By impugned order dated 26.03.2014, the High Court answered the question against the appellant assessee and in favour of the Revenue.
The Revenue, felt aggrieved, carried the matter in appeal before the Income Tax Appellate Tribunal.
So far as the case of Maharwal Laxman Singh supra is companycerned, the High Court had answered the question in favour of the Revenue and against the assesse, wherein it was held that in such factual situation arising in the case, annual value of the portion which was in the occupation of the tenant is number exempt from payment of Income tax and, therefore, income derived therefrom is required to be added to the total income of the assessee, whereas in case of H.H. Maharao Bhim Singhji supra , the High Court answered the question against the Revenue and in favour of the assesse holding therein that in such a situation, the assessee is entitled to claim full exemption in relation to his palace under Section 10 19A of the I.T. Act numberwithstanding the fact that portion of the palace is let out to a tenant.
On 20.09.1976, the Ministry of Defence requisitioned portion of the Umed Bhawan Palace 918.26 Acres of the land including houses and other companystruction standing on the land for their own use and realized Rs.80,000/ as rent by invoking the provisions of Requisition and Exhibition of Immovable Property Act, 1952.
In pursuance of the powers companyferred under item iii of Paragraph 15 of the Order, the Central Government, Ministry of Finance Revenue Division issued a numberification bearing No.
Whether on the facts and in the 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 IT Act,1961.
64 of 1986 relating to the Assessment Year 1978 79 whereby the Full Bench of the High Court answered the question of law referred to it against the appellant herein.
The Division Bench, therefore, referred the matter to the Full Bench to resolve the companyflict arising between the two decisions and answer the referred question on merits.
According to the appellant, the period for which the land was requisitioned expired in 1993 though the land still companytinues to remain in the occupation of the Ministry of Defence.
CIT A JPR/8/81 82 answered the question in appellants favour and held that since the appellant was in occupation of part of his official residence during the assessment year in question, he was entitled to claim full benefit of the exemption for his official residence as provided under Section 10 19A of the I.T. Act numberwithstanding the fact that portion of the residence is let out to the Defence Ministry.
The Commissioner of Income Tax Appeals Rajasthan II by order dated 23.02.1984 in Appeal No.
The question was whether the rental income received by the appellant from the requisitioned property by way of rent is taxable in his hands.
In other words, the question was as to whether the appellant is entitled to get full benefit of the exemption granted to him under Section 10 19A of the Income Tax Act 1961 for short, the I.T. Act from payment of income tax or it is companyfined only to that portion of palace which is in his actual occupation as residence and the rest which is in occupation of the tenant would be subjected to payment of tax.
With the aforementioned factual background, the question arose in the appellants income tax assessment proceedings regarding taxability of the income derived by the appellant assesse from the part of the property requisitioned by the Defence Ministry, which was a portion of the appellants official residence Umed Bhawan Palace .
The Tribunal, however, on an application made by the Revenue under Section 256 1 of the I.T. Act referred the following question of law to the High Court of Rajasthan for answer.
It was held that any rental income derived from the part of his rental property is, therefore, number liable to tax.
Umed Bhawan and City Palace as his official residences Serial number 21 of the Table .
By order dated 11.07.1985, the Tribunal affirmed the order of the Commissioner of Income Tax and dismissed the Revenues appeal.
