693/CBDT. - Income Tax - 693/CBDT

INSTRUCTION NO. 693/CBDT Dated : May 27, 1974 Section(s) Referred: 206 , Rule 35 of IT Rules Statute: Income - Tax Act, 1961 The Supreme Court had held in the case of S.K.Dutta, Income-tax Officer and Other Vs.S.L.Ingty that exemption of Income-tax given in favour of members of Scheduled Tribes other than Government servants under section 4(3)(xii) of the Income-tax Act, 1922 and Section 10(26) of the Income tax Act, 1961 was discriminatory. The Board considered the effect of the above judgment and clarified by its Circular Instruction F.No.11/18/75-ITJ(25) that under the Income-tax Act, 1961 except in the case of income from the dividend and interest on securities, the exemption would be available, only if the source of income was within the areas specified in the Act. 2. Recently the Comptroller and Auditor General of India has pointed out to the Board that in the case of 10 officers belonging to the Scheduled Tribes no tax has been deducted at source in respect of salaries drawn outside the specified areas. The annual returns furnished by the Treasury Officer, Shillong revealed that no tax was deducted from salaries paid to 9 officers for assessment years 1969-70 to 1971-72 and by one officer for assessment years 1964-65 to 1967-68. There was also no demand raised for tax of Rs. 0.50 lakhs (estimated) raised by the Department subsequently by way of assessment in these cases. 3. The Board is distressed to note that the loss of revenue has arises in these cases entirely due to Income-tax Officer's failure to follow the specific instructions contained in the Board's Circular No.F.No.11/18/75-ITJ (25) and his failure to scrutinise the annual return of salary required to be filed by employers under section 206 in Form No.24 prescribed under Rule 35 of Income-tax Rules, 1922. The Board desire that the clarification contained in the above Circular and the instructions in regard to proper verification of annual return of salary (Form No.24) contained in Office Manual Volume II Section 2, Chapter XV, para 8 be reiterated to all the concerned officials immediately.