1973 (2) TMI 15 - HC - Income Tax

Petitioner belongs to the Garo community, which is a Scheduled Tribe as defined in clause (25) of article 366 of the Constitution, and is a permanent inhabitant of the Garo Hills District, which is an area specified in Part A of the Table appended to paragraph 20 of the Sixth Schedule to the Constitution - Whether the provision granting exemption for the income of a member of Scheduled Tribe accruing in certain areas and no exemption being given to income from other areas would be discriminatory and contravenes article 14 of the Constitution - challenge to the validity of section 10(26) cannot survive - Application dismissed

Summary

Issues:
1. Validity of section 10(26) of the Income-tax Act, 1961.
2. Constitutionality of section 10(26) under article 14 of the Constitution.
3. Discrimination between persons belonging to the same Scheduled Tribe.

Analysis:

Issue 1: Validity of section 10(26) of the Income-tax Act, 1961
The petitioner, a Resident Medical Officer, challenged the validity of section 10(26) of the Act, claiming exemption from income tax as a member of the Scheduled Tribe. The Income-tax Officer argued that the provision aims to uplift the socioeconomic status of Scheduled Tribe members in specified areas. The court examined the impugned provision which exempts income of Scheduled Tribe members in specific regions from taxation. The judgment highlighted the relevance of territorial nexus with the assessable income under the Act.

Issue 2: Constitutionality of section 10(26) under article 14 of the Constitution
The petitioner contended that section 10(26) discriminated between persons of the same Scheduled Tribe without a rational basis. The court analyzed the constitutional aspect, emphasizing that income-tax is chargeable under section 4 and subject to section 10. It was observed that the provision requiring income to accrue or arise from specific areas for exemption did not violate article 14. The court justified the classification based on the object of uplifting the Scheduled Tribe members and the areas they inhabit.

Issue 3: Discrimination between persons belonging to the same Scheduled Tribe
The judgment referenced a previous case where the Supreme Court struck down a clause excluding Government servants from exemption benefits for Scheduled Tribe members. The court reiterated the principles of law guiding discriminatory taxation, emphasizing the State's discretion in selecting persons or objects for taxation. It was clarified that a law is not discriminatory if it operates equally within its selected range. The court dismissed the petitioner's application, upholding the validity of section 10(26) and emphasizing the reasonable classification based on the object of the provision.

In conclusion, the court dismissed the application, emphasizing the reasonable classification and object of the exemption clause for Scheduled Tribe members. The judgment provided a detailed analysis of the legal principles guiding taxation laws and upheld the constitutionality of section 10(26) of the Income-tax Act, 1961.