Commissioner of Income Tax vs D. Lakshminarayanaswamy

N.V. Balasubramanian, J.—At the instance of the Department, the following question of law is referred by the Income Tax Appellate

Tribunal u/s 256(1) of the Income Tax Act, 1961, for our consideration :

Whether, on the facts and in the circumstances of the case, the Tribunal is correct in law in holding that the assessee is entitled to exemption u/s

10(13A) of the Income Tax Act ?

The assessee has been served on May 18, 1992, and there is no representation on behalf of the assessee.

The assessment year involved is 1982-83. The assessee is assessed in the status of an individual. The assessee during the course of the previous

assessment year 1982-83 received a sum of Rs. 9,000 as house rent allowance from Shri Ramakrishna Mills (CBE) Limited. The assessee

claimed that the house rent allowance received is exempt from tax. The Income Tax Officer negatived the claim of the assessee on the ground that

the assessee had not incurred any expenditure by way of rent, as he was residing in a house belonging to the Hindu undivided family, in which the

assessee is a member and no rent was paid by him to the family. The Appellate Assistant Commissioner, following the decision of the Punjab and

Haryana High Court in the case of Commissioner of Income Tax Vs. Justice S.C. Mittal, accepted the claim of the assessee and held that the

assessee was entitled to exemption. The Tribunal on appeal by the Revenue, following the decision of the Punjab and Haryana High Court, cited

supra, held that the assessee is entitled to the deduction u/s 10(13A) of the Income Tax Act. The decision of the Tribunal was rendered on

December 17, 1983. An Explanation was introduced by the Taxation Laws (Amendment) Act, 1984, with retrospective effect from April 1, 1976,

which expressly provides that the provisions of section 10(13A) of the Act would not apply in a case where the residential accommodation was

occupied by the assessee which is owned by him or the assessee has not incurred expenditure on payment of rent in respect of residential

accommodation occupied by him. We have seen that the assessment year 1982-83 and by virtue of the retrospective amendment made by the

Taxation Laws (Amendment) Act, 1984, the Explanation to section 10(13A) of the Act is applicable to the facts of the case. Since the assessee

has occupied the residential accommodation belonging to the Hindu undivided family and has not incurred any expenditure towards the rent, the

assessee is not entitled to claim the exemption provided u/s 10(13A) of the Act.

In this connection it is relevant to notice that the Explanation introduced to section 10(13A) of the Act has neutralised the effect of the decision

of the Punjab and Haryana High Court in Commissioner of Income Tax Vs. Justice S.C. Mittal, . That apart, the decision of the Punjab and

Haryana High Court has been dissented from uniformly by the Delhi, Karnataka, Andhra Pradesh as well as the Rajasthan High Courts in All India

Lakshmi Commercial Bank Officers'' Association Vs. Union of India and Others, ; Patil Vijaykumar and Others Vs. Union of India and Another, ;

M. Krishna Murthy and Others Vs. Commissioner of Income Tax, Andhra Pradesh, Hyderabad and Others, and Commissioner of Income Tax

Vs. Rajeshwar Prasad, , respectively.

We are of the view that in any case, the decision of the Punjab and Haryana High Court, in Commissioner of Income Tax Vs. Justice S.C.

Mittal, has been superseded by the legislative amendment with retrospective effect. We are, therefore, of the view that the Income Tax Appellate

Tribunal was not justified in holding that the house rent allowance received by the assessee occupying the house belonging to the Hindu undivided

family and not actually paying any rent is exempt u/s 10(13A) of the Act. Accordingly, we answer the question referred to us in the negative and in

favour of the Department. However, there will be no order as to costs.