TMI Blog1985 (7) TMI 24X X X X Extracts X X X X X X X X Extracts X X X X ..... mpt under clause (19A) of section 10 of the Income-tax Act, 1961, is taxable under the Income-tax Act, 1961 ? The assessee is an individual. The assessment year involved is 1975-76. The previous year relevant to the assessment year 1975-76 ended on September 30, 1974. The return for the previous year in question was filed on August 16, 1975, declaring a total income of Rs. 17,328. During the assessment proceedings, it was noticed by the Income-tax Officer that the assessee has rented out quarters, garage and godowns on rent at the rate of Rs. 9,322 per annum. The assessee disclosed this income. In view of section 10(l 9A) of the Income-tax Act, 1961 (No. XLIII of 1961) (for short " the Act"), the annual value of any one palace of the Rul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions which were let out to them. They have right to remain in possession so long they were not evicted in due course of law. So, the tenants were in occupation of the quarters, godowns and garage in the previous year relevant to the assessment year under consideration. It may be stated here that clause (19A) was inserted by the Rulers of Indian States (Abolition of Privileges) Act, 1972, with effect from December 28, 1971. So, at the relevant time, the portion of the palace was not in the occupation of the Ruler and, as such, the annual value of the palace, which is not in occupation of the assessee, could not be exempt from tax in view of section 10(l 9A) of the Income-tax Act, 1961. Thus, in my opinion, the finding of the learned Appellat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h effect from December 28, 1971 : " (19A) the annual value of any one palace in the occupation of a Ruler, being a palace, the annual value whereof was exempt from income-tax before the commencement of the Constitution (Twenty-sixth Amendment) Act, 1971, by virtue of the provisions of the Merged States (Taxation Concessions) Order, 1949, or the Part B States (Taxation Concessions) Order, 1950, or, as the case may be, the Jammu and Kashmir (Taxation Concessions) Order, 1958 : Provided that for the assessment year commencing on the 1st day of April, 1972, the annual value of every such palace in the occupation of such Ruler during the relevant previous year shall be exempt from incometax." Section 10 deals with the income not include ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d occupation ". In Webster's Third New International Dictionary, the word " occupation ", amongst others, has been defined as the actual possession. The word " occupant " means a person who occupies a particular place or premises. In Black's Law Dictionary, " occupation " has been stated to mean control, use; the act or process by which real property is possessed and enjoyed; where a person exercises physical control over land." The word " occupation " has been defined in " Words and Phrases Legally Defined, Vol. 4 " by John B. Saunders, at p. 11. According to it, an occupier is one who actually exercises the rights of an owner in possession. The primary element of occupation is possession, but includes something more, for mere legal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Concessions) Order, 1950. One of the conditions which is necessary to be fulfilled for claiming exemption from payment of wealth-tax under section 5(1)(iii) of the Wealth-tax Act is that the building should be in the occupation of the Ruler. It was held by the Delhi High Court in agreement with the Tribunal that where a number of buildings belonging to the palace have been let out to outsiders and are not in the occupation of the Ruler, the aforesaid condition cannot be said to have been fulfilled. The idea behind section 10(19A) of the Act is that the annual value of any one palace should not be included at the time of computation of the total income of the assessee when the Ruler continues to occupy that palace, i.e., it should be in his ..... X X X X Extracts X X X X X X X X Extracts X X X X
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