2014 (4) TMI 82 - HC - Income Tax

Benefit of Exemption u/s 10(26) of the Act - Whether the assessee is entitled to take the benefit of Section 10(26) of the Act Held that - The assessee should approach the AO who is otherwise seized of the assessees cases for realization of the income tax on their total income earned and after examining the issue on the basis of the evidence adduced by the petitioners in support of their contentions seeking exemption from payment of income tax on the basis of Section 10(26), then pass appropriate orders in the cases of each individual assessee thus, the matter is remitted back to the ITO(TDS) for fresh consideration in the light of the judgement delivered in Pradip Kr. Taye Versus Union of India 2009 (12) TMI 285 - GAUHATI HIGH COURT Decided in favour of Assessee.

Summary

Issues:
1. Interpretation of Section 10(26) of the Income Tax Act for exemption from income tax.
2. Jurisdiction of the High Court under Article 226/227 of the Constitution of India.
3. Direction to approach the Assessing Officer for factual inquiry.
4. Reference to a previous judgment by the Full Bench of the High Court.

Analysis:
1. The primary issue in this case is the interpretation of Section 10(26) of the Income Tax Act to determine whether each petitioner is entitled to exemption from income tax on their total income. The petitioners sought relief under Article 226/227 of the Constitution of India, questioning the applicability of this provision to their individual cases.

2. The High Court, after hearing arguments from both parties, decided that the matter requires factual adjudication by the Assessing Officer, rather than being resolved in the Court's extraordinary jurisdiction under Article 226. This decision was based on the complexity of the factual inquiry needed to ascertain whether the petitioners meet the requirements of Section 10(26).

3. The Court directed the petitioners to approach the Income Tax Officer (TDS) in Dibrugarh, Assam, who is handling their cases, for a detailed examination of the evidence supporting their claim for exemption under Section 10(26). The Assessing Officer was instructed to consider the legal precedent set by a previous Full Bench judgment of the High Court while making individual decisions for each petitioner.

4. The judgment referenced a prior case, WP(C) No.727 of 2009, where the issue of entitlement to claim exemption under Section 10(26) was already addressed by the Full Bench of the High Court. The Income Tax Officer was directed to adhere to the legal principles established in that judgment while evaluating the petitioners' claims and providing reasoned decisions within a timeframe of six months.

In conclusion, the High Court disposed of the writ petition, emphasizing the need for a thorough factual inquiry by the Assessing Officer to determine the applicability of Section 10(26) to each petitioner's case. The petitioners were instructed to submit necessary documentation within a month to facilitate the Assessing Officer's decision-making process.