2017 (11) TMI 1739 - HC - Income Tax

Exemption as granted u/s 10(19A) - contention of the petitioner-appellant is that the legal heirs of the original Ruler are no longer Ruler - contention emphasised was palace not Ruler - Held that - While matter was pending before the Supreme Court in Maharao Bhim Singh of Kota Thr. Maharao Brij Raj Singh Kota vs. Commissioner of Income Tax Rajasthan-II Jaipur 2016 (12) TMI 418 - 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) 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.

Summary

Issues involved:
1. Condonation of delay in filing review petitions.
2. Interpretation of Section 10(19A) of the Income Tax Act regarding exemption for palaces occupied by rulers.
3. Definition of "Ruler" as per Article 366(22) of the Constitution of India.
4. Legal heirs' entitlement to claim exemption under Section 10(19A) as successors of rulers.
5. Recognition of legal heirs as rulers by the President of India.
6. Requirement of raising substantial questions of law before the appropriate authorities.

Detailed analysis:
1. The judgment deals with review petitions filed beyond the limitation period, seeking condonation of delay under Section 5 of the Limitation Act. The court allowed the applications, condoning the delay in filing the review petitions and exempting the certified copies' filing requirements due to the main matter's tagging with the review petition.

2. The main contention revolved around the interpretation of Section 10(19A) of the Income Tax Act concerning the exemption of palaces occupied by rulers. The petitioner argued that the legal heirs of the original ruler are not rulers themselves, thus questioning the availability of exemption under Section 10(19A) for the present assessee.

3. The court referred to the Supreme Court's order in a similar case, emphasizing the distinction in terminology used in different sections of the Income Tax Act and Wealth Tax Act regarding the taxation of palaces. The court highlighted the significance of the specific language employed in Section 10(19A) and the absence of provisions for taxing portions of a palace.

4. The definition of "Ruler" as per Article 366(22) of the Constitution of India was crucial in determining the eligibility of the legal heirs to claim exemption under Section 10(19A) as successors of the original ruler. The court emphasized the importance of recognition by the President of India for legal heirs to be considered rulers.

5. The judgment underscored that the recognition of legal heirs as rulers by the President of India is essential for them to claim the status of rulers and avail exemptions under relevant tax provisions. The absence of such recognition was deemed a critical factor in determining the legal heirs' entitlement to claim the exemption.

6. The court noted that no substantial question of law was raised before the lower authorities, leading to the conclusion that it would not be appropriate to allow the review petitions. The court suggested seeking clarification from the Supreme Court if necessary and highlighted the importance of raising substantial legal questions before the appropriate authorities for consideration.