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Monday, December 12, 2016

"Umed Bhawan Palace".-whether the appellant is entitled to get full benefit of the exemption granted to him under Section 10 (19A) of the Income Tax Act 1961 (for short, "the I.T. Act") from payment of income-tax or it is confined only to that portion of palace which is in his actual occupation as residence and the rest which is in occupation of the tenant would be subjected to payment of tax.= In our considered opinion, if the Legislature intended to spilt the Palace in part(s), alike houses for taxing the subject, it would have said so by employing appropriate language in Section 10(19A) of the I.T. Act. We, however, do not find such language employed in Section-Section 23(2) and (3), uses the expression “house or part of a house”. Such expression does not find place in Section 10(19A) of the I.T. Act. Likewise, we do not find any such expression in Section 23, specifically dealing with the cases relating to “palace”. This significant departure of the words in Section 10(19A) of the I.T. Act and Section 23 also suggest that the Legislature did not intend to tax portion of the “palace” by splitting it in parts.- It is a settled rule of interpretation that if two Statutes dealing with the same subject use different language then it is not permissible to apply the language of one Statute to other while interpreting such Statutes. Similarly, once the assessee is able to fulfill the conditions specified in section for claiming exemption under the Act then provisions dealing with grant of exemption should be construed liberally because the exemptions are for the benefit of the assessee.-Though principle of res judicata does not apply to income-tax proceedings and each assessment year is an independent year in itself, yet, in our view, in the absence of any valid and convincing reason, there was no justification on the part of the Revenue to have pursued the same issue again to higher Courts. There should be a finality attached to the issue once it stands decided by the higher Courts on merits. This principle, in our view, applies to this case on all force against the Revenue.

                                                                  Reportable

                        IN THE SUPREME COURT OF INDIA

                        CIVIL APPELLATE JURISDICTION

                        CIVIL APPEAL No. 2812 OF 2015

Maharao Bhim Singh of Kota
Thr. Maharao Brij Raj Singh, Kota …….Appellant(s)


                             VERSUS


Commissioner of Income-tax,
Rajasthan-II, Jaipur                    ……Respondent(s)


                               J U D G M E N T
Abhay Manohar Sapre, J.
1.    This appeal is filed against the final order dated  26.03.2014  passed
by the High Court of Rajasthan at Jaipur in D.B. Income  Tax  Reference  No.
64 of 1986 relating to  the Assessment Year 1978-79 whereby the Full   Bench
of the High Court answered the question of law referred to  it  against  the
appellant herein.
2.    In order to appreciate  the  issue  involved  in  the  appeal,  it  is
necessary to state the relevant facts in brief infra.
3.    The appellant was the Ruler of the princely State of Kota, now a  part
of State of Rajasthan. He owned  extensive  properties  which,  inter  alia,
included his two residential palaces known as    "Umed  Bhawan  Palace"  and
"City  Palace“.   The  appellant  is  using  Umed  Bhawan  Palace  for   his
residence.   So far as this appeal is concerned, the issue  involved  herein
centers around "Umed Bhawan Palace".
4.    In exercise of the powers conferred  by  Section  60A  of  the  Indian
Income Tax Act, 1922 (XI of 1922), the Central Government  issued  an  order
called "The Part B States (Taxation Concessions) Order,  1950"  (hereinafter
referred  to  as  "The  Order").   It  was  issued  essentially   to   grant
exemptions, reductions in rate of tax and the modifications in  relation  to
specified kinds of income earned  by  the  persons  (Ruler  and  his  family
members) from various sources as specified therein. The Order was  published
in the Gazette of India, extraordinary, on 02.12.1950.
5.    Paragraph 15 of the Order deals  with  various  kinds  of  exemptions.
Item (iii) of  Paragraph 15, which is relevant  for  this  appeal,  provides
that the bona fide annual value of the residential palace of the Ruler of  a
State which is situate within the State  and  is  declared  by  the  Central
Government as his  inalienable  ancestral  property  would  be  exempt  from
payment of Income-tax.
6.    In pursuance of the powers conferred under item (iii) of Paragraph  15
of the Order, the Central Government, Ministry of Finance(Revenue  Division)
 issued a notification bearing No.  S.R.O.1619  dated  14.05.1954  declaring
the appellant's aforementioned two  palaces,  viz.,  Umed  Bhawan  and  City
Palace as his official residences (Serial no. 21 of the Table).
7.    On 20.09.1976, the Ministry of Defence requisitioned  portion  of  the
Umed Bhawan Palace (918.26 Acres of the  land  including  houses  and  other
construction  standing  on  the  land)  for  their  own  use  and   realized
Rs.80,000/-   as  rent  by  invoking  the  provisions  of  Requisition   and
Exhibition of Immovable Property Act, 1952.   According  to  the  appellant,
the period for which the land was requisitioned expired in 1993  though  the
land still continues  to  remain  in  the  occupation  of  the  Ministry  of
Defence.
8.    With the aforementioned factual background, the question arose in  the
appellant's income-tax assessment proceedings regarding  taxability  of  the
income derived by the appellant (assesse) from  the  part  of  the  property
requisitioned  by  the  Defence  Ministry,  which  was  a  portion  of   the
appellant's official  residence  (Umed  Bhawan  Palace).  The  question  was
whether the rental income received by the appellant from  the  requisitioned
property by way of rent is taxable  in  his  hands.   In  other  words,  the
question was as to whether the appellant is entitled to get full benefit  of
the exemption granted to him under Section 10 (19A) of the  Income  Tax  Act
1961 (for short, "the I.T.  Act")  from  payment  of  income-tax  or  it  is
confined only to that portion of palace which is in  his  actual  occupation
as residence and the rest which is in occupation  of  the  tenant  would  be
subjected to payment of tax.
9.    The Commissioner of Income Tax(Appeals) Rajasthan-II  by  order  dated
23.02.1984  in  Appeal  No.  CIT(A)/JPR/8/81-82  answered  the  question  in
appellant's favour and held that since the appellant was  in  occupation  of
part of his official residence during the assessment year  in  question,  he
was entitled to claim  full  benefit  of  the  exemption  for  his  official
residence  as  provided  under  Section   10   (19A)   of   the   I.T.   Act
notwithstanding the fact that portion of the residence is  let  out  to  the
Defence Ministry.  The  Revenue,  felt  aggrieved,  carried  the  matter  in
appeal  before  the  Income  Tax  Appellate  Tribunal.    By   order   dated
11.07.1985, the Tribunal affirmed the order of the  Commissioner  of  Income
Tax and dismissed the  Revenue's  appeal.   The  Tribunal,  however,  on  an
application made by the  Revenue  under  Section  256(1)  of  the  I.T.  Act
referred the following question of law to the High Court  of  Rajasthan  for
answer.
"Whether on the facts and in the circumstances of  the  case,  the  Tribunal
was justified in holding that the rental income from Umed Bhawan Palace  was
exempt under Section 10(19A) of the IT Act,1961."

10.   The Division Bench of the  High  Court  while  hearing  the  reference
noticed cleavage of opinion on the question referred in  this  case  in  two
earlier decisions of the High Court of Rajasthan.  One was in  the  case  of
Maharawal Laxman Singh vs. C.I.T., (1986) 160 ITR 103(Raj.) and another  was
in appellant’s own case, C.I.T. vs. H.H.  Maharao  Bhim  Singhji,  (1988)173
ITR 79(Raj.).  So far as the  case  of  Maharwal  Laxman  Singh  (supra)  is
concerned, the High Court  had  answered  the  question  in  favour  of  the
Revenue and against the assesse, wherein it was held that  in  such  factual
situation arising in the case, annual value of the portion which was in  the
occupation of the tenant is not exempt  from   payment  of  Income-tax  and,
therefore, income derived therefrom is required to be  added  to  the  total
income of the assessee,  whereas  in  case  of  H.H.  Maharao  Bhim  Singhji
(supra), the High Court answered the question against  the  Revenue  and  in
favour of the  assesse  holding  therein  that  in  such  a  situation,  the
assessee is entitled to claim full  exemption  in  relation  to  his  palace
under Section 10(19A) of the I.T. Act notwithstanding the fact that  portion
of the palace is let out to a tenant.  It was held that  any  rental  income
derived from the part of his rental property is, therefore,  not  liable  to
tax.  The Division Bench, therefore, referred the matter to the  Full  Bench
to resolve the conflict arising between the two  decisions  and  answer  the
referred question on merits.
11.   By impugned order  dated  26.03.2014,  the  High  Court  answered  the
question against the appellant (assessee) and  in  favour  of  the  Revenue.
While referring to various authorities of this Court and  the  High  Courts,
it was held that the law laid down in C.I.T. vs. H.H. Maharao Bhim  Singhji,
(supra) does not lay down correct principle of  law  whereas  the  law  laid
down in Maharawal Laxman Singh  vs.  C.I.T.(supra)  lays  down  the  correct
principle of law.  It was held that so long as  the  assessee  continues  to
remain in occupation of his official residential palace for his own use,  he
would be entitled to claim exemption available under Section 10(19A) of  the
I.T. Act but when he is found to have let  out  any  part  of  his  official
residence and at the same time is  found  to  have  retained  its  remaining
portion for  his  own  use,  he  becomes  disentitle  to  claim  benefit  of
exemption available under Section 10(19A) for the  entire  palace.   It  was
held that in such circumstances, he is required to  pay  income-tax  on  the
income derived by him from the  portion  let  out  in  accordance  with  the
provisions of the I.T. Act and the benefit of  exemption  remains  available
only to the extent of portion which is in his occupation  as  residence.  It
is against this order, the assessee has filed this appeal.
12.    Heard  Mr.  Gopal  Subramaniam,  learned  senior  counsel,  for   the
appellant (assessee) and Mr. Y.P. Adhyaru, learned senior counsel,  for  the
respondent (Revenue).
13.   Mr. Gopal Subramaniam while assailing the legality and correctness  of
the impugned order contended that the reasoning and  conclusion  arrived  at
by the High Court is not legally sustainable for various reasons.
14.   In the first  place,  learned  senior  counsel  urged  that  when  the
question involved in this appeal, was  already  decided  in  favour  of  the
appellant in all previous assessment years (1973-74  to  1977-78),  by  this
Court, there was no justifiable reason for the Revenue to have  pursued  the
same question again only for the assessment year in  question  (1978-79)  to
the High Court.  Learned counsel urged that in any  event,  the  High  Court
should  have  taken  note  of  this  fact  and  answered  the  reference  in
appellant's favour by placing reliance on the earlier decision in  the  case
of H.H. Maharao Bhim  Singhji  (supra).   In  support  of  this  submission,
learned counsel placed reliance on  the  decisions  of  this  Court  in  M/s
Radhasoami Satsang, Saomi Bagh, Agra vs. Commissioner of Income Tax,  (1992)
1 SCC 659, The  Parashuram  Pottery  Works  Co.  Ltd.  vs.  The  Income  Tax
Officer,  Circle-I,  Ward  ‘A’  Rajkot,  Gujarat,  (1977)  1  SCC  408   and
Commissioner of Income Tax vs. Excel Industries Ltd., (2014) 13 SCC 459.
15.   In the second place, learned counsel contended that  since  the  issue
involved herein pertains to grant of exemption to the assessee from  payment
of income-tax under Section 10(19A) of the I.T. Act read with  paragraph  15
of the Order, such provisions should be regarded as exception and  construed
liberally in appellant’s favour unlike the charging  provisions,  which  are
interpreted strictly. Reliance was placed on the decision of this Court   in
 the case of Union of India & Ors. vs. Wood Papers Ltd.  &  Anr.,  (1990)  4
SCC 256  and other decisions.
16.   In the third place, learned counsel contended that the High Court  was
not justified in placing reliance  on  Section  5(iii)  of  the  Wealth  Tax
Act,1957 while interpreting Sections 10(19A), 22 and 23 of the I.T. Act  and
Paragraph 15 of the Order. Learned counsel pointed out that  Section  5(iii)
of the Wealth Tax Act and Section 23 of the I.T. Act  are  neither  in  pari
materia with  each  other  and  nor  identically  worded.   Learned  counsel
pointed  out  the  difference  in  the  language  employed   in   both   the
aforementioned sections in support of  his submission.
 17.  In the fourth place,  learned  counsel  contended  that  the  question
involved in this appeal has already been answered by the M.P. High Court  in
the case of Commissioner of Income-tax  vs.  Bharatchandra  Banjdeo,  (1985)
154 ITR 236(MP) = 1986 (27) Taxman 456 (M.P.) in  favour  of  the  assessee.
It was urged that there was no justifiable reason  for  the  High  Court  to
have departed from the view taken by the M.P. High  Court.  Learned  counsel
urged that the reason given for distinguishing the view taken  by  the  M.P.
High Court is not well founded and more so when it has already  been  relied
on by the Rajasthan High Court in  H.H.  Maharao  Bhim  Singhji  (supra)  in
appellant’s own case.
18.   In the  fifth  place,  learned  counsel  contended  that  there  is  a
significant departure in the wordings of Section 10(19A) and Section  23  of
the I.T. Act.  Learned counsel pointed out that  Section  10(19A)  does  not
use the same expression which  occurs  in  Section  23(2),  namely,  "annual
value of such house or part of the house".  According  to  learned  counsel,
absence of these words in Section 10(19A) of the I.T. Act goes to show  that
the appellant is entitled to  claim  exemption   applicable  to  the  entire
palace even though the part of palace is in occupation of  tenant.   It  was
urged that splitting of palace is not permissible under Section 10 (19A)  of
the I.T. Act though it is permissible in ‘house”.
19.    It is  these  submissions,  which  were  elaborated  by  the  learned
counsel with reference  to  case  law  and  interpretative  process  of  the
relevant provisions of the I.T. Act and Order.
20.   In reply, learned counsel for the respondent (Revenue)  supported  the
reasoning and the conclusion arrived at by the High  Court  and  prayed  for
its upholding.
21.   Having heard learned counsel for the parties and upon perusal  of  the
record of the case and  the  written  submissions,  we  find  force  in  the
submissions urged by the learned counsel for the appellant (assessee).
22.   Section 10(19A) of the I.T. Act and Paragraph 15(iii)  of  the  Order,
which are relevant for this case, read as under:

      Section 10(19A) of the I.T. Act
“Section 10.  Incomes not included in total income.-In computing  the  total
income of a previous year of any person, any income falling  within  any  of
the following clauses shall not be included-
1 to 19………………………………………………
(19A) The annual value of any one palace  in  the  occupation  of  a  Ruler,
being 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;]”

Paragraph 15 of the Order

15. Exemptions-Any income falling within  the  following  classes  shall  be
exempt from income-tax and super-tax and shall not be included in the  total
income or total world income of the person receiving them:
(i)………………………………………………..
(ii)……………………………………………….
(iii) The bona fide annual value of the residential palace of the  Ruler  of
a State which is situate within the State and is  declared  by  the  Central
Government as his inalienable ancestral property.”

23.   Section 10 provides that in computing the total income of  a  previous
year of any person, any income falling within  any  of  the  sub-clauses  of
Section 10 shall not be included. Sub-clause  (19A)  says  that  the  annual
value of any one palace which is  in  occupation    of  a  Ruler  and  whose
annual value was exempt from  income-tax  before  the  commencement  of  the
Constitution (Twenty-sixth Amendment) by virtue of  the  provisions  of  the
Merged States (Taxation concessions)  Order,  1949  or  the  Part  B  States
(Taxation Concessions), Order 1950 would be exempt from payment  of  income-
tax.
24.   As mentioned above, Paragraph 15 (iii) grants exemption  to  the  bona
fide annual value of the residential palace of the Ruler of a  State,  which
is declared by the Central Government to be Rulers ancestral  property  from
payment of income-tax.
25.   In order  to  claim  exemption  from  payment  of  income-tax  on  the
residential palace of the Ruler under Section 10(19A), it is  necessary  for
the Ruler to satisfy that  first,  he  owns  the  palace  as  his  ancestral
property; second, such palace is in his occupation  as  his  residence;  and
third, the palace is  declared  exempt  from  payment  of  income-tax  under
Paragraph 15 (iii) of the Order, 1950 by the Central Government.
26.   Now, the question arises that where part of the residential palace  is
found to be in occupation of the tenant and remaining is  in  occupation  of
the Ruler for his residence, whether in such  circumstances,  the  Ruler  is
entitled to claim exemption for the whole of his  residential  palace  under
Section 10(19A) or such exemption would confine only to that portion of  the
palace which is in his  actual  occupation.  In  other  words,  whether  the
exemption would cease to apply to let out  portion  thereby  subjecting  the
income derived from let out portion to payment of income-tax  in  the  hands
of the Ruler.
27.   This very question was examined by the M.P. High Court in the case  of
Bharatchandra Banjdeo (supra) in detail.   It  was  held  that  no  reliance
could be placed on Section 5(iii) of the Wealth  Tax  Act  while  construing
Section 10(19A) for the reason that the language employed in Section  5(iii)
is not identical with the language of  Section  10(19A)  of  the  I.T.  Act.
Their Lordships distinguished the decision of Delhi High Court  rendered  in
the case of Mohd Ali Khan vs. CIT, (1983)140  ITR  948(Delhi),  which  arose
under the Wealth Tax Act.  It was held that even if the Ruler  had  let  out
the portion of his residential palace, yet he would continue  to  enjoy  the
exemption in respect of entire palace because it is not  possible  to  split
the exemption in two parts, i.e., the one in his occupation  and  the  other
in possession of the tenant.
28.   Justice G.L. Oza, the learned Chief  Justice  (as  His  Lordship  then
was), speaking for the Bench held as under:
“8. It is, therefore, clear that under this order the income  from  all  the
palaces of a Ruler which are declared to  be  the  official  residence  were
exempt. Under clause (19A) of Section 10, only one palace in occupation  has
been exempted and it appears that similarly  in  the  W.T.  Act  instead  of
using  the  word  "palace"  they  have  used  the  words  "one  building  in
occupation of a Ruler" which has been exempted from tax.

9. It is not in dispute that in this reference the property in  question  is
a palace. It is also not in dispute that a portion of it is  in  occupation.
The only question which has been raised by learned counsel for  the  Revenue
is that if only a portion of the palace  is  in  occupation,  the  exemption
under clause (19A) of Section 10 would be available only for that  part  and
not for the whole. The change brought  about  by  the  insertion  under  the
Merged States (Taxation Concessions) Order is  clearly  illustrated  by  the
two provisions quoted  above.  By  clause  (19A),  the  exemption  has  been
limited only to one palace in occupation.  If  the  Legislature  intended  a
further splitting up, it would have been provided in clause (19A) that  such
portion of the palace in occupation is only exempted, but  it  appears  that
the  language  used  by  the  Legislature  did  not  contemplate  a  further
splitting up. In Mohd. Ali Khan's case: [1983] 140 ITR 948(Delhi)  which  is
a case under the W.T. Act, the only question  considered  was  that  if  the
palace which was declared to be  an  official  residence  had  a  number  of
buildings, as the exemption under the W.T. Act is available only in  respect
of one building which  is  in  occupation  and,  therefore,  the  assessee's
contention, that the other buildings which may  not  be  in  occupation  but
declared to be an official residence should be exempted, was  not  accepted.
In clause (19A) of Section 10,  in  the  place  of  "building",  the  phrase
employed is "one palace" and so far as the case in hand is concerned, it  is
not disputed that this official residence is only one palace  and  not  more
than one. Under these circumstances, in our opinion, clause (19A) could  not
be interpreted  to  mean  that  it  contemplates  further  splitting  up  of
portions of a palace. The language of clause (19A)  of  Section 10 does  not
justify it. It is settled that in cases of exemption, the  language  of  the
statute has to be liberally construed but even  if  this  principle  is  not
considered, there are no words in clause (19A) of Section 10 from  which  an
intention for splitting up of the palace into portions  could  be  gathered.
In this view of the  matter,  therefore,  the  contention  advanced  by  the
learned counsel for the Revenue cannot be accepted.”



29.   Relying upon the aforesaid decision, Rajasthan High Court in the  case
of the appellant herein in Commissioner of Income-Tax vs. H.H. Maharao  Bhim
Singhji, (supra) answered the question in favour of the  appellant  for  the
assessment years (1973-74 to 1977-78).
30.   Justice J.S. Verma, the learned Chief Justice (as  His  Lordship  then
was) speaking for the Bench 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]154ITR236(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 palace is declared  as  his
official residence. Accordingly, it was held that even if  only  a  part  of
the palace is in the self-occupation of the former Ruler and  the  rest  has
been  let  out,  the  exemption  available  under  section 10(19A) will   be
available to the entire palace. No decision taking a contrary view has  been
cited before us. We do not find any good ground to depart  from  that  view,
when the view taken in that decision is undoubtedly  a  plausible  view.  In
the case of a taxing statute, a plausible view in  favour  of  the  assessee
should be preferred in these circumstances.  Following  that  decision,  the
first question has to be answered against the Revenue and in favour  of  the
assessee.”



31.   Following the aforesaid view, the High Court of Rajasthan declined  to
make reference to the High Court under Section 256(1) of  the  I.T.  Act  in
later Assessment Years and dismissed the application  made  by  the  Revenue
under Section 256(2) of the I.T. Act (see- (Commissioner of  Income-Tax  vs.
H.H.  Maharao  Bhim  Singh  (2002)124  Taxman   26)   with   the   following
observations.
“ 5. In coming to this conclusion, this Court has followed another  decision
of the Madhya Pradesh High Court in CIT vs. Bharatchanda Banjdeo (1985)  154
ITR 236 (M.P.).  The decision of this Court in CIT  vs.  H.H.  Maharao  Bhim
Singhji (1988) 173 ITR 79, we are informed by the learned counsel,  has  not
been appealed against.

6.  In that view of the matter, we are of the opinion that  the  application
under Section 256(1) has rightly been rejected by the Tribunal  and  do  not
deserve further consideration.”

32.   In our considered opinion, the view taken by the Madhya  Pradesh  High
Court in the case of Bharatchandra Banjdeo (supra) and the one taken in  the
case of the appellant in Maharao Bhim  Singhji’s  case  (supra)  by  rightly
placing reliance on Bharatchandra Banjdeo’s  case  (supra)  is  the  correct
view and we find no good ground to take any other view.
33.   As rightly held in the  case  of  Bharatchandra  Banjdeo  (supra),  no
reliance could be placed on Section 5(iii)  of  the  Wealth  Tax  Act  while
construing Section 10(19A) of the I.T. Act.  It is due to marked  difference
in the language employed in both  sections.  It  is  apposite  to  reproduce
Section 5 (iii) of the Wealth Tax Act as under:
“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-
(i)…………………………………………………………..
(ii)………………………………………………………….
(iii) any one 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 paragraph 15 of the  Part  B  States  (Taxation
Concessions) Order, 1950;”

34.   We find that in Section 10(19A) of the I.T. Act, the  Legislature  has
used the expression "palace” for considering the grant of exemption  to  the
Ruler whereas on the  same  subject,  the  Legislature  has  used  different
expression namely "any one building" in Section 5 (iii) of  the  Wealth  Tax
Act. We cannot ignore this distinction while  interpreting  Section  10(19A)
which, in our view, is significant.
35.   In our considered opinion, if the Legislature intended  to  spilt  the
Palace in part(s), alike houses for taxing the subject, it would  have  said
so by employing appropriate language in Section 10(19A)  of  the  I.T.  Act.
We, however, do not find such language employed in Section 10(19A).
36.   As  rightly  pointed  out  by  the  learned  senior  counsel  for  the
appellant, Section 23(2) and (3), uses the expression “house or  part  of  a
house”.  Such expression does not find place in Section 10(19A) of the  I.T.
Act.   Likewise,  we  do  not  find  any  such  expression  in  Section  23,
specifically dealing with the cases relating to “palace”.  This  significant
departure of the words in Section 10(19A) of the I.T.  Act  and  Section  23
also suggest that the Legislature did not  intend  to  tax  portion  of  the
“palace” by splitting it in parts.
37.   It is a settled rule of interpretation that if  two  Statutes  dealing
with the same subject use different language then it is not  permissible  to
apply  the  language  of  one  Statute  to  other  while  interpreting  such
Statutes.  Similarly, once the assessee is able to  fulfill  the  conditions
specified in section for claiming exemption under the  Act  then  provisions
dealing with grant of exemption should be construed  liberally  because  the
exemptions are for the benefit of the assessee.
38.   In the light of these reasonings, we are  of  the  considered  opinion
that the view taken by the M.P. High Court in Bharatchandra  Banjdeo’s  case
(supra) and the Rajasthan High Court in H.H.  Maharao  Bhim  Singhji’s  case
(supra) is a correct view.
39.   We also notice that the  question  involved  in  this  case  had  also
arisen in previous Assessment Years’ (1973-74 till 1977-78) and was  decided
in appellant's favour when Special Leave Petition(c) No. 3764 of 2007  filed
by the Revenue was dismissed by this Court on 25.08.2010  by  affirming  the
order of the Rajasthan High Court referred supra.
40.   In such a factual situation where the Revenue  consistently  lost  the
matter on the issue then, in  our  view,  there  was  no  reason  much  less
justifiable reason for the Revenue to have pursued the same issue  any  more
in higher courts.
41.   Though  principle  of  res  judicata  does  not  apply  to  income-tax
proceedings and each assessment year is an independent year in itself,  yet,
in our view, in the absence of any valid and convincing  reason,  there  was
no justification on the part of the Revenue to have pursued the  same  issue
again to higher Courts. There should be a finality  attached  to  the  issue
once it stands decided by the higher Courts on merits.  This  principle,  in
our view, applies to this case on all force against the  Revenue.  [see  M/s
Radhasoami Satsang, Saomi Bagh, Agra’s case (supra)].
42.   Learned Counsel for  the  respondent  (Revenue)  though  made  sincere
attempt to persuade us to uphold the view taken by the  High  Court  but  in
the light of  what  we  have  held  above,  we  are  unable  to  accept  his
submissions.
43.   In the light of foregoing discussion, in our considered  opinion,  the
reasoning and the conclusion arrived at by the High Court  in  the  impugned
order including the view taken by the  Rajasthan  High  Court  in  Maharaval
Lakshmansingh’s case (supra) does not lay  down  correct  principle  of  law
whereas the view taken by the M.P. High Court  in  cases  of   Bharatchandra
Bhanjdeo (supra), Commissioner  of  Income-Tax  vs.  Bharatchandra  Bhanjdev
(1989)176 ITR 380 (MP) and  H.H. Maharao  Bhim  Singhji  (supra)  lays  down
correct principle of law.
44.   This takes us to the  last  submission  of  learned  counsel  for  the
appellant who made a feeble attempt to question the legality  and  propriety
of  the  requisition  proceedings  initiated  by  the   Central   Government
(Ministry of Defence) in relation to portion of land.   It  was  urged  that
even after expiry of  the  period  of  requisition,  the  Defence  Ministry,
continues to remain in possession of  the  land  to  the  detriment  of  the
interest of appellant. To say the least, in our  view,  this  submission  is
wholly misplaced in this appeal. The appellant, in our view,  has  to  raise
this issue in  appropriate  proceedings  before  competent  Fora  for  their
adjudication  and  not  in  this  appeal  which  arises  out  of  income-tax
proceedings and has nothing to do with requisition proceedings of the  land.

45.    In  view  of  foregoing  discussion,  the  appeal  succeeds  and   is
accordingly allowed. The impugned order is set aside. As a consequence,  the
question referred to the High Court in  the  reference  proceedings  out  of
which this appeal arises is answered in favour of the  appellant  (assessee)
and against the Revenue.


         ….……...................................J.
                                     [RANJAN GOGOI]


                     ………..................................J.
                                      [ABHAY MANOHAR SAPRE]
      New Delhi,
      December 05, 2016.
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