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Home / News / India News / SC provides IT relief to former rulers
  • India

    SC provides IT relief to former rulers

    Supriya
    Written by
    Supriya
    Mail
    Last updated on Dec 14, 2016, 07:00 am
    SC provides IT relief to former rulers
    Credits:
  • The Supreme Court has ruled on a nearly 4 decade old dispute between legal heirs of Maharao Bhim Singh of Kota and the Income Tax department.

    SC ruling said that erstwhile rulers did not need to pay tax on rental income derived from letting-out residential palaces.

    The petitioners, Singh's heirs had moved the SC against the decision of Rajasthan High Court.

  • In this article
    Umed Bhavan Palace case IT-Department's contention Rajasthan HC rules in favour of IT-department SC provides IT relief to former rulers Supreme Court quashes HC order
  • Background

    Umed Bhavan Palace case

    Umed Bhavan Palace case
    Credits:
  • In 1950, the Union Government declared residential palaces of erstwhile rulers exempt from income-tax as it was inalienable ancestral property.

    Former ruler, Maharao Bhim Singh, owns two residential palaces namely Umed Bhawan Palace and City Palace.

    Singh resided at Umed Bhawan and leased a portion of it to Ministry of Defence in 1976.

    In 1984, IT department initiated proceedings for taxing such rental income.

  • Explanation

    IT-Department's contention

    IT-Department's contention
    Credits:
  • The income tax department contented that the 1950 exemption was with respect to personal use of the property.

    Tax officials took the view that income earned from renting the palace was taxable.

    The Commissioner of Income Tax and Income Tax Appellate Tribunal turned down the IT department's contention.

    The income tax department then approached the Rajasthan High Court.

  • Details

    Rajasthan HC rules in favour of IT-department

    Rajasthan HC rules in favour of IT-department
  • Rajasthan High Court ruled that as long as the former ruler continued to remain in possession of his official palace for personal use, he continues to be entitled to claim exemption.

    However if he were to rent out any part of his residence, he loses the benefit of the exemption granted under Section 10 (19A) of the Income Tax act.

  • 14 Dec 2016

    SC provides IT relief to former rulers

    SC provides IT relief to former rulers
    Credits:
  • The Supreme Court has ruled on a nearly 4 decade old dispute between legal heirs of Maharao Bhim Singh of Kota and the Income Tax department.

    SC ruling said that erstwhile rulers did not need to pay tax on rental income derived from letting-out residential palaces.

    The petitioners, Singh's heirs had moved the SC against the decision of Rajasthan High Court.

  • Information

    Supreme Court quashes HC order

  • SC squashed Rajasthan HC's ruling and came down heaving on IT-department for registering a case despite clear exemption under Section 10(19A) which uses term 'palace' to grant exemption to ruler and rental income earned from renting out portion of the palace.

  • Kota
  •  
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