The Supreme Court (SC) on 5 December 2016 held that the income earned by erstwhile rulers of a princely state or by their heirs by renting out a portion of the residential palace is not taxable.
Moreover, the court also smacked the Income Tax department for registering such case despite their income being exempted under Section 10(19A) of the IT Act, 1961.
The ruling was made by a bench of Justices Ranjan Gogoi and Abhay Manohar Sapre.
The court was hearing a plea of the ruler of the former princely state of Kota, now a part of Rajasthan, challenging the high court order for bringing his income from rent in the Income Tax net. The ruler owns two residential palaces known as Umed Bhawan Palace and the City Palace.
The ruler is using Umed Bhawan Palace for his residence and a portion of it was rented out to the Ministry of Defence in 1976.
When: 5 December 2016
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