In a significant ruling, the Income Tax Appellate Tribunal (ITAT), Delhi bench has held that the rental amount paid to wife is eligible for HRA deduction under section 10(13A) of the Income Tax Act, 1961.
The assessee, Mr. Aman Kumar Jain filed his income tax return claiming a deduction for HRA under section 10(13A) of the Act, on account of rent paid to his wife.
The claim was denied by the authorities below by holding that from the ITR of his wife there is no other income other than rental income.
The bench comprising Shri Chandra Mohan Garg (Judicial Member) has noted the fact that the wife of assessee is earning income from business and profession in addition to rental and interest income and filing returns of income paying taxes thereon.
Considering the fact that the assessee has paid rent to his wife and the recipient wife has declared rental income under the head income from house property in her return of income which has been accepted by the revenue confirming the payment of taxes, and the rental house has been registered in the name of his wife who purchased the house by procuring loans from the banks and also paying interest and installments against the housing loans, the assessee is eligible for deduction.
“Therefore, the observations of the ld. CIT(A) are not sustainable based on incorrect appreciation of facts as the sources for purchase of house in the hands of Smt. Sangeeta Jain and earning of rental income therefrom has been proved and accepted by the revenue therefore the other side of transaction of payment of rent by the husband cannot be doubted and thus the contention of authorities below that the rent by the husband is not allowable for claiming deduction of HRA u/s. 10(13A) of the Act is devoid on merits,” the ITAT ruled.
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