Kuldeepkumar D Kaura Vs DCIT (Gujarat High Court)
SEO Title: HRA Exemption Under Section 10(13A) Cannot Be Denied Where Employer Recovers Rent From Employee: Gujarat HC
Material Facts: The assessee, serving as Chief Operating Officer (COO) and Chief Executive Officer (CEO) of Sterlite Industries India Ltd., filed his return for Assessment Year 2006-07 declaring total income of Rs. 2,12,75,910. He claimed exemption of House Rent Allowance (HRA) amounting to Rs. 16,19,940 under Section 10(13A) of the Income Tax Act, 1961. The employer had taken a residential flat on lease for the assessee’s accommodation and paid rent directly to the landlord. The same amount of Rs. 1,70,000 per month was recovered from the assessee’s salary.
Procedural History: The Assessing Officer, by assessment order passed under Section 143(3), disallowed the HRA exemption under Section 10(13A) and added Rs. 16,19,940 to the assessee’s income on the ground that the assessee had not directly paid rent to the landlord and was occupying accommodation leased by the employer.
The Commissioner of Income Tax (Appeals) allowed the assessee’s appeal and deleted the addition, holding that although the employer paid the landlord directly, the rent was recovered from the employee and the arrangement did not affect eligibility for exemption under Section 10(13A).
