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PALACE – BUILDING – DISTINCTION

Income Tax - By: - Mr. M. GOVINDARAJAN - Dated:- 1-2-2017 - Exemption to the Palace of a Ruler Section 10 of the Income Tax Act, 1961 ( Act for short) provides that in computing the total income of a previous year of any person, any income falling within the sub clauses of Section 10 shall not be included. Sub clause (19A) provides that the annual value of any one palace which is in occupation of a Ruler and whose annual value was exempt from income tax before the commencement of the Constitutio .....

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payment of income tax on the residential palace of the Ruler under Section 10(19A) it is necessary for the Ruler to satisfy that- he owns the palace as his ancestral property; such palace is in his occupation as his residence; the palace is declared exempt from the payment of income tax under Paragraph 15 (iii) of the Order, 1950 by the Central Government. Issue The issue to be discussed in this article is where part of the residential palace is found to be in occupation of the tenant and remai .....

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in occupation, the exemption under Section 10(19A) would be available only for that part and not for the whole. The High Court held that the exemption has been limited only to one palace in occupation. If the Legislature intended a further splitting up, it would have been provided in Section 10(19A) that such portion of the palace in occupation is only exempted, but it appears that the language used by the Legislature did not contemplate a further splitting up. The Revenue relied on the case in .....

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urt in this regard held that in Section 10(19A), in the place of building , the phrase employed is one palace and so far as in the case in hand is concerned, it is not disputed that this official residential is only one palace and not more than one. Under these circumstances, Section 10(19A) could not be interpreted to mean that it contemplates further splitting up of portions of a palace. The language of Section 10(19A) does not justify it. It is settled that in cases of exemption, the language .....

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to deny the benefit of exemption to the other portion of the palace rented out by the Ruler, since the entire palace is declared as his Official residence. Even if only a part of the palace is in the self occupation of the former Ruler and the rest has been let out, the exemption available under Section 10(19A) will be available to the entire palace. In the case of a taxing statute, a plausible view in favor of the assessee should be preferred in these circumstances. In Maharao Bhim Singh of Kot .....

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their own use and realized ₹ 80,000 as rent. The lease period ended on 1993 though the land still continues to remain in the hands of Ministry of Defence. The issue involved in the appellant s case is whether the rental income received by the appellant from the Ministry of Defence is taxable in his hands or he would be entitled to full exemption from the income. The Commissioner of Income Tax (Appeals), Rajasthan - II held the case in favor of the appellant by holding that since the appell .....

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the Revenue under Section 256 (1) of the Act referred to the High Court of Rajasthan for answer to the question of law - Whether on the facts and circumstances of the case, the Tribunal was justified in holding that the rental income from Umed Bhawan Palace was exempt under Section 10(19A) of the Income Tax Act, 1961? The High Court answered the question against the appellant and in favor of the Revenue. The High Court held that so long as the assessee continues to remain in occupation of his o .....

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it of exemption remains available only to the extent of portion which he is in occupation of his residence. The assessee filed the present appeal before the Supreme Court. The appellant contended the following before the Supreme Court- The question involved in this appeal was already decided in favor of the appellant in all previous assessment years by the Supreme Court, there was no justifiable reason for the Revenue to have pursued the same question again only for the assessment year in questi .....

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Ta Act and Section 23 of the Income Tax Act are neither in pari materia with each other and nor identically worded; The question involved in this appeal has already been answered by the Madhya Pradesh High Court in Commissioner of Income Tax V. Bharatchandra Banjdeo - 1985 (1) TMI 38 - MADHYA PRADESH High Court; and therefore there was no justifiable reason for the High Court to have departed from the view taken by the MP High Court; Section 10(19A) does not use the same expression which occurs .....

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