Commissioner Of Income Tax, Kota v. Shri Brij Raj Singh (Sole Owner Of Estate Of Shri Bhim Singh,Kota), Kota

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Civil Review No. 5/2018 Commissioner Of Income Tax, Kota ----Petitioner Versus Shri Brij Raj Singh (Sole Owner Of Estate Of Shri Bhim Singh,Kota), Kota ----Respondent For Petitioner(s) : Ms. Shiva Goyal for Ms. Parinitoo JainFor Respondent(s): HON'BLE MR. JUSTICE K.S.JHAVERI HON'BLE MR. JUSTICE INDERJEET SINGH 16/03/2018 Order 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 incase of The Commissioner of Income Tax, Kota vs. Late H.H.Maharao Bhim Singh and other connected matters (DB CivilReview No. 98/2017) decided on 2[nd] November, 2017 wherein it has been held as under:- “The contention of the petitioner-appellant is thatthe legal heirs of the original Ruler are no longerRuler, therefore, exemption which was granted u/s10(19A) is not available to the present assessee. She has taken us to the order of the SupremeCourt in Maharao Bhim Singh of Kota Thr. MaharaoBrij Raj Singh, Kota vs. Commissioner of IncomeTax, Rajasthan-II, Jaipur wherein it has beenobserved as under:- “34. We find that in Section 10(19A) of the I.T. Act, the Legislature has used theexpression "palace" for considering the grant of exemption to the Ruler whereas onthe same subject, the Legislature has useddifferent expression namely "any onebuilding" in Section 5(iii) of the WealthTax Act. We cannot ignore this distinctionwhile interpreting Section 10(19A) which,in our view, is significant. 35. In our considered opinion, if theLegislature intended to spilt the Palace inpart(s), alike houses for taxing the subject,it would have said so by employingappropriate language in Section 10(19A) ofthe I.T. Act. We, however, do not find suchlanguage employed in Section 10(19A). 36. As rightly pointed out by the learnedSenior Counsel for the Appellant, Section23(2) and (3), uses the expression "houseor part of a house". Such expressiondoes not find place in Section 10(19A) ofthe I.T. Act. Likewise, we do not find anysuch expression in Section 23, specificallydealing with the cases relating to"palace". This significant departure of thewords in Section 10(19A) of the I.T. Actand Section 23 also suggest that theLegislature did not intend to tax portion ofthe "palace" by splitting it in parts.” The provision of Section 10(19A) of theIncome Tax, 1961 reads as under:- (19A) the annual value of any one palace inthe occupation of a Ruler, being a palace,the annual value whereof was exempt fromincome- tax before the commencement ofthe Constitution (Twenty- sixth Amendment)Act, 1971 , by virtue of the provisions of theMerged States (Taxation Concessions) Order,1949 , or the Part B States (TaxationConcessions) Order, 1950 , or, as the casemay be, the Jammu and Kashmir (TaxationConcessions) Order, 1958 : Provided that for the assessment yearcommencing on the 1st day of April, 1972 ,the annual value of every such palace in theoccupation of such Ruler during the relevantprevious year shall be exempt from income-tax;] (20) the income of a local authoritywhich is chargeable under the head" Incomefrom house property"," Capital gains", or" Income from other sources" or from a tradeor business carried on by it which accrues orarises from the supply of a commodity orservice (not being water or electricity) withinits own jurisdictional area or from the supplyof water or electricity within or outside itsown jurisdictional area]; She also taken us to Article 366 sub clause(22) of the Constitution of India which readsas under:- Provided that for the assessment yearcommencing on the 1st day of April, 1972 ,the annual value of every such palace in theoccupation of such Ruler during the relevantprevious year shall be exempt from income-tax;] (20) the income of a local authoritywhich is chargeable under the head" Incomefrom house property"," Capital gains", or" Income from other sources" or from a tradeor business carried on by it which accrues orarises from the supply of a commodity orservice (not being water or electricity) withinits own jurisdictional area or from the supplyof water or electricity within or outside itsown jurisdictional area]; She also taken us to Article 366 sub clause(22) of the Constitution of India which readsas under:- “(22) Ruler means the Prince, Chief or otherperson who, at any time before thecommencement of the Constitution (Twentysixth Amendment) Act, 1971, wasrecognised by the President as the Ruler ofan Indian State or any person who, at anytime before such commencement, wasrecognised by the President as thesuccessor of such Ruler;” We have heard counsel for the parties. The contention emphasised before theSupreme Court was ‘palace’ not ‘Ruler’.Therefore, we have considered only thesame. Though one of the ground (C) of thememo of appeal reads as under:- “C. That the order of Tribunal is erroneousas the property in question is exempt fromIncome Tax and Wealth Tax, only for theEx-Ruler who happens to be His HighnessLate Sh. Maharao Bhim Singh Ji. But in theinstant case the assessee who is the legalheir of Ex-Ruler Shri Bhim Singhji is notRuler or successor of Ruler as required tobe declared by the Central Government asper Article 366(22) of Constitution of India.According to section 5(1)(iii) of Wealth TaxAct any one building in the occupation of aRuler- (Up to 27.12.1971) declared by the Centralgovernment as his official residence or. (W.e.f. 28.12.1971) being a building whichimmediately before the commencement ofthe Constitution (Twenty-sixth Amendment)Act, 1971, was official residence by virtueof a declaration by the Central Governmentunder paragraph 13 of the Merged States(Taxation Concessions) Order, 1949 orparagraph 15 of the Part B State (TaxationConcessions) Order, 1950 is exempt under section 5(1)(iii), for assessment years1957-58 to 1992-93 and further as perSection 10(19A) the annual value of anyone palace of occupation of the ruler, beinga palace, the annual value whereof wasexempt from Income Tax before thecommencement of the Constitution (Twentysixth Amendment) Act, 1971 by virtue ofthe provisions of the Merged States(Taxation Concessions) Order, 1949 or thepart 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 TaxAct the word “Ruler” and the word“Occupation” has vital importance since toclaim exemption under these section theassessee should come under the fourcorners of the definition/meaning of thewords “Ruler & Occupation”. The expression ‘Ruler’ as per the definition(effective from 28.12.1971) in Article366(22) of the Constitution of India, meansthe Prince, Chief or other person who, atany time before the commencement of theConstitution (Twenty-sixth Amendment)Act, 1971, was recognized by the Presidentas the Ruler of an Indian State or anyperson who, at any time before suchcommencement, was recognized by thePresident as the successor of such Ruler. Itis submitted here that Ex-Ruler MaharaoBhim Singhji has expired in the year 1991and the President of India has notaccorded/recognizedthemandatorysuccession certificate as required for theassessee to become the “Successor of suchRuler”. Therefore, in absence of suchrecognition by the President of India, theassessee Shri Brij Raj Singh in the capacityof legal heir cannot suo moto claim to bethe Ruler as mandatory required underArticle 366(22) of the Constitution of India.The definition of ‘Ruler’ prescribed by Article366(22) of the Constitution is inclusivedefinition and its latter part takes insuccessors of a Ruler who satisfied the testof its first part. It was held in maharajKumar Takendra Bir Singh reported in AIR1964 SC 1663 that the minor MaharajKokendrajit Singh of Manipur who has beenrecognized by the President as thesuccessor of his deceased father, must be held to be a ruler under Article 366(22) andhe is entitled to claim the status of a Rulerof the former State of Manipur. Thusreorganization by the President is the sinequa non to become the successor of the Ex-Ruler, which in the present case isadmittedly missing. Further Article 366(22)is a provision relating to recognition ofRulers, which is the direct, and onlypurpose of the said provision. Thus in theinstant case no such recognition has beenaccorded to the assessee by the Presidenthence on bare perusal of Article 366(22) ofConstitution of India the appeal deserves tobe allowed and the order of the Tribunaldeserves to be quashed on threshold.” However, no substantial question of law wasframed nor same was admitted as it wasnot raised before the AO, CIT(A) or IncomeTax Appellate Tribunal. In our considered opinion, while matter waspending before the Supreme Court, sameposition was existing. Since legal heirs areon record right from 1992 and the questionwhether the legal heirs is Ruler or not wasnever raised before the AO, CIT(A) orIncome Tax Appellate Tribunal, nosubstantial question of law has beenframed. In that view of the matter, it will not beappropriate to allow these review petitions.If the department desires they may getclarification from the Supreme Court. Wecannot sit over the decision of SupremeCourt in appeal, since Supreme Court hasalready decided the issue and we havefollowed the same. The other contention regarding exemptionu/s 10 (19A) given to the palace, in ourconsidered opinion, Ruler, individual or HUFis not required to be considered at thisstage. It will be open for the department toget clarified the same from the SupremeCourt.” In view of the above, the review petition stands disposed of. (INDERJEET SINGH),J (K.S.JHAVERI),J