JUDGMENT JUDGMENT judgment of court was delivered by MULYE J.-By this reference under section 256(2) of Income-tax Act, 1961, at instance of Revenue, Income-tax Appellate Tribunal, Indore Bench, Indore, has referred following question of law for opinion of this court, on basis of order passed by this court in Misc. Civil Case No. 45 of 1982: " Whether, on facts and in circumstances of case, Tribunal was right in law in holding that A.L.V. of Manik Bagh Palace was exempt from income-tax under Part B States (Taxation Concessions) Order, 1950? " Facts giving rise to this reference, as per statement of case received, may be stated, in brief, thus: It relates to assessment of Princess Usha Trust, Indore, which is assessee herein. assessment year is 1974-75 for previous year ended March 31, 1974. In its return of income for this year, assessee had claimed exemption in respect of income from Manik Bagh Palace, Indore. Income-tax Officer, however, referred to fact that his predecessor, in earlier years, had discussed this issue at length and had held that income from above palace was taxable. He, therefore, included annual letting value of Manik Bagh Palace amounting to Rs. 74,882 as income taxable in hands of assessee-trust. assessee preferred appeal objecting, inter alia, to rejection of its claim for exemption in respect of annual letting value of Manik Bagh Palace. Appellate Assistant Commissioner accepted assessee's claim and directed Income-tax Officer to exclude annual letting value of this property from assessee's total income. Revenue preferred appeal to Tribunal objecting, inter alia, to directions given by Appellate Assistant Commissioner to Income-tax Officer to exclude A.L.V. of Manik Bagh Palace from assessee's total income. Tribunal examined this issue and after setting out relevant facts and relevant portion of order of Appellate Assistant Commissioner rejected Revenue's appeal, which contended that owner of said palace is not Ruler and, therefore, exemption could not be granted, on ground that same cannot be accepted as said A.L.V. has never been subjected to tax in earlier years and in light of Part B States (Taxation Concessions) Order, 1950, and Tribunal's order and confirmed finding of Appellate Assistant Commissioner in this regard. learned counsel for Revenue submitted that according to section 10(19A) of Income-tax Act which is reproduced below, assessee-trust was not entitled to exemption as no such exemption was granted to trust as such. He, therefore, submitted that trust not being Ruler, Tribunal has committed error in holding on this point against Department and in favour of assessee " 10. Incomes not included in total income.-... (19A) annual value of any one palace in occupation of Ruler, being palace, annual value whereof was exempt from incometax before commencement of Constitution (Twenty-sixth Amendment) Act, 1971, by virtue of provisions of Merged States (Taxation Concessions) Order, 1949, or Part B States (Taxation Concessions) Order 1950, or, as case may be, Jammu and Kashmir (Taxation Concessions) Order, 1958: Provided that for assessment year commencing on 1st day of April, 1972, annual value of every such palace in occupation of such Ruler during relevant previous year shall be exempt from income-tax. This clause was inserted by Rulers of Indian States (Abolition of Privileges) Act, 1972, w.e.f. December 28, 1971. Section 7 of said Act provided that clause (19A) of section 10 of Income-tax Act, 1961, shall be deemed to have been inserted with effect from December 28, 1971, although clause (19A) was in force on April 1, 1972. Yet, by that clause, exemption granted to erstwhile Rulers in respect of annual value of palaces was withdrawn and annual value of only one of palaces in occupation of Ruler was exempted from income-tax with effect from December 28, 1971. By insertion of clause (19A) of section 10, exemption which was in force prior to December 28, 1971, was not taken away in any manner. Under section 60A of Indian Income-tax Act, 1922, Part B States (Taxation Concessions) Order, 1950, was issued on December 22, 1950, and according to Notification S.R.O. 1619 dated September 14, 1954, issued in pursuance of provision of item (iii) of paragraph 15 of Part B States (Taxation Concessions) Order, 1950, Central Government declared for purposes of paragraph 15 of said order, palaces specified in column 2 of Table annexed thereto as official residences of Rulers of former Indian States (now included in Part B States) specified in corresponding entry of column 3 of said table. Accordingly, three palaces including (1) Manik Bagh Palace at Indore, (2) Old Palace, Indore, and (3) Yashwant Niwas Palace, Indore, were exempted, being official residences of Ruler of Indore. However, learned counsel for Revenue submitted that as assessee, namely, Princess Usha Trust, has claimed exemption even under sections 160 and 161 of Income-tax Act as representative assessee, trustees are liable to pay tax and in support of this submission he placed reliance on decisions in [1973] 88 ITR 47 (SC) (Trustees of Gordhandas Govindram Family Charity Trust v. CIT) and [1983] 140 ITR 948 (Mohd Ali Khan v. CWT). However, we are of opinion that these authorities being distinguishable on facts cannot be applied to facts of present case. There is nothing on record to indicate that Manik Bagh Palace has ceased to be official residences of the, Ruler of Indore, namely, Princess Usha Raje, who succeeded late Maharaja Yeshwant Rao Holkar or that she is deriving any income therefrom as such. In fact, Part B States (Taxation Concessions) Order, 1950, which has granted exemption under clause 15 has used words " any income " and "of person receiving them ". Therefore, we are unable to agree with submission made by learned counsel for Revenue. On other hand, learned counsel for assessee-trust submitted that in fact trust is created for beneficiary, one of whom under present trust being Princess Usha Raje, who has been recognised by Government of India as Ruler of Indore. He further submitted that prior to assessment years 1972-73, 1973-74 and 1974-75, exemption in respect of Manik Bagh Palace was granted to trust and exemption order nowhere provides that Ruler must stay in official residence for all time though there is nothing on record on basis of which it could be inferred, in present case, that Princess Usha Raje has ceased to occupy said palace as her official residence. He, therefore, submitted that Revenue cannot challenge validity of exemption order in these proceedings because if they wanted to challenge same, they ought to have come up in writ petition. But that remedy having not been resorted to, Revenue is not entitled to challenge same in this manner. learned counsel further submitted that exemption order relates to palaces of Ruler which are belonging to and in possession of Ruler. He further submitted that words " of " and " belonging to " have been interpreted in Controller of Estate Ditty v. Estate of Late Sanka Simhachalam [1975] 99 ITR 370 (SC) and Commissioner of Wealthtax v. Trustees of H.E.H. Nizam's family (Remainder Wealth) Trust [1977] 108 ITR 555 (SC). He, therefore, submitted that view taken by Tribunal being proper and in accordance with law does not deserve to be disturbed. After hearing learned counsel, we are of opinion that questions referred to above have to be answered in favour of assessee and against Department. exemption order mentions official residence and one of palaces, namely, Manik Bagh Palace, Indore, has also been recognised and treated as official residence. There is nothing on record to indicate that Princess Usha Raje, Maharani of Indore, has ceased to occupy palace as official residence. Even exemption order does not make it obligatory upon her to live in same palace for all time because in her case, three palaces have been declared as official residences. That apart it is not in dispute that Maharani Usha Raje is beneficiary under assessee-trust. Therefore, we are unable to agree with submission made by learned counsel for Revenue and authorities cited by him do not apply to facts of present case as admittedly assessee-trust has also been granted exemption in past. In result, our answer to question referred is as follows: " On facts and in circumstances of case, Tribunal was right in law in holding that A.L.V. of Manik Bagh Palace was exempt from income-tax under Part B States (Taxation Concessions) Order, 1950. " reference is thus answered in favour of assessee and against Department with no order as to costs. *** COMMISSIONER OF INCOME TAX v. PRINCESS USHA TRUST