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TMI Blog2012 (7) TMI 494X X X X Extracts X X X X X X X X Extracts X X X X ..... aid 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, therefore, prayed that the order of the Id. CIT(A) may be set-aside and the order of the A.O may be restored." 3. Brief facts of the case till the assessment stage of this issue are noted by Ld. CIT(A) in para 4.1 of his order which is reproduced below: "During the assessment proceedings the appellant that he was an employee of Sterlite Industries (India) Ltd., Mumbai, and was paid H.R.A. for his leased accommodation. The employer had obtained residential flat at grou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5. It was pointed out that as per the original employment letter dated 04.02.2004, he was supposed to get HRA @ 40% of the basic pay and in addition to this, he was to be provided residential accommodation at Udaipur for which he was to be charged @ Rs.6,000/- per month as rent and in case of relocation to Mumbai, he was eligible for a company leased accommodation for which the total cost of deposit for the house (calculated @ 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ties below. We find that in the present case, employer is making two payments of Rs. 1.70 lacs per month in addition to the payment of HRA to the assessee to the extent @ 40% of the basic pay. First payment is made by the employer company to the land lord from whom the accommodation was taken on lease by the employer company for the residence of the present assessee. In addition to this, the employer is making payment of special HRA to the assessee of Rs. 1.70 lacs per month in addition to the payment of HRA being paid by the employer to the assessee @ 40% of the basic pay. In addition to this, the employer company has provided deposit to the land lord of Rs. 40 lacs in respect of housing accommodation taken on lease by the employer company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce 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 although not to the land lord directly but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s such this ground of appeal is allowed." 8. From the above para of the order of Ld. CIT(A), we find that he has proceeded to decide this issue on this basis alone that since the rental agreement between the land lord and the employer is for the purpose of interest of land lord and the rent is being reimbursed by the assessee employee to the employer, the assessee is eligible for exemption u/s 10(13A) of the Income tax Act, 1961. But he has not considered the 2nd objection of the A.O. that the assessee was allowed to occupy the leased accommodation provided by the employer for which the employer paid rent as per lease & license agreement and this was also one of the reasons given by the A.O. for disallowing the claim of the assessee u/s 10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i.e. Rs.1.70 lacs per month and the same amount has been reimbursed by the employee to the employer and, therefore, perquisite value of hosing accommodation provided by the employer company to the employee assessee is 'nil' as per Rule 3 of the Income Tax Rules. But once, the housing perquisite value is worked out as 'nil' after considering this 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) of the Act and, therefore, we are of the considered opinion that the disallowance made by the A.O. regarding the claim of the assessee for exemption u/s 10(13A) is in order and, therefore, the order of Ld. CIT(A) result ..... X X X X Extracts X X X X X X X X Extracts X X X X
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