TMI Blog2012 (7) TMI 494X X X X Extracts X X X X X X X X Extracts X X X X ..... his 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)and, therefore, the disallowance made by the A.O. regarding the claim of the assessee for exemption u/s 10(13A) is in order - against assessee. - IT APPEAL NO. 437 (AHD.) OF 2010 - - - Dated:- 15-6-2012 - A.K. GARODIA, KUL BHARAT, JJ. ORDER A.K. Garodia, Accountant Member This is the Revenue's appeal directed against the order of Ld. CIT(A)-VI, Baroda dated 13.11.2009 for the assessment year 2006-07. 2. The grounds raised by the revenue are as under: "On the facts and in the circumstances of the case and in law, the learned C.I.T(A) erred:- (1) in directing the assessing officer to allow the claim of the assessee for exemption of HRA u/s. 10(13A) of the Act without appreciating that the assessee has not paid the rent directly to the landlord and hence the claim of the assessee is not covered under section 10(13A) of the Act. (2) in the facts and in the circumstances of the case and in law, the learned CIT(A) ought to have upheld the order of the A.O. (3) It is, theref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ulated @ 10% and the monthly rent was fixed up to Rs. 1.5 lacs / month). As per the revised employment terms, w.e.f. 01.04.2005, he was to be given HRA @ 40% of the basic and in addition to this, he was allowed special HRA of Rs.1.70 lacs per month and the employer company was to give security deposit of Rs.40 lacs to the land lord. Pay slip for the month of March 2006 was submitted by the Ld. A.R. as per which, he was paid HRA of Rs. 3,10,020/- for this month and recovery was made on account of rent @ 1.70 lacs per month. It was pointed out by the bench that under these facts, assessee is getting double benefit i.e. free use of accommodation provided by the employer which was taken by the employer on lease and in addition to this the assessee is also getting HRA and against these two benefits, assessee is making payment of one rent of Rs. 1.70 lacs per month to the employer. It was pointed out by the bench that the assessee is getting two benefits out of which, one has to be taxed in any case because only one payment is being made by the assessee on account of rent. As the accommodation provided by the employer company was not added to the income of the assessee being the perquisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pute in the present case is that the assessee claimed exemption of HRA received by him from the employer company of Rs.3 lacs per month approximately. The exemption is claimed by the assessee u/s 10(13A) for the amount of reimbursement of rental expenses paid to the employer of Rs.1.70 lacs per month. The assessee claimed that he is eligible for exemption u/s 10(13A) and he claimed exemption of Rs. 16,19,940/-. This claim of the assessee was rejected by the A.O. on this basis that since the assessee is not paying rent to the land lord directly, he is not entitled to the benefit of Section 10(13A) of the Income tax Act, 1961. One more reason was given by the A.O. that since the assessee was allowed to occupy free accommodation provided by the employer for which the employer was paying rent as per the leased license agreement, the assessee's claim of exemption u/s 10(13A) for a sum of Rs. 16,19,.940/- is denied and added to the total income of the assessee. Against this disallowance made by the A.O., this is the claim of the assessee that since the assessee is not occupying any housing accommodation owned by the assessee and the assessee is paying rent of Rs.1.70 lacs per month altho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he employer, one of which is not taxed on the basis of reimbursement of rent by the assessee to the employer. The first benefit is of rent free accommodation provided by the employer to the assessee employee for which the employer is incurring rental expenditure of Rs. 1.70 lacs per month in addition to providing interest free deposit of Rs. 40 lacs with the land lord. The 2nd benefit being received by the assessee is this that he is getting HRA of Rs.3 lacs approximately per month including special HRA of Rs.1.70 lacs per month. Against these two benefits being received by the assessee, the assessee is making one payment i.e. reimbursement of rentals to the employer company @ Rs.1.70 lacs per month. Now, this reimbursement of rent to the employer company of Rs.1.70 lacs per month is considered against the free housing accommodation provided by the employer company to the employee assessee, then this reimbursement of house rent to employer is no more available to be considered for exemption u/s 10(13A). As per Rule 3, the perquisite value of the housing accommodation provided by the employer company has to be worked out @ 15% of the salary or actual amount of lease rental paid by t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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