(1) The amount, which is not to be included in the total income of an assessee in respect of the special allowance referred to in Schedule III [Table: Sl. No. 11] to the Act, shall be the least of the following:

(a) the actual amount of such allowance received by the assessee in respect of the relevant period; or

(b) the amount by which the expenditure actually incurred by the assessee in payment of rent in respect of residential accommodation occupied by him exceeds one-tenth of the amount of salary due to the assessee for the relevant period; or

(c) in case of an assessee employed in the location mentioned in column B of the following Table, an amount equal to such percentage of salary, mentioned in column C thereof, due to the assessee in respect of the relevant period:—

Table

(2) In this rule,–

(a) "relevant period" means the period during which the said accommodation was occupied by the assessee during the tax year; and

(b) "Salary” includes dearness allowance, if provided for under the terms of employment, but excludes all other allowances and perquisites.