1985 (9) TMI 109 - AT - Income Tax

Summary

Issues Involved:
1. Condonation of delay in filing the appeal.
2. Exemption under Section 10(26B) of the Income Tax Act.
3. Exemption under Section 10(20A) of the Income Tax Act.

Detailed Analysis:

1. Condonation of Delay in Filing the Appeal:
The appellant filed an application for condonation of delay, explaining that the Managing Director and General Manager were unavailable due to urgent engagements and outstation tours, which prevented the timely filing of the appeal. The Tribunal, after considering the reasons, found them to be sufficient and reasonable, and thus condoned the delay, stating, "it was beyond the control of the Managing Director and the General Manager to have filed the appeals within the prescribed time."

2. Exemption under Section 10(26B) of the Income Tax Act:
The appellant, a government company, claimed exemption under Section 10(26B) and Section 10(20A) of the IT Act. The CIT (A) had previously rejected these claims, stating that only one of the five main objects of the company related to the benefit of Harijans and other weaker sections, which did not suffice for exemption under Section 10(26B). The Tribunal, however, found that the objects listed in the Memorandum of Association were interconnected and supplementary to the main objective of promoting the interests of Scheduled Castes, Scheduled Tribes, and other weaker sections. The Tribunal stated, "the objects as mentioned in the Memorandum of Association of the Company are very broad and wide and objects Nos. 2 to 5 mentioned in the Memorandum of Association of the company were supplementary and were introduced with a view to achieve the object as mentioned in cl. (1) of the said Memorandum of Association."

The Tribunal concluded that the corporation's income attributable to housing schemes for Scheduled Castes and Scheduled Tribes is exempt under Section 10(26B). However, it clarified that income related to backward classes and other weaker sections does not qualify for this exemption. The Tribunal directed the ITO to examine whether the interest income earned by the corporation is taxable, stating, "the ITO shall examine this matter and will pass an order in accordance with law whether such interest income...is taxable or not."

3. Exemption under Section 10(20A) of the Income Tax Act:
Given that the Tribunal allowed the exemption under Section 10(26B) for income related to Scheduled Castes and Scheduled Tribes, it found it unnecessary to address the alternative claim under Section 10(20A). The Tribunal noted, "we do not think it necessary to deal with the applicability of s. 10(20A) of the IT Act," rendering this ground infructuous.

Conclusion:
The appeal was partly allowed. The Tribunal condoned the delay in filing the appeal and granted exemption under Section 10(26B) for income related to housing schemes for Scheduled Castes and Scheduled Tribes. The alternative claim under Section 10(20A) was not addressed due to the resolution under Section 10(26B). The ITO was directed to examine the taxability of interest income separately.