Income Tax exemption on let out portion of palace as it would be deemed to be in occupation of Ruler under sec. 10(19A)
Where Ruler continues to occupy palace, whether by actually utilizing it or by keeping it vacant, it shall be, for purpose of section 10(19A), deemed to be in his occupation, and he will also be entitled to exemption under section 10(19A) in respect of annual value of Part of palace, possession of which he has parted with in favour of tenants.
Hon’ble Supreme Court in case of Maharao Bhim Singh of Kota Thr. Maharao Brij Raj Singh, Kota V/s Commissioner of Income Tax, Rajasthan -II, Jaipur has held that a Palace in occupation of Ruler can’t be split up as per interpretation U/sec 10(19A) of I.T.Act,1961, exemption is allowed in case of part rented portion of a palace. Hon’ble Supreme Court has considered opinion, the reasoning and the conclusion arrived atby the High Court in the impugned order including the view taken by the Rajasthan High Court in Maharaval Lakshman singh’s case (supra) does not lay down correct principle of law whereas the view taken by the M.P. High Court in cases of Bharatchandra Bhanjdeo (supra), Commissioner of Income-Tax vs. Bharatchandra Bhanjdev (1989)176ITR 380 (MP) and H.H. Maharao Bhim Singhji (supra) lays down correct principle of law.