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TMI Blog2016 (11) TMI 541X X X X Extracts X X X X X X X X Extracts X X X X ..... come of the petitioners is traceable to the defined area, under the notification of 23.2.1951? - Held that:- From the communication of 27.4.2004 (Annexure-2) of the ITO, North Lakhimpur, it can be seen that the officer was influenced by the fact that Tribal Belt areas of Assam is not mentioned in Section 10(26) of the I.T. Act and on that basis, direction was issued to the college Principal to deduct tax at source from the salary of the petitioners. But the relevant question is whether the concerned area of the petitioners is covered under the notification of 23.2.1951. According to us, this factual aspect needs to be verified by the Tax Officer, without being influenced in any manner by the declaration of the Tribal Belt area by the Assam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision in the present case is Section 10(26), which reads as follows:- 10. In computing the total income of a previous year of any person, any income falling within any of the following clauses shall not be included-... (26) in the case of a member of a scheduled tribe as defined in clause (25) of article 366 of the Constitution, residing in any area specified in Part I or Part II of the Table appended to paragraph 20 of the Sixth Schedule to the Constitution or in the (State of Arunachal Pradesh, Manipur, Mizoram, Nagaland and Tripura) or in the areas covered by Notification No. TAD/R/35/50/109, dated the February 23, 1951, issued by the Governor of Assam under the proviso to sub-paragraph (3) of the said paragraph 20 (as it stood ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and after analyzing the relevant legal provisions, the High Court observed as follows:- . 7. In our view, section 10 sub-section (26) stipulates that in computing the total income of an assessee, who is a member of a scheduled tribe as defined in clause (25) 1 of article 366 of the Constitution, (1) any income, which accrues or arises to him from any source in the areas or States mentioned in sub-section (26), should be excluded, and also (2) income, arising by way of a dividend or interest on security, is also required to be excluded irrespective of the territory from which such accrual has taken place. However, there are certain other conditions, specified under sub-section (26) which make the benefit p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1971 (81 of 1971). We need not examine the purpose of the said notification, but from the tenor of the notification, it appears that the Governor of the then State of Assam was authorized to specify some areas, which are otherwise declared to form part of the tribal areas under paragraph 20 of the Sixth Schedule as it then existed. On such specification, those areas cease to form part of the tribal areas for the purpose of the Sixth Schedule. In exercise of such power, the notification was issued specifying certain areas of the then State of Assam. However, for the purpose of conferring the benefits under section 10 sub-section (26), Parliament thought it fit that notwithstanding the scheme of paragraph 20 of the Sixth Schedule to the Cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Tribal Belt, by the notification of 13th March, 1951. Mr. J.C. Gogoi specifically submits that the later notification (Tribal Belt declaration) has nothing to do with exemption to income tax and therefore is not relevant for the present matter. 9. The respondents on the other hand contend that exemption under Section 10(26) of the I.T. Act is available on fulfillment of certain conditions i.e. firstly, the geographical area of the residents and 2ndly, the source of the area from which, the income is accruing. According to Mr. S. Sarma, the learned standing counsel for the Income Tax Deptt., the exemption under Section 10(26) of the I.T. Act is with reference to income deriving from a specified area, as the people of that area are in n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thout being influenced in any manner by the declaration of the Tribal Belt area by the Assam Governor, through the subsequent notification of 13.3.1951. 12. Having concluded thus, we direct the jurisdictional Income Tax Officer (ITO) to re-visit the petitioners claim for tax exemption, under Section 10(26) of the I.T. Act, by identifying the area where they reside and wherefrom they earn their salary income, in the context of the areas specified in the notification dated 23.2.1951. To enable the ITO to re-decide the issue, the petitioners will file individual representation(s) to claim tax exemption and the matter should thus be finalized with due opportunity to the petitioners. It is ordered accordingly. As the petitioners are protected ..... X X X X Extracts X X X X X X X X Extracts X X X X
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