1993 (2) TMI 74 - HC - Income Tax

Summary

Issues:
1. Interpretation of section 10(26) of the Income-tax Act, 1961 regarding exemption for income of a Scheduled Tribe member residing in specific areas.
2. Determining whether the income of the assessee, a member of the Khasi tribe, residing in the cantonment area of Shillong town, is exempt under section 10(26) of the Act.

Analysis:
The judgment addressed the interpretation of section 10(26) of the Income-tax Act, 1961, regarding the exemption for the income of a Scheduled Tribe member residing in specific areas. The dispute centered around whether the assessee, a member of the Khasi tribe working as a college principal in the cantonment area of Shillong town, was entitled to exemption under section 10(26) of the Act. The Income-tax Officer had assessed the assessee, but the Appellate Assistant Commissioner and the Tribunal ruled in favor of the assessee, leading to the reference to the High Court.

The court examined the conditions for exemption under section 10(26) of the Act. It was established that the assessee was a member of a Scheduled Tribe and resided in the Khasi Hills District, which includes the areas of Shillong municipality and cantonment. The income of the assessee, derived from working at a government college in the cantonment area, was deemed to have accrued from a source in the specified areas, satisfying the third condition for exemption.

The judgment emphasized the importance of the specific wording of section 10(26), which refers to the areas specified in the Table appended to paragraph 20 of the Sixth Schedule. It clarified that the reference is to the areas specified in the Table and not restricted by sub-paragraph (2) of paragraph 20. By analyzing the historical context and legislative intent, the court concluded that the assessee met all the conditions for exemption under section 10(26) of the Act.

In conclusion, the High Court ruled in favor of the assessee, holding that she was entitled to exemption under section 10(26) of the Income-tax Act, 1961. The judgment answered the questions raised in the affirmative, in favor of the assessee and against the Revenue. The Court directed the transmission of the judgment to the Income-tax Appellate Tribunal without any specific cost implications.