RAJESH BALIA, J. - (1.) IN all these appeals, which arise out of the common order passed by the Tribunal, Jodhpur Bench, Jodhpur, dt. 1st Nov., 2004, relating to asst. yrs. 1980 -81 and 1990 -91 and another common order passed on 1st Nov., 2004 for asst. yrs. 1985 -86 to 1989 -90, the following questions stated to be substantial questions of law arise for consideration in this appeal : 1. Whether, on the facts and in the circumstances of the case, the Tribunal is justified in law in holding that Samore Bag Palace is part and parcel of the City Palace being the official residence, i.e., self -occupied property, hence exempted under Section 5(1)(iv) of the WT Act and it is to be valued under Section 7(4) read with Rule 3 of the Schedule as on 1st April, 1971 ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal is justified in law in holding that Samore Bag Palace is part and parcel of the City Palace being the official residence, i.e., self -occupied property, hence exempted under Section 5(1)(iv) of the WT Act and it is to be valued under Section 7(4) read with Rule 3 of the Schedule as on 1st April, 1971, ignoring the fact that Section 5(1)(iv) of the WT Act speaks of 'any one building' and Samore Bag Palace is entirely a different building far away from the City Palace, having separate boundary walls, open land, etc. and, therefore, it cannot be part and parcel of the City Palace ? 3. Whether, on the facts and in the circumstances of the case, the Tribunal is justified in law in holding that Samore Bag Palace is part and parcel of the City Palace being the official residence, i.e., self -occupied property, hence exempted under Section 5(1)(iv) of the WT Act and it is to be valued under Section 7(4) read with Rule 3 of the Schedule as on 1st April, 1971, ignoring the fact that Notification No. 37, dt. 14th Nov., 1954, shows only City Palace and Laxmivilas Palace as the official residence of the former ruler ? 4. Whether, on the facts and in the circumstances of the case, the Tribunal is justified in law in holding that Samore Bag Palace is part and parcel of the City Palace being the official residence, i.e., self -occupied property, hence exempted under Section 5(1)(iv) of the WT Act and it is to be valued under Section 7(4) read with Rule 3 of the Schedule as on 1st April, 1971 ignoring the fact that by virtue of the rule of primogeniture, every ruler in Rajasthan held and enjoyed properties in his individual capacity and in the instant case both, the legal heir and the Department has accepted the Tribunals decision that Samore Bag Palace is an HUF property ? 5. Whether, on the facts and in the circumstances of the case, the Tribunal is justified in law in holding that the interest under Section 31(2) is not leviable in this case ?
(2.) IT would be necessary to notice certain facts to consider whether any question of law or substantial question of law arises for consideration in these appeals. The first premise which is not the subject -matter of dispute is that Samore Bag Palace has been found by the Tribunal to be property of HUF, known as HUF of late Maharana Shri Bhagwat Singhji. The dispute relates to valuation of the property referred to above for the purpose of wealth -tax. The assessee has claimed Samore Bag Palace firstly to be part of City Palace which was recognised as official residence of the erstwhile ruler and, therefore, its value was not included in the wealth of the assessee under Section 5(1)(iv). Alternatively, it was urged that it being in exclusive occupancy of residential purposes of Maharana's elder son throughout the period in question, its value was exempted to the extent permissible under Section 5(1)(iv) as it was existing until asst. yr. 1992 -93 as a residential premise belonging to HUF.
(3.) FROM the orders placed before us, we notice that the claim was exclusively founded under Section 5(1)(iii) of the WT Act before the AO. The AO found that as per the covenant recognising the property of the erstwhile rulers of the Indian States at the time of their merger with the Union; City Palace and Laxmivilas Palace only were recognised as the official residence of ex -ruler of Mewar. At the time of assessment, City Palace was being managed by a trust and was exempted and Laxmivilas Palace was converted into hotel and both were not being used as official residence of the assessee, therefore, the assessee was not entitled to claim benefit of exemption under Section 5(1)(iii) in respect of the aforesaid two properties. The assessee has originally claimed benefit of Section 5(1)(iii) in respect of Samore Bag Palace on the ground that it being situated within the boundary of City Palace was a part of the City Palace, and, therefore, it continued to be part of official residence as part of the City Palace recognised under the Act. This plea was rejected by the AO inter alia, on the ground that the recognition of official residence of a ruler depended on the recognition of a person as a ruler of the erstwhile State and that recognition was always in the capacity of an individual and not in the capacity of HUF. The recognition of ruler and holding of any building as official residence as ruler cannot be considered as the one belonging to HUF. Such a recognition is insignia of personal right and not of joint rights as co -tenants or joint tenants. The status as ruler cannot be spread. Therefore, the property of HUF cannot be subject -matter of exemption under Section 5(1)(iii).;