COMMISSIONER OF INCOME TAX BOMBAY Vs. K BALASUBRAMANIAM

JUDGEMENT

(1.) BY this reference, at the instance of the revenue, the following question of law has been referred by the Income Tax Appellate Tribunal, Mumbai to this Court for opinion under section 256 (1) of the income Tax Act, 1961 :

(2.) THE assessee is an individual. The assessment years involved in this reference are 1980-81 and 1981-82, the relevant accounting years being the years ended on 31-3-1980 and 31-3-1981 respectively. In each of these two accounting years, the assessee received a sum of Rs. 4,800/- as house rent allowance from employer. The assessee claimed that the above amount was not liable to be included in computation of his income from salary in view of the provisions of section 10 (13a) of the Income Tax Act, 1961 ( Act ). The Income Tax officer rejected this claim of the assessee on the ground that during the relevant period the assessee resided in a flat owned by him and did not pay any rent to anyone. The assessee appealed to the Appellate Assistant Commissioner of income-tax, who, relying on the decision of Punjab and haryana High Court in C. I. T. vs. B. R. Tuli, (1980) 125 ITR 460, accepted the claim and allowed the appeal of the assessee. The appeal of the revenue against the above order of the Appellate Assistant Commissioner was rejected by the income-tax Appellate Tribunal. Hence this reference.

(3.) WE have heard Mr. R. V. Desai, learned counsel for the revenue, who submits that the controversy now stands resolved by insertion of the Explanation to clause (13a) of section 10 of the Income-tax Act, 1961 with retrospective effect from 1-4-1976 by the Taxation Laws (Amendment) Act, 1984. The assessee, though served, is not represented. We have considered the submission of Mr. Desai. Section 10 (13a)of the Act exempts any allowance specifically granted to an employee by his employer to meet expenditure actually incurred by him on payment of rent for residential accommodation occupied by him to the extent prescribed, subject, however, to a ceiling of four hundred rupees per month. Section 10 (13a), at the material time, stood as follows :-