guest house constituted a surrender of the provided accommodation, making him ineligible for HRA.

5. Interpretation of accommodation and residence under HRA rules:
The court distinguished between "accommodation" (immediate provision) and "residence" (more stable, permanent nature). The petitioner was provided immediate accommodation at the guest house but chose to stay at a hotel, thus not adhering to the rules. The court held that the petitioner's refusal to stay at the provided guest house made him ineligible for HRA.

Conclusion:
The court dismissed the writ petition, ruling that the petitioner was not entitled to HRA due to the surrender of the provided accommodation. The petitioner's reliance on previous judgments was found inapplicable as the specific HRA rules governing the case were clear and unambiguous. The interim order was vacated, and all connected interlocutory applications were disposed of without any order as to costs.