HRA EXEMPTION FOR RENT PAID TO WIFE OR MOTHER

An employee who is in receipt of House Rent Allowance (HRA) from his employer, and who incurs expenditure by way of rent on residential accommodation occupied by him, is entitled to claim an exemption of the HRA to the extent prescribed by rule 2A. By virtue of the explanation to Section 10(13A), the assessee is not entitled to such exemption if:

(a) the residential accommodation so occupied is owned by the assessee himself, or

(b) the assessee has not actually incurred any expenditure by way of rent on such accommodation occupied by him.

At times, it may so happen that the accommodation in which the employee is residing is owned by a close relative, either wife or a parent, who also resides in the same accommodation along with the assessee. The issue has arisen before the Tribunals as to whether the assessee is entitled to exemption for HRA under section 10(13A) in such circumstances, more so when the expenditure on rent is not adequately evidenced.

While the Ahmedabad and Delhi benches of the Tribunal has taken the view that an assessee cannot be denied the exemption under such circumstances, the Mumbai bench of the Tribunal has taken a contrary view, holding that the assessee was not entitled to the benefit of the exemption in such a case.

BAJRANG PRASAD RAMDHARANI’S CASE
The issue first came up before the Ahmedabad bench of the Tribunal in the