JUDGMENT
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.
3. 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.
4. 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).
5. The non-application of Section 5(1)(iii) was accepted by the CIT(A). No question has been raised about exigibility to exemption under Section 5(1)(iv) before us also in respect of Samore Bag.
6. However, the CIT(A) finding that the property was in occupancy of one of the members of the HUF for the entire period of 12 months during relevant assessment year, held it to be one residential building in occupation of HUF being entitled to exemption under Section 5(1)(iii) as it was then existing and for the purpose directed its value to be taken as on 1st April, 1971, in terms of Section 7(2) of the Act of 1957. This has been affirmed in appeal by the Tribunal holding that occupancy by any one member of the HUF is an occupancy of the HUF and, therefore, Samore Bag has to be held to be a building to a person to which it belonged. As referred to above, the contention of the Revenue suggests that Samore Bag being not a part of City Palace, it would not be constituted as a part of the official residence of the erstwhile ruler and the finding that the Samore Bag is a part of the City Palace is not founded on material.
7. We regret to notice that nowhere any officer has founded that it has been contended by the assessee that Samore Bag is a part of the City Palace. On the contrary, the finding is that it is not official residence recognised under the covenant claimed by the assessee under Section 5(1)(iii) and its exemption has been rejected and no question about the rejection of the said claim is before us nor it could have been at the instance of the Revenue as it is the finding of fact.
8. The only question that really was raised and answered by the Tribunal was when a property belonging to HUF is in occupancy of a member of HUF, is it entitled to claim exemption in respect of the state (said) building under Section 5(1)(iv). The provision of Section 5(1)(iii) exempted one or part of the house belonging to the assessee. It may also be relevant here to notice Sub-clause (iii) of Clause (1) of Section 5 which reads w.e.f. 28th Dec., 1971 when the Constitution (26th Amendment) Act, 1971, came into force :
“(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 para 13 of the Merged States (Taxation Concessions) Order, 1949, or para 15 of the Part B States (Taxation Concessions) Order, 1950;”
Apparently, Clause (iii) was extended only to a building in occupancy of a ruler and one which has been declared as his official residence under the aforesaid orders. Under that property even if it were to be occupied by the erstwhile ruler, it was eligible to exemption under Section 5(1)(iii) which is so obvious as to take any other interpretorial exercise.
9. It may be noticed here that so far as exemption relating to one house or part of the house belonging to the assessee is not restricted by the self-occupancy of the assessee, therefore, claim to exemption of one house belonging to assessee is not dependent on personal occupation, therefore, so far as the question of claiming exemption by HUF of one house belonging to it is concerned, it could firstly be availed in respect of any one house belonging to the assessee. It is not the case of the Revenue before us that there being claim to exemption of other house belonging to HUF, the assessee could not avail the benefit of exemption under Section 5(1)(iii) in respect of Samore Bag Palace in addition thereto which undisputably was belonging to HUF as per the finding of the authorities under the WT Act and has become final (by) order of Tribunal dt. 24th Aug., 1999 and appeal against which has been rejected by the High Court.
10. Another aspect of the matter is about the valuation of any one building belonging to the assessee-HUF, if it is exclusively in occupation for residential purposes throughout the period of 12 months, valuation of such house has to be taken at the option of the assessee as determined in the manner laid down in Schedule III either as on the date the assessee became the owner of such house or on 1st April, 1971. It is relevant to mention here that on the basis of this provision, the Tribunal reached the finding that the house in Samore Bag was in exclusive possession of one of the members of the HUF, and, therefore, it was in the exclusive possession of the assessee for residential purposes for 12 months and its value has to be taken under Section 7(2) which was determined at Rs. 15,54,321.
11. The principle is well settled that in the case of property belonging to HUF each and every member of HUF is entitled to joint possession and residence of house belonging to HUF, whether as a matter of covenant, the members of the HUF may occupy different houses. Still, the house occupied by any member, coparcener of the HUF is a house occupied by the HUF, as the occupancy of the house is not personal and individual by the person but it is a joint possession of the property for benefit and on behalf of all. Consequently, the proposition of law being clear, the findings of the Tribunal that Samore Bag Palace was in personal occupation of one of the members of HUF throughout the period of 12 months, therefore, it was a house belonging to HUF for the residence of HUF is a finding of fact and does not give rise to any question of law. The benefit of freezing the valuation of one house belonging to an assessee, which is in self-occupation is restricted to one such house only. It is not the case of Revenue that the assessee has claimed and the Department has allowed the valuation of any other house in occupation of HUF to be under Section 7(2) read with Schedule III. Determination of all these questions are finding of fact.
12. In these circumstances, we are of the opinion that no question of law much less substantial question of law arises in all these appeals, so far as the question relating to the claim of the assessee to exemption to the property known as Samore Bag and its valuation in terms of Section 7(2) is concerned, as the answer to it is clear from the statute itself, it does not require any clarification or interpretation on any ambiguity.
13. The other question which has been stated to arise out of Tribunal’s order is in respect of levy of interest under Section 31(2) of the WT Act. The Tribunal has found that the provision of Sub-section (2) of Section 31 of the WT Act, 1957, is in pari materia with Sub-section (2) of Section 220 of the IT Act which has been the subject-matter of consideration before the Supreme Court in Vikrant Tyres Ltd. v. ITO (2001) 247 ITR 821 (SC). The Supreme Court has held on perusal of the provision that making of a demand and its non-payment within time given in the notice of demand is a condition precedent before levy of interest. The findings of fact noticed by the Tribunal in the present case is that the assessee has paid the demand in terms of the notice of demand issued in time, and therefore, there was no question of levy of interest under Section 31(2). The answer being concluded by the Supreme Court decision, it also does not give rise to any substantial question of law.
14. Accordingly, no substantial question of law arises for consideration in these appeals. The appeals are accordingly dismissed.