Official residence exemption protected palace rent value under the Part B States tax concessions order.

The annual letting value of Manik Bagh Palace was held exempt from income-tax under the Part B States (Taxation Concessions) Order, 1950 because the palace had been recognised and treated as the Ruler's official residence. The exemption was not lost merely because the trust claimed the property, since the beneficiary remained the recognised Ruler and the Order did not require continuous occupation of one palace at all times. The Revenue's reliance on representative-assessee principles did not change the application of the concessional order on these facts, and the result was in favour of the assessee.

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Issues: Whether the annual letting value of Manik Bagh Palace was exempt from income-tax under the Part B States (Taxation Concessions) Order, 1950.

Analysis: The exemption order protected the annual value of palaces treated as official residences of the Ruler. Manik Bagh Palace had been recognised and treated as such an official residence, and there was nothing to show that the Ruler had ceased to occupy it in that capacity. The trust's claim did not defeat the exemption, since the beneficiary remained the recognised Ruler and the order did not require continuous residence in one palace at all times. The court also held that the Revenue's reliance on representative-assessee principles did not alter the application of the concessional order on these facts.

Conclusion: The annual letting value of Manik Bagh Palace was exempt from income-tax under the Part B States (Taxation Concessions) Order, 1950, and the answer was in favour of the assessee.

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