The assessee a salaried individual. The ssessee had filed Form 16 in support of the salary offered to tax in the return of income.The AO  asked the assessee to explain the manner in which the exemption under S.  10(13A) in respect of house rent allowance was calculated. In response the assessee filed detailed working explaining that term ‘salary’ for the purposes of S.  10(13A) includes only ‘basic salary’ and ‘dearness allowance’ and nothing more. The AO held that the ‘performance bonus’ received by the assessee also formed part of ‘salary’ for the purposes of S.  10(13A) and accordingly re-computed the exemption available under S.  10(13A) thereby resulting in disallowance of the entire exemption claim of Rs. 8.48 lakhs. On appeal to the Tribunal the Tribunal held that  the basic salary for the purpose of computation of house rent disallowance is Rs. 3 lakhs (10 per cent of Rs. 30 lakhs being basic salary). Therefore, excess of rent paid over 10 per cent of salary comes at Rs. 5.20 lakhs (Rs. 8.20 – Rs. 3 lakhs). Accordingly the assessee is entitled for house rent allowance at Rs. 5.20 lakhs . Followed CIT v. B. Ghosal [1980] (125 ITR 744 (Karn) (HC)  ( AY. 2011 -12)