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
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.
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.