Rule 2A

Rule 2A — the law in short

What the courts have decided on section Rule 2A, in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• Sudip Rungta v DCIT ITATHelps taxpayerValidity unconfirmed
  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.
• Meena Vaswani v ACIT ITATHelps departmentValidity unconfirmed
  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.

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.