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Judgment
Delay in filing the review petition is condoned.
The application u/s 5 of the Limitation Act is allowed.
Now, the issue is covered by the decision of this Court in case of The Commissioner of Income Tax, Kota vs. Late H.H. Maharao Bhim Singh and
other connected matters (DB Civil Review No. 98/2017) decided on 2nd November, 2017 wherein it has been held as under:-
“The contention of the petitioner-appellant is that the legal heirs of the original Ruler are no longer Ruler, therefore, exemption which was granted
u/s 10(19A) is not available to the present assessee.
She has taken us to the order of the Supreme Court in Maharao Bhim Singh of Kota Thr. Maharao Brij Raj Singh, Kota vs. Commissioner of Income
Tax, Rajasthan-II, Jaipur wherein it has been observed as under:-
“34. We find that in Section 10(19A) of the I.T. Act, the Legislature has used the expression ""palace"" for considering the grant of exemption to the
Ruler whereas on the same subject, the Legislature has used different expression namely ""any one building"" in Section 5(iii) of the Wealth Tax Act.
We cannot ignore this distinction while interpreting Section 10(19A) which, in our view, is significant.
35. In our considered opinion, if theLegislature intended to spilt the Palace in part(s), alike houses for taxing the subject, it would have said so by
employing appropriate language in Section 10(19A) of the I.T. Act. We, however, do not find such language employed in Section 10(19A).
36. As rightly pointed out by the learnedSenior Counsel for the Appellant, Section 23(2) and (3), uses the expression ""house or part of a house"".
Such expression does not find place in Section 10(19A) of the I.T. Act. Likewise, we do not find any such expression in Section 23, specifically
dealing with the cases relating to ""palace"". This significant departure of the words in Section 10(19A) of the I.T. Act and Section 23 also suggest that
the Legislature did not intend to tax portion of the ""palace"" by splitting it in parts.â€
The provision of Section 10(19A) of the Income Tax, 1961 reads as under:-
(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;] (20) the income of a local authority which is chargeable under the head
Income from house property"","" Capital gains"", or"" Income from other sources"" or from a trade or business carried on by it which accrues or arises
from the supply of a commodity or service (not being water or electricity) within its own jurisdictional area or from the supply of water or electricity
within or outside its own jurisdictional area];
She also taken us to Article 366 sub clause (22) of the Constitution of India which reads as under:-
“(22) Ruler means the Prince, Chief or other person who, at any time before the commencement of the Constitution (Twenty sixth Amendment)
Act, 1971, was recognised by the President as the Ruler of an Indian State or any person who, at any time before such commencement, was
recognised by the President as the successor of such Ruler;â€
We have heard counsel for the parties.
The contention emphasised before the Supreme Court was ‘palace’ not ‘Ruler’. Therefore, we have considered only the same. Though
one of the ground (C) of the memo of appeal reads as under:-
“C. That the order of Tribunal is erroneous as the property in question is exempt from Income Tax and Wealth Tax, only for the Ex-Ruler who
happens to be His Highness Late Sh. Maharao Bhim Singh Ji. But in the instant case the assessee who is the legal heir of Ex-Ruler Shri Bhim Singhji
is not Ruler or successor of Ruler as required to be declared by the Central Government as per Article 366(22) of Constitution of India. According to
section 5(1)(iii) of Wealth Tax Act any one building in the occupation of a Ruler-
(Up to 27.12.1971) declared by the Central government as his official residence or.
(W.e.f. 28.12.1971) being a building which immediately before the commencement of the Constitution (Twenty-sixth Amendment) Act, 1971, was
official residence by virtue of a declaration by the Central Government under paragraph 13 of the Merged States (Taxation Concessions) Order, 1949
or paragraph 15 of the Part B State (Taxation Concessions) Order, 1950 is exempt under section 5(1)(iii), for assessment years 1957-58 to 1992-93
and further as per Section 10(19A) the annual value of any one palace of occupation of the 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 Concession) Order, 1950 or, as the case may be, the Jammu &
Kashmir (Taxation concession) Order, 1958. Thus, as per aforesaid both the sections i.e. in the Income Tax Act and in the Wealth Tax Act the word
“Ruler†and the word “Occupation†has vital importance since to claim exemption under these section the assessee should come under the
four corners of the definition/meaning of the words “Ruler & Occupationâ€.
The expression ‘Ruler’ as per the definition (effective from 28.12.1971) in Article 366(22) of the Constitution of India, means the Prince, Chief
or other person who, at any time before the commencement of the Constitution (Twenty-sixth Amendment) Act, 1971, was recognized by the
President as the Ruler of an Indian State or any person who, at any time before such commencement, was recognized by the President as the
successor of such Ruler. It is submitted here that Ex-Ruler Maharao Bhim Singhji has expired in the year 1991 and the President of India has not
accorded/recognized the mandatory succession certificate as required for the assessee to become the “Successor of such Rulerâ€. Therefore, in
absence of such recognition by the President of India, the assessee Shri Brij Raj Singh in the capacity of legal heir cannot suo moto claim to be the
Ruler as mandatory required under Article 366(22) of the Constitution of India. The definition of ‘Ruler’ prescribed by Article 366(22) of the
Constitution is inclusive definition and its latter part takes in successors of a Ruler who satisfied the test of its first part. It was held in maharaj Kumar
Takendra Bir Singh reported in AIR 1964 SC 1663 that the minor Maharaj Kokendrajit Singh of Manipur who has been recognized by the President as
the successor of his deceased father, must be held to be a ruler under Article 366(22) and he is entitled to claim the status of a Ruler of the former
State of Manipur. Thus reorganization by the President is the sine qua non to become the successor of the ExRuler, which in the present case is
admittedly missing. Further Article 366(22) is a provision relating to recognition of Rulers, which is the direct, and only purpose of the said provision.
Thus in the instant case no such recognition has been accorded to the assessee by the President hence on bare perusal of Article 366(22) of
Constitution of India the appeal deserves to be allowed and the order of the Tribunal deserves to be quashed on threshold.â€
However, no substantial question of law was framed nor same was admitted as it was not raised before the AO, CIT(A) or Income Tax Appellate
Tribunal.
In our considered opinion, while matter was pending before the Supreme Court, same position was existing. Since legal heirs are on record right from
1992 and the question whether the legal heirs is Ruler or not was never raised before the AO, CIT(A) or Income Tax Appellate Tribunal, no
substantial question of law has been framed.
In that view of the matter, it will not be appropriate to allow these review petitions. If the department desires they may get clarification from the
Supreme Court. We cannot sit over the decision of Supreme Court in appeal, since Supreme Court has already decided the issue and we have
followed the same.
The other contention regarding exemption u/s 10 (19A)Â given to the palace, in our considered opinion, Ruler, individual or HUF is not required to be
considered at this stage. It will be open for the department to get clarified the same from the Supreme Court.â€
In view of the above, the review petition stands disposed of.