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TMI Blog2002 (2) TMI 21X X X X Extracts X X X X X X X X Extracts X X X X ..... or the year 1983-84 admittedly had been completed under section 16(3) on March 15, 1988, on a total wealth of Rs. 41,41,000 it has subsequently been revised under section 35 on the net wealth of Rs. 2,38,000 by reduction of land and building tax of Rs. 40,62,200. However, this assessment dated March 15, 1988, was reopened by the Revenue by initiating proceedings under section 17(2)/16(3) of the Wealth-tax Act while issuing notice to the assessee (petitioner) to show cause as to why additions/disallowances on the following points be not made in his wealth : "1. Land and building tax liability of Rs. 40,62,000 wrongly allowed as it relates to the assets which are already claimed and allowed as exempted assets, hence, not admissible as per the provisions of rile 2(m). 2. The value of land requisitioned by the defence on annual compensation was not included in the net wealth due to claim of wrong exemption under section 5(1)(iii). 3. Annual compensation received/receivable by the assessee on the said land as per point (2) above." After hearing the parties, the net wealth of the assessee (petitioner) was computed as under : Net wealth assessed as per order under section 16(3)135 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this court's order dated September 18, 2000, this amendment application was sought on behalf of the petitioner to be with drawn and this court allowed the petitioner to withdraw this amendment application. Shri J. K. Singhi, learned counsel for the petitioner-assessee contended that the assessment for the year 1983-84 had been completed on March 15, 1988, granting the benefit of the Board's circular (annexure 2) so also section 5(1)(iii) of the Wealth-tax Act but subsequently respondent No. 2 reopened the assessment and passed order dated March 27, 1997 (annexure 6), illegally by erroneously interpreting order (annexure 2) on the ground of putting Ummed Bhawan land to other use, and without considering that it was not voluntarily but the disputed Bhawan was put to other use, i.e., for defence purpose, as such the reassessment order (annexure 6) is liable to be quashed. Per contra, Sarvashri R. B. Mathur and Ashok Gaur appearing for the Revenue (WT IT Departments), laid much stress or, the availability of alternative remedy to the petitioner against the impugned reassessment order and further it has been contended that admittedly the petitioner has concomitantly preferred an a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eing 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 income-tax." Section 5 dealing with exemptions in respect of certain assets - "5. Exemptions in respect of certain assets. -Wealth-tax shall not be payable by an assessee in respect of the following assets and such assets shall not be included in the net wealth of the assessee- . . . (iii) anyone building in the occupation of a Ruler, being a building which immediately before the commencement of the Constitution (Twenty sixth Amendment) Act, 1971, was his official residence by virtue of a declaration by the Central Government under paragraph 13 of the Merged States (Taxation Concessions) Order, 1949, or paragr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t would have been provided in clause (19A) of section 10 of the Income-tax Act that such portion of the palace in occupation is only exempt but it seems that the language used by the Legislature did not contemplate a further splitting up. Even while following the decision in CIT v. Bharatchandra Banjdeo [1985] 154 ITR 236 (MP) this court (DB of J. S. Verma C.J. and 1. S. Israni J., as they then were) dealing with the selfsame Ummed Bhawan Palace's matter as to the exemption claimed by the petitioner's father, Maharao Bhim Singh, under section 10(19A) of the Income-tax Act for the assessment years 1973-74, 1974-75, 1975-76, 1976-77 and 1977-78 in CIT v. H. H. Maharao Bhim Singh [1988] 173 ITR 79 (Raj) held as under: "So far as the first question relating to exemption claimed under section 10(19A) is concerned, there is a direct decision in CIT v. Bharatchandra Banjdeo [1985] 154 ITR 236 (MP). It was held therein that it is not possible to split up one palace into parts for granting exemption only to that part in self-occupation of the ex-Ruler as his official residence and to deny the benefit of exemption to the other portion of the palace rented out by the ruler, since the entire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Government under the Merged States (Taxation Concessions) Order, 1949, in fact was not let out but its appurtenant land was requisitioned by the Collector, Kota, for defence purposes in the year 1976, which was not a voluntary act on the part of the petitioner to earn wealth or income in receipt of the recurring compensation against such requisition of land of 918.26 acres Appurtenant to Ummed Bhawan Palace compound, inasmuch as the official residence declared as Ummed Bhawan Palace compound included the requisitioned land also, which cannot further be split up for the purpose of exemption under section 5(1)(iii) of the Wealth-tax Act, nor do the provisions of exemption contemplate further splitting up of portions of a building declared as official residence into residential and let out portions. Therefore, even if only a part of a palace or building is in the self-occupation of a Ruler and the rest has been let out, the exemption will be available for the entire palace. I take support from the afore quoted dictum of law laid down in similar circumstances for the self-same building known as Ummed Bhawan Palace which is the subject-matter here also and accordingly in my considered v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... having been accorded on requisition of land by the Central Government for defence purpose long back in the year 1976 cannot be agitated again for reassessment under section 17 of the Wealth-tax Act in the peculiar facts and circumstances narrated above. Thus viewed, I find and hold that despite the matter having stood concluded by virtue of decisions of this court for previous assessment years, Viz., judgments dated August 10, 1987, August 12, 1987 and October 10, 2001, the respondents in utter disregard thereof adhered to reopen the assessment and passed the reassessment under challenge and this clearly shows the arbitrariness and whims on their part which requires to be interfered with by invoking the extraordinary jurisdiction of this court irrespective of the fact that the petitioner in so far as the impugned reassessment is concerned has got alternative remedy or availed of it by way of preferring appeal, may be that has been decided in his favour by way of remand. Hence, I find no merit in any of the contentions raised by the Revenue in this regard. On the basis of the aforesaid conclusions, the Revenue is bound to close the matter wherever pending either before the assessin ..... 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