My employees claim HRA and home loan interest together. Must I treat that as a double benefit?
No, not on these facts. The point was ground 2 of a composite order under s.201 and s.271C. The first appellate authority had held the exemption and the interest deduction to be two independent provisions, each with its own conditions, and the Tribunal upheld that because the department could not controvert it, so the short deduction and the consequential penalty both fell away. The employees concerned had let out the houses they owned and were living in rented premises, with the whole of the interest set against rental income and the exemption claimed on the rent they actually paid.
Decided by the ITAT (ITAT Kolkata Bench 'A' - P.M. Jagtap (Accountant Member) and S.S. Viswanethra Ravi (Judicial Member); order delivered by P.M. Jagtap, AM; ITA Nos. 510, 708 and 712 (Kol.) of 2016; AY 2012-13) on 2018-09-12, reported as [2018] 97 taxmann.com 573 (Kol.)(Trib.); (2018) 172 ITD 505 (Kol.)(Trib.); ITA Nos. 510, 708 and 712 (Kol.) of 2016; AY 2012-13. It bears on section 10(13A), section 24(b), section 192, section 201(1), section 201(1A), section 271C, section 9(1)(vi), section 194C, section 194-I, section 194J of the Income Tax Act 1961, in Salary & Perquisites, House Property and TDS Defaults matters.
Assessing officers do raise short-deduction demands on employers who allow both claims in the TDS computation, on the view that it is impermissible duplication. This order answers that view, but on narrow facts and a narrow footing. The employees had let out the houses they owned and were living in rented premises, so the interest ran against rental income while the allowance was exempted on rent they actually paid; the officer's premise that the interest related to a self-occupied house was contradicted by the employer's explanation. The finding that the two provisions operate independently is the first appellate authority's, upheld because the department did not contest it, so this is a useful answer to a demand rather than an authority on how the two provisions interact.
Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere.
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The employer was proceeded against under s.201(1) and s.201(1A) for financial year 2011-12 after a survey under s.133A, on three heads of alleged short deduction: tax on communication charges said to be royalty under s.194J, tax on manpower supply payments of Rs. 1,39,58,638 said to be fees for technical services rather than payments under s.194C, and the salary computation for certain employees. On the salary head the officer's case was that the employer had allowed those employees both an exemption of house rent allowance and a deduction of housing loan interest, which he treated as a double benefit that was not permissible, putting the excess interest at Rs. 43,66,699 and the tax at Rs. 11,74,088. The employees concerned had let out the houses they owned and were themselves living in rented premises: the whole of the interest was set against the rental income, producing a loss under the head income from house property, and the exemption was allowed on the rent they actually paid. The officer's own premise, that the interest related to a self-occupied house, was contradicted by that explanation. The first appellate authority decided the salary head in the employer's favour and cancelled the consequential penalty under s.271C, and the revenue appealed.
The revenue's appeal on the salary head was dismissed. That head was ground 2 of a composite order under s.201(1)/201(1A) and s.271C, and the Tribunal's disposal of it is short: it recorded the officer's double-benefit view and the first appellate authority's contrary finding that the two benefits are governed by two independent provisions, held that the departmental representative had raised nothing to controvert that finding or the reasons given for it, and found no justifiable reason to interfere (para 10). The consequential penalty under s.271C fell with the default (para 11). Both revenue appeals were dismissed and the employer's own appeal allowed (para 12); nothing was restored to the Assessing Officer.
The Tribunal added no construction of its own on how s.10(13A) and s.24(b) interact. The proposition the entry rests on is the first appellate authority's, recorded and affirmed: that the exemption and the interest deduction are two independent provisions, that interest is allowed on satisfaction of s.24(b) while house rent allowance is exempt under s.10 subject to the conditions prescribed, that the officer had not alleged the house property loss was wrongly computed or the allowance wrongly calculated, and that the premise of an impermissible double benefit was therefore wrong. The Tribunal upheld that finding because the departmental representative could not controvert it. An affirmance for want of contest is worth less than a reasoned construction, and the entry should be used on that footing.
The Ld. CIT(A) however found that these two benefits were governed by two independent provisions and since the concerned employees had satisfied the conditions for claiming the benefits under these two independent provisions, there was no violation on the part of the assessee of the Income Tax Act.
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Handle my notice → Ask a CA on WhatsAppNo, not on these facts. The point was ground 2 of a composite order under s.201 and s.271C. The first appellate authority had held the exemption and the interest deduction to be two independent provisions, each with its own conditions, and the Tribunal upheld that because the department could not controvert it, so the short deduction and the consequential penalty both fell away. The employees concerned had let out the houses they owned and were living in rented premises, with the whole of the interest set against rental income and the exemption claimed on the rent they actually paid. This was decided by the ITAT (ITAT Kolkata Bench 'A' - P.M. Jagtap (Accountant Member) and S.S. Viswanethra Ravi (Judicial Member); order delivered by P.M. Jagtap, AM; ITA Nos. 510, 708 and 712 (Kol.) of 2016; AY 2012-13) and bears on section 10(13A), section 24(b), section 192, section 201(1), section 201(1A), section 271C, section 9(1)(vi), section 194C, section 194-I, section 194J of the Income Tax Act 1961. It is reported as [2018] 97 taxmann.com 573 (Kol.)(Trib.); (2018) 172 ITD 505 (Kol.)(Trib.); ITA Nos. 510, 708 and 712 (Kol.) of 2016; AY 2012-13. Assessing officers do raise short-deduction demands on employers who allow both claims in the TDS computation, on the view that it is impermissible duplication. This order answers that view, but on narrow facts and a narrow footing. The employees had let out the houses they owned and were living in rented premises, so the interest ran against rental income while the allowance was exempted on rent they actually paid; the officer's premise that the interest related to a self-occupied house was contradicted by the employer's explanation. The finding that the two provisions operate independently is the first appellate authority's, upheld because the department did not contest it, so this is a useful answer to a demand rather than an authority on how the two provisions interact. If it applies to you, the first step is this: Establish the employee's actual position first - whether the house he owns is let out and he is paying rent elsewhere - because that is the fact pattern this order deals with.
The employer was proceeded against under s.201(1) and s.201(1A) for financial year 2011-12 after a survey under s.133A, on three heads of alleged short deduction: tax on communication charges said to be royalty under s.194J, tax on manpower supply payments of Rs. 1,39,58,638 said to be fees for technical services rather than payments under s.194C, and the salary computation for certain employees. On the salary head the officer's case was that the employer had allowed those employees both an exemption of house rent allowance and a deduction of housing loan interest, which he treated as a double benefit that was not permissible, putting the excess interest at Rs. 43,66,699 and the tax at Rs. 11,74,088. The employees concerned had let out the houses they owned and were themselves living in rented premises: the whole of the interest was set against the rental income, producing a loss under the head income from house property, and the exemption was allowed on the rent they actually paid. The officer's own premise, that the interest related to a self-occupied house, was contradicted by that explanation. The first appellate authority decided the salary head in the employer's favour and cancelled the consequential penalty under s.271C, and the revenue appealed. The matter was decided on 2018-09-12 by the ITAT (ITAT Kolkata Bench 'A' - P.M. Jagtap (Accountant Member) and S.S. Viswanethra Ravi (Judicial Member); order delivered by P.M. Jagtap, AM; ITA Nos. 510, 708 and 712 (Kol.) of 2016; AY 2012-13). On those facts the ITAT held as follows. The revenue's appeal on the salary head was dismissed. That head was ground 2 of a composite order under s.201(1)/201(1A) and s.271C, and the Tribunal's disposal of it is short: it recorded the officer's double-benefit view and the first appellate authority's contrary finding that the two benefits are governed by two independent provisions, held that the departmental representative had raised nothing to controvert that finding or the reasons given for it, and found no justifiable reason to interfere (para 10). The consequential penalty under s.271C fell with the default (para 11). Both revenue appeals were dismissed and the employer's own appeal allowed (para 12); nothing was restored to the Assessing Officer.
The Tribunal added no construction of its own on how s.10(13A) and s.24(b) interact. The proposition the entry rests on is the first appellate authority's, recorded and affirmed: that the exemption and the interest deduction are two independent provisions, that interest is allowed on satisfaction of s.24(b) while house rent allowance is exempt under s.10 subject to the conditions prescribed, that the officer had not alleged the house property loss was wrongly computed or the allowance wrongly calculated, and that the premise of an impermissible double benefit was therefore wrong. The Tribunal upheld that finding because the departmental representative could not controvert it. An affirmance for want of contest is worth less than a reasoned construction, and the entry should be used on that footing. In the words reproduced by the source cited on this page: "The Ld. CIT(A) however found that these two benefits were governed by two independent provisions and since the concerned employees had satisfied the conditions for claiming the benefits under these two independent provisions, there was no violation on the part of the assessee of the Income Tax Act." The decision followed or applied Channel Guide India Ltd. v. Asstt. CIT [2012] 25 taxmann.com 25/139 ITD 49 (Mum.)(Trib.) - followed at para 8, on a retrospective amendment not creating a past obligation to deduct; Destimoney Securities (P.) Ltd. v. ITO [ITA No. 4106 (Mum.) of 2014, dated 21-6-2017] - followed at para 9, on lease line and connectivity charges not being rent under s.194-I.
It was decided by the ITAT on 2018-09-12 and is reported as [2018] 97 taxmann.com 573 (Kol.)(Trib.); (2018) 172 ITD 505 (Kol.)(Trib.); ITA Nos. 510, 708 and 712 (Kol.) of 2016; AY 2012-13. Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere. A Tribunal decision binds the assessing officer and the Commissioner (Appeals) within that Tribunal's jurisdiction, and is persuasive before other benches. It is not binding on a High Court, and a contrary co-ordinate bench decision will be argued against you, so check whether the point has been taken the other way before you build a reply around it. On section 10(13A), section 24(b), section 192, section 201(1), section 201(1A), section 271C, section 9(1)(vi), section 194C, section 194-I, section 194J, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. The revenue's appeal on the salary head was dismissed. That head was ground 2 of a composite order under s.201(1)/201(1A) and s.271C, and the Tribunal's disposal of it is short: it recorded the officer's double-benefit view and the first appellate authority's contrary finding that the two benefits are governed by two independent provisions, held that the departmental representative had raised nothing to controvert that finding or the reasons given for it, and found no justifiable reason to interfere (para 10). The consequential penalty under s.271C fell with the default (para 11). Both revenue appeals were dismissed and the employer's own appeal allowed (para 12); nothing was restored to the Assessing Officer. It arises in Salary & Perquisites, House Property and TDS Defaults matters, on section 10(13A), section 24(b), section 192, section 201(1), section 201(1A), section 271C, section 9(1)(vi), section 194C, section 194-I, section 194J of the Income Tax Act 1961, and was decided by ITAT Kolkata Bench 'A' - P.M. Jagtap (Accountant Member) and S.S. Viswanethra Ravi (Judicial Member); order delivered by P.M. Jagtap, AM; ITA Nos. 510, 708 and 712 (Kol.) of 2016; AY 2012-13. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Keep the rent proof for the exemption and the lender's interest certificate as separate files, since they support conditions under separate provisions. If a short-deduction demand is raised on a double-benefit theory, ask the officer to identify the provision that bars a simultaneous claim, and to say whether he disputes the computation of the house property loss or the calculation of the allowance - neither was disputed here. Do not present this order as a reasoned construction of s.10(13A) and s.24(b); the Tribunal declined to interfere because the department did not contest the point. Check the year on the employer's side too. This order is for FY 2011-12, before s.71(3A) existed. From AY 2018-19 only Rs 2,00,000 of a loss under the head income from house property can be set off against other heads, so in the salary computation under s.192(2B) the employer may take that loss into account only to that extent, and the balance goes forward under s.71B in the employee's own hands. The independence of s.10(13A) and s.24(b) that this order upholds is unaffected; the quantum that reaches the TDS computation is not.
Searched for later treatment; none was found. That is not the same as a source affirming it. A citedby: search returns one hit, Shri Dinesh Kumar Ghosh v ACIT (ITAT Kolkata, 26 April 2019) — and that order was read in full: the words 'SDV International' do not appear in it anywhere, so the link is an indexing false positive. A second probe on the company name returns 48 documents, all other litigation involving SDV International Logistics (Supreme Court and Calcutta High Court commercial matters, a Karnataka customs case), none citing this order. No later decision applying the holding that the s.10(13A) exemption and the s.24(b) interest deduction are independent was found, and no Calcutta High Court appeal from it was traced. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The order has now been read in full, and three things change. The respondent is SDV International Logistics Ltd.; the 'Shri' carried in the earlier record is not part of the cause title. The house rent allowance question is one ground in a composite order under s.201(1)/201(1A) and s.271C, the other issues being s.194J on internet connectivity and specialised line rental, s.194-I on lease line charges, s.194C against s.194J on manpower supply, and the consequential penalty. And the sentence about two independent provisions is the first appellate authority's finding, recorded by the Tribunal at para 10 and upheld because the departmental representative could not controvert it - it is not the Tribunal's own construction of s.10(13A) and s.24(b), and the reasoning previously published in this entry does not exist in the order. The short-note reference at (2018) 68 ITR 35 (SN) is not on the reporter's citation line and remains unconfirmed. Nobody has confirmed the decision still stands. The order has now been read from the Tribunal's own text on Indian Kanoon, which confirms the coram, the Kolkata 'A' Bench, the three appeal numbers, the assessment year 2012-13, the twelve numbered paragraphs, the quoted sentence at para 10, the cancellation of the s.271C penalty at para 11 and the disposal at para 12. One disclosure about the tags: neither s.10(13A) nor s.192 is named anywhere in the order — it refers only to house rent allowance 'u/s 10', and the proceeding is under s.201(1) and s.201(1A) — so those two are carried here as the heads a reader will search under rather than as provisions the Bench cited. Sections 24(b), 201(1), 201(1A), 271C, 9(1)(vi), 194C, 194-I and 194J are all cited in terms, as is s.133A for the survey. The Tribunal gave no reasoning of its own on how s.10(13A) and s.24(b) interact; para 10 turns on the department's failure to controvert the first appellate authority. The order therefore does not tell you how the two provisions would be construed in a contested case, and it does not deal with an employee claiming interest on a house he occupies himself, which was the officer's own mistaken premise. The short-note reference at (2018) 68 ITR 35 (SN) is not on the reporter's citation line. Nothing later applying the point has been found. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The revenue's appeal on the salary head was dismissed. That head was ground 2 of a composite order under s.201(1)/201(1A) and s.271C, and the Tribunal's disposal of it is short: it recorded the officer's double-benefit view and the first appellate authority's contrary finding that the two benefits are governed by two independent provisions, held that the departmental representative had raised nothing to controvert that finding or the reasons given for it, and found no justifiable reason to interfere (para 10). The consequential penalty under s.271C fell with the default (para 11). Both revenue appeals were dismissed and the employer's own appeal allowed (para 12); nothing was restored to the Assessing Officer.
TaxSphere, “ACIT v SDV International Logistics Ltd”, https://taxnotice.vittsphere.com/caselaw/case/acit-v-sdv-international-logistics-hra-with-loan-interest/ (validity last checked 2026-08-23)
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I pay rent to my wife for the flat she owns and we live in it together. The officer says the whole thing is a colourable device and has disallowed my HRA. Is living under the same roof as my landlord by itself fatal?
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I paid External Development Charges to HUDA/HSVP because the Town and Country Planning Department told me to. I have no contract with HUDA. Does s.194C still oblige me to deduct tax at source?
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