Case Law Details
Ravindra R.V. Vs DCIT (ITAT Bangalore)
Introduction: In the case of Ravindra R.V. vs. DCIT, the Income Tax Appellate Tribunal (ITAT) Bangalore addressed a crucial issue concerning the denial of House Rent Allowance (HRA) exemption under Section 10(13A) of the Income Tax Act. The ITAT remitted the matter back to the Assessing Officer (AO) for reconsideration.
Detailed Analysis:
Background of the Case: Ravindra R.V. filed an appeal against the order of the Commissioner of Income Tax (Appeals)/National Faceless Assessment Centre (CIT(A)/NFAC) dated 27.2.2023 for a specific assessment year. There was a delay of 19 days in filing the appeal before the ITAT. The assessee provided a bonafide reason for the delay, attributing it to personal difficulties that caused a delay in contacting a Chartered Accountant to file the appeal.
The primary issue in this appeal revolved around the denial of exemption claimed on the House Rent Allowance (HRA) received by the assessee.
The Disputed HRA Exemption:
Ravindra R.V. claimed an exemption under Section 10(13A) of the Income Tax Act for the HRA component of his salary, which amounted to Rs. 1,02,564/-. However, during the processing of the income tax return, this exemption was denied. The denial was based on the computation rules, which specify that the exemption should be the least of:
1. 50% of the Basic + DA
2. Excess rent paid over 10% of salary
3. Actual HRA received
The Assessing Officer (AO) rejected the exemption on the grounds that the return of income did not provide specific details regarding the breakup of Basic salary, Dearness Allowance (DA), HRA, etc. Additionally, the return lacked a specific window or caption to capture the data of HRA exemption. As a result, the AO processed the return under Section 143(1)(a) of the Act without granting the HRA benefit, a decision that was later confirmed by the CIT(A).
The ITAT’s Decision: The ITAT reviewed the submissions of both parties. The assessee’s authorized representative (A.R.) presented detailed salary information for the assessment year under consideration. This information was not included in the original return of income but was now provided to support the claim for HRA exemption. The A.R. argued that the assessee was entitled to an HRA exemption of Rs. 1,02,564/- out of the total HRA received, amounting to Rs. 1,79,440/-.
In its decision, the ITAT acknowledged that these crucial details were missing from the original return of income filed by the assessee along with Form No. 16. Therefore, the AO and the CIT(A) had considered the entire salary while calculating the HRA exemption, instead of considering only the Basic and DA components as per Rule 2A of the Income Tax Rules.
In light of this, the ITAT deemed it appropriate to remit the issue back to the AO for a re-examination. The AO was instructed to re-evaluate the matter, taking into account the Form No. 16 filed by the assessee before the lower authorities. This reconsideration was aimed at granting the deduction for HRA in accordance with the relevant provisions.
Conclusion: In the Ravindra R.V. vs. DCIT case, the ITAT Bangalore took note of the missing salary details in the original return of income and remitted the matter to the Assessing Officer for reconsideration. The denial of House Rent Allowance (HRA) exemption under Section 10(13A) was due to the absence of specific salary breakdown, which is now provided for re-evaluation. This case highlights the importance of thorough documentation in income tax filings and the opportunity for taxpayers to rectify deficiencies in their claims during the appeal process.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
This appeal by assessee is directed against order of CIT(A)/NFAC dated 27.2.2023 for the assessment year.
2. There was a delay of 19 days in filing the appeal before this Tribunal. The assessee has filed an affidavit explaining the delay that due to his personal difficulties, he took time to contact the Chartered Accountant to file appeal before this Tribunal.
2.1. In our opinion, there is a bonafide reason for filing the appeal belatedly by 19 days before this Tribunal. Considering the reason explained by the assessee, we condone the delay and admit the appeal for adjudication.
3. The only grievance in this appeal is with regard to non-granting of exemption of House Rent Allowance (HRA) received by the assessee.
3.1 The assessee has claimed exemption u/s 10(13A) of the Income-tax Act,1961 [‘the Act’ for short] towards the house rent allowance which is part of his salary component amounting to Rs.1,02,564/-. While processing the return of income, the exemption claimed has been denied on the basis that amount claimed to have been the least of an amount equal to 50% of the Basic + DA or excess rent paid either 10% of salary or actual HRA received. However, the ld. AO denied the benefit u/s 10(13A) of the Act on the reason that the return of income did not have specific details of breakup of Basic salary, DA, HRA, etc. and also return of income did not have specific window or caption, which could capture the data of HRA exemption. In the absence of suitable details while processing return u/s 143(1)(a) of the Act, the benefit of HRA not given. On appeal, ld. CIT(A) confirmed the same. Against this assessee is in appeal before us.
4. We have heard the rival submissions and perused the materials available on record. Before us, ld. A.R. submitted the assessee’s salary details for the assessment year under consideration, which is as follows:
4.1 According to him, the assessee is entitled for HRA exemption to the tune of Rs.1,02,564/- out of HRA received to the tune of Rs.1,79,440/- and computed the deduction u/s 10(13A) of the Act read with Rule 2A of the Income Tax Rules, 1962 as follows:
4.2 In our opinion, these details are not available in the return of income filed by the assessee along with Form No.16. As such, ld. NFAC/CIT(A) adopted the entire salary instead of considering the Basic & DA while computing the benefit u/s 10(13A) of the Act read with Rule 2A of the I.T. Rules. In our opinion, it is appropriate to remit this issue to the file of ld. AO to re-examine the issue for the purpose of quantification of HRA on the basis of Form No.16 filed by the assessee before lower authorities. Accordingly, the issue in dispute is remitted to the file of ld. AO for reconsideration so as to grant deduction towards HRA.
5. In the result, appeal of the assessee is partly allowed for statistical purposes.
Order pronounced in the open court on 7th Sept, 2023
