Section 10(13A)

Section 10(13A) — the law in short

What the courts have decided on section 10(13A), in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• Sumit Maloo v ITO, Kishangarh ITATHelps taxpayerNo later treatment found
  The Assessing Officer has disallowed my whole Chapter VI-A block — 80C, 80D, 80G — and my HRA, saying I filed no documentary evidence. I did file it. What do I do?
  The Jaipur Tribunal restored almost all of it, holding that where the assessee has actually placed the evidence on record the Assessing Officer and the CIT(A) cannot disallow "arbitrarily" without discussing those documents. On s.80D in particular the Tribunal allowed Rs 50,000 of medical expenditure incurred on a dependent father who was a senior citizen suffering from Parkinson's, on the strength of a doctor's prescription, the father's Aadhaar showing his age, and bank entries evidencing the spend — with no insurance policy at all.
• Vinod Sharma v ACIT ITATCuts both waysNo later treatment found
  I claimed HRA on rent paid to my wife. We are co-owners of the flat and we live in it together. The officer has disallowed it. What exactly will sink the claim?
  Four things sank it here, and any one of them is dangerous: the assessee was himself a co-owner of the accommodation, there was no rent agreement, no monthly rent outgo could be traced in the bank account, and the recipient's return of income showing the rent as her income was never produced — not before the Assessing Officer, not before the Commissioner (Appeals), and not before the Tribunal. On those facts the Tribunal dismissed the ground in a paragraph.
• Smt. Madhu Khatri v DCIT ITATHelps taxpayerNo later treatment found
  My employer allowed my HRA and conveyance allowance in Form 16 after taking my Form 12BB with the landlord's name, address and PAN. The CPC has still added them back. Does the employer's Form 16, backed by the Rule 26C declaration, carry the claim?
  On these facts, yes. The Tribunal held the assessee eligible for the s.10(13A) exemption of Rs 7,41,983 and the s.10(14) conveyance allowance of Rs 19,200 because the claim was supported by the requisite documents — bank statement as proof of payment, the declaration under Rule 26C, Form 12BB carrying the landlord's name, address, PAN and rent receipts, and a Form 16 in which the employer had allowed both exemptions after satisfying itself — and because the Commissioner (Appeals) had ignored all of that. The Form 16 was disputed neither by the Commissioner (Appeals) nor by the Departmental Representative.
• Aman Kumar Jain v ITO ITATHelps taxpayerJudgment not reachable
  I pay rent to my wife, who owns the flat. Will my HRA exemption survive?
  The reported outcome is that the exemption was allowed for AY 2020-21, the flat being registered in the wife's name, she servicing the loan on it and having declared the rent in her own return. That account comes from a digest listing. The order is unreported and could not be found in a full-text subscription research database on any of three searches, so no paragraph of it has been read and nothing in this entry is corroborated by a primary source. For a sourced authority on the same point, lead with Abhay Kumar Mittal v. Dy. CIT [2022] 136 taxmann.com 78/194 ITD 224 (Delhi)(Trib.).
• Abhay Kumar Mittal v DCIT ITATHelps taxpayerNo later treatment found
  The AO clubbed my wife's rental income with mine and denied my HRA. Is that right?
  No. The Tribunal found the sources for the wife's purchase of the house were proved and never doubted, so the clubbing under s.64 had no foundation; there is no legal impediment to paying house rent to your wife, and the HRA exemption could not be denied.
• Sudip Rungta v DCIT ITATHelps taxpayerNo later treatment found
  The AO added my performance bonus to salary and cut my HRA exemption. Can he do that?
  No. 'Salary' for the house rent allowance exemption is not the general definition in s.17 but the one in clause (h) of rule 2 of Part A of the Fourth Schedule, which rule 2A picks up: it takes in basic salary and dearness allowance where the terms of employment so provide, and excludes all other allowances. A performance bonus therefore stays out, the ten per cent test ran on the basic salary of Rs 30 lakhs, and the assessee was held entitled to about Rs 5.20 lakhs of exemption.
• ACIT v SDV International Logistics Ltd ITATHelps taxpayerNo later treatment found
  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.
• Meena Vaswani v ACIT ITATHelps departmentNo later treatment found
  What evidence does the department actually need before it will accept HRA on rent paid to my mother?
  More than rent receipts. The Tribunal denied the exemption for three years on rent said to be paid to the assessee's mother, holding the arrangement a sham: there was no leave and licence agreement, the rent was paid in cash with nothing in the bank, the mother had not returned the rent as her income, and an inspector found the assessee actually living in her own flat nearby.
• Bajrang Prasad Ramdharani v ACIT ITATHelps taxpayer
  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?
  No. The Tribunal read s.10(13A) with its own Explanation and held that the provision imposes only two conditions — that the assessee occupies the accommodation, and that he has actually incurred expenditure on rent — and that neither of them is broken merely because the landlord is his wife and lives in the same house. Where rent receipts were produced and the payments were traceable to bank transfers, the exemption was restored even though the Assessing Officer and the Commissioner (Appeals) had both branded the arrangement a device.
• Statutory position — s.17(3): what "profits in lieu of salary" includes, the exemption receipts it carves out, and the limb that catches money paid before employment begins or after it ends CBDT Circulars & InstructionsCuts both ways
  My client received a payment from a former employer that is not gratuity, not retrenchment compensation and not under any VRS. The Assessing Officer says it is profits in lieu of salary. What exactly does s.17(3) cover, and what does it not?
  Section 17(3) has three limbs. Clause (i) covers the amount of any compensation due to or received from an employer or former employer at or in connection with the termination of employment or the modification of its terms and conditions. Clause (ii) covers any payment due to or received from an employer, a former employer or a provident or other fund, but expressly excludes any payment referred to in clause (10), (10A), (10B), (11), (12), (13) or (13A) of section 10, and excludes so much of the payment as consists of the employee's own contributions or interest on them or any sum received under a Keyman insurance policy including bonus allocated on it. Clause (iii) covers any amount due to or received, whether in lump sum or otherwise, by any assessee from any person before his joining any employment with that person or after cessation of his employment with that person.

Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.