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Issues involved: Wealth-tax assessment of the former Ruler of Rampur for the assessment year 1961-62, entitlement to exemption under s. 5(1)(iii) of the W.T. Act, 1957 for the entire Khas Bagh Palace.
Judgment Summary: The reference pertains to the wealth-tax assessment of the former Ruler of Rampur for the assessment year 1961-62, represented by legal heirs. The main issue is whether the assessee is entitled to exemption u/s 5(1)(iii) of the W.T. Act, 1957 for the entire Khas Bagh Palace, including buildings let out to tenants. The assessee claimed exemption for the entire Khas Bagh Palace under s. 5(1)(iii), but the WTO allowed exemption only for the portions occupied by the assessee. The dispute centered on whether buildings let out should be included in the taxable wealth of the assessee. The Tribunal concluded that the entire Khas Bagh Palace should be treated as one building for the purpose of exemption under s. 5(1)(iii). However, the Tribunal held that the assessee would only be entitled to exemption for the portion of the palace occupied by the Ruler, not for the buildings let out to outsiders. The Court agreed with the Tribunal's interpretation, emphasizing that the exemption under s. 5(1)(iii) is contingent on the building being in the occupation of the Ruler. The Court rejected the argument that the entire palace should be considered one building for exemption purposes, stating that the Ruler must occupy the building to qualify for exemption. The Court distinguished previous cases under different statutes, highlighting that s. 5(1)(iii) specifically links the exemption to the occupation by the Ruler. The Court upheld the Tribunal's decision, stating that it aligned with the statute's intent and benefitted the assessee by granting exemption based on the Ruler's occupation of the building. In conclusion, the Court affirmed the Tribunal's decision, ruling in favor of the Revenue. The Court directed the parties to bear their own costs in this matter.
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