Official residence exemption under wealth-tax remains intact despite partial letting of the qualifying building.

The exemption for one building under section 5(1)(iii) of the Wealth-tax Act, 1957 continues to apply to an ex-ruler's official residence where the building remains the qualifying palace, even if a part has been let out. Partial letting does not alter the statutory character of the single exempt building or justify apportionment of its value for wealth-tax purposes. The settled interpretation of "any one building" limits the number of exempt buildings, but does not permit splitting the value of one qualifying residence. On that basis, no referable question of law arose under section 256(2) of the Income-tax Act, 1961.

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Issues: Whether, for the purposes of exemption under section 5(1)(iii) of the Wealth-tax Act, 1957, the entire building used as the official residence of an ex-ruler remains exempt when a part of it has been let out, and whether any referable question of law arises under section 256(2) of the Income-tax Act, 1961.

Analysis: The exemption provision applies to one building in the occupation of the ruler, being the building which, immediately before the commencement of the Constitution (26th Amendment) Act, 1971, was his official residence under the relevant Central Government declarations. The building in question was the ex-ruler's palace and official residence, and a portion having been let out did not alter the statutory character of the building for the purpose of the exemption. The settled view had already held that the words "any one building" limit the number of exempt buildings and do not authorize splitting the value of a single qualifying building merely because part of it is rented out.

Conclusion: The entire building remained exempt under section 5(1)(iii) of the Wealth-tax Act, 1957, and no question of law arose for reference under section 256(2) of the Income-tax Act, 1961.

Final Conclusion: The Revenue's applications seeking a reference were rejected, as the legal position on the exemption was already settled against the Revenue.

Ratio Decidendi: Where a qualifying official residence of an ex-ruler answers the statutory description of one exempt building, partial letting out of the building does not justify apportionment of its value for wealth-tax purposes.

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