IT : Employee cannot claim both benefits HRA exemption and Nil value of perk in respect of rent recovered by employer for employer-provided accommodation
ITAT to employees 'Thou shall not claim two tax benefits with one payment of rent'
Facts
• Assessee had been allotted a residential flat by employer which was obtained on lease by employer.
• Employer recovered Rs. 1.70 lakhs p.m. towards reimbursement of rent and also paid HRA to assessee.
• Assessee-employee claimed nil value of accommodation perk under section 17(2) since rent was reimbursed to employer. He also claimed HRA exemption under section 10(13A) in respect of rent recovered by employer.
• AO disallowed HRA exemption claim since assessee had claimed nil perk value of accommodation in respect of rent recovered. CIT(A) allowed assessee's appeal. Hence, the present Revenue appeal to ITAT.
Held
• Revenue's appeal allowed and AO's order disallowing HRA exemption restored.
• Assessee was getting two benefits i.e. free use of accommodation provided by the employer which was taken by the employer on lease and in addition to this the assessee is also getting HRA and against these two benefits, assessee is making payment of one rent of Rs. 1.70 lacs per month to the employer.
• Assessee is getting two benefits out of which, one has to be taxed in any case because only one payment is being made by the assessee on account of rent.
• As the accommodation provided by the employer company was not added to the income of the assessee being the perquisite value of the house since the assessee has made the reimbursement of rent expenses incurred by the employer but then the same payment of rent to the employer company cannot be considered for the purpose of working out exemption against HRA under section 10(13A) of the Income tax Act, 1961.
Editor's Note
• Wherever Legislature intended that more than one deduction should not be claimed in respect of same amount, the same has been provided with sufficient clarity in express words. Section 80A(4) provides against claiming double/multiple deductions under different sections of same amount of profit from eligible business. As ITAT observed in Asstt CIT v. Deepak Bheda [2012] 23 taxmann.com 159 (Mum- Trib.) wherein the ITAT observed that in respect of restrictions on claiming double deduction "Wherever any such restriction is deemed fit, the legislature has provided in the statute a sufficient check under chapter VI-A of the Income Tax Act.". So, it can be argued that absent any express provision against double/multiple tax benefits in respect of same amount, there is no bar in claiming the same. - [2012] 23 taxmann.com 225 (Ahmedabad - Trib.)