Law:

Section:

Section 5(1)(iii) of the Wealth-tax Act, 1957, read with section 10(19A) of the Income-tax Act, 1961 - Exemption - Ruler's palace - Whether where palace or building declared as official residence of ex-ruler under Merged States (Taxation Concession) Order, 1949, is partly in self-occupation and is let out, exemption would be available for entire palace or building - Held, yes Circulars and notifications - CBDT Circular No. F 517(7) of 1984, dated 29-8-1984 FACTS The controversy centered around the claim of the petitioner-ex-ruler in respect of exemption of palace under section 5(1)(iii). The assessee claimed that the 'palace' was exempted from tax under section 5(1)(iii). The revenue contended that the exemption from wealth-tax as contemplated under section 5(1)(iii) is only for any one building in possession of a Ruler, and the wealth-tax in case of the petitioner as ex-ruler had been levied on the parts of the building which had admittedly been let out by the ruler. HELD In the instant case, the property was a 'palace' renowned as Ummed Bhawan Palace and also declared as 'official residence' of ex-ruler. Even if only a part of a palace is in the occupation of a ruler and the rest has been let out, the exemption will be available for the entire palace. If the Legislature intended further splitting up it would have been provided in clause (19A) of section 10 that such portion of the palace in occupation , is only exempt but the Legislature did not contemplate a further splitting up. It was indefeasible to split up one palace or building into parts for granting exemption only to that part in self-occupation of the ex-ruler as his official residence while to deny the benefit of exemption to the other portion of the palace or building let out by the ruler and especially when the build- ing and its appurtenant land was requisitioned for defence purpose by the Central Government which was beyond the control of the petitioner against recurring compensation since the entire palace and building along with its appurtenant land was declared as his official residence. The revenue had been continuing to grant exemption to palace not only under the Income-tax Act but also…

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