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Issues Involved:
1. Assessability of the assessee as a Body of Individuals (BOI). 2. Eligibility for exemption under section 10(26) of the Income-tax Act, 1961. Detailed Analysis: Assessability as a Body of Individuals (BOI): The primary issue revolves around whether the assessee should be assessed as a Body of Individuals (BOI). The Income Tax Officer (ITO) had determined that the assessee constituted a BOI, as the business and properties were jointly owned and managed by the members of the Khasi family. The income earned was not owned by any individual but was for the maintenance of all family members. The ITO's stance was supported by the decisions in *Deccan Wine and General Stores v. CIT* and *CIT v. Harivadan Tribhovandas*, which suggested that even an involuntary association could be a BOI if the individuals earned income jointly. The Appellate Assistant Commissioner (AAC), however, disagreed, stating that there was no voluntary agreement among the members to form an association or BOI, thus negating the ITO's assessment. The Tribunal, upon review, sided with the ITO, emphasizing that the members of the Khasi family, who jointly owned and operated the business, did indeed form a BOI. The Tribunal highlighted that the income was a result of their joint efforts and management, fitting the definition of a BOI as per the cited legal precedents. The AAC's failure to consider these decisions was noted, leading to the reversal of the AAC's order and affirming the ITO's assessment of the assessee as a BOI. Eligibility for Exemption under Section 10(26):The second issue concerned whether the income of the BOI, consisting of members from a scheduled tribe, was exempt under section 10(26) of the Income-tax Act. The ITO had denied this exemption, arguing that section 10(26) applied only to individual members and not to a collective unit like a BOI. The AAC, however, interpreted the term 'person' in section 10(26) more broadly, suggesting that it could include family units, especially given the unique structure of Khasi society, where properties are often held collectively by the family rather than individually. The Tribunal supported the AAC's broader interpretation of 'person' in section 10(26), taking into account the matriarchal and collective nature of Khasi society. It was noted that the Legislature's use of 'person' rather than 'individual' in section 10(26) was intentional, aiming to include family units within its scope. The Tribunal reasoned that limiting the exemption to individuals would render it ineffective for most of the Khasi society, where property and income are typically managed collectively by family units. Consequently, the Tribunal concluded that the income earned by a Khasi family as a unit is entitled to exemption under section 10(26), just as it would be for an individual Khasi's self-earned income. In conclusion, the Tribunal rejected the departmental appeals, affirming the AAC's decision to annul the assessment orders for the years in question and granting the exemption under section 10(26) to the Khasi family unit.
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