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TMI Blog1976 (2) TMI 2X X X X Extracts X X X X X X X X Extracts X X X X ..... m. The Assam Secretariat building and office, which constitute his place of work was within that quarter of the town which is included in Shillong Municipality and is not a part of the area described in para. 20 of the Sixth Schedule. The Income-tax Officer took the view that the assessee's income from salary in the relevant year arose in the non-scheduled area and, as such, is not covered by the exemption provided under section 10(26)(a) of the Act. The assessee claimed that his income from salary had accrued or arisen within the specified area and, as such, he was entitled to the exemption. In the alternative, he contended that this was not a valid condition for denying him the benefit of the exemption under section 10(26). The Income-tax Officer overruled these contentions and completed the assessment subjecting the assessee's salary to tax. The assessee thereupon filed a petition under article 226 of the Constitution in the High Court for impugning the assessment orders and the notices of demand for the assessment year 1970-71, on the ground that sub-clause (a) of section 10(26) of the Act is invalid and ultra vires article 14 of the Constitution. The writ petition was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as follows : " Section 4(3)(xxi) : Any income 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 A or Part B of the Table appended to Paragraph 20 of the Sixth Schedule to the Constitution or in the Union Territories of Manipur and Tripura, provided that such member is not in the service of Government. " The 1961 Act then re-enacted this clause as under : " 10(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 Union Territories of Manipur and Tripura, who is not in the service of Government, any income which accrues or arises to him. (a) from any source in the area or Union Territories aforesaid, or (b) by way of dividend or interest on securities. " The State of Nagaland (Adaptation of Laws on Union Subjects) Order, 1965, added with effect from the 1st December, 1963, the State of Nagaland also, to the areas, the tribal people of which could claim this exemption. The validity of the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... " 'Scheduled Tribes' means such tribes or tribal communities or parts of or groups within such tribes or tribal communities as are deemed under article 342 to be Scheduled Tribes for the purposes of this Constitution. " Article 342 empowers the President with respect to any State or Union Territory, and where it is a State after consultation with the Governor thereof, by public notification, to specify Tribes or Tribal communities or parts of or groups within tribes or tribal communities which shall for the purpose of this Constitution be deemed to be Scheduled Tribes, as the case may be. Clause (2) of this article empowers Parliament to exercise the same power by enacting a law. The respondent belongs, to the Jaintia Scheduled Tribe which is one of the Scheduled Tribes notified under article 342(1). The first condition for the applicability of section 10(26) was thus indubitably satisfied. Part II of the Table appended to paragraph 20 of the Sixth Schedule of the Constitution, inter alia, specifies the United Khasi-Jaintia Hills District as one of the tribal areas. According to the averments in the writ petition, the respondent is a permanent resident of the United Khasi-Jai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ven indirectly questioned. The contention of the revenue, there, was that the exemption from income-tax was given to members of certain Scheduled Tribes, due to their economic and social backwardness ; that it was not possible to consider Government servants as socially and economically backward and hence the exemption was justly denied to the assessee, who was a Government servant having income from salary. It was further urged by the revenue that once a tribal becomes a Government servant, he is lifted out of his social environment and assimilated into forward sections of society and, therefore, he needs no more any crutch to lean on. These arguments were found to be irrelevant and unsustainable. In that context, the court observed : " The exemption in question was not given to individuals either on the basis of their social status or economic resources. It was given to a class. Hence individuals as individuals do not come into the picture. We fail to see in what manner the social status and economic resources of a Government servant can be different from that of another holding a similar position in a corporation or that of a successful medical practitioner, lawyer, archit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reedom to select and classify persons, districts, goods, properties incomes and objects which it would tax, and which it would not tax. So long as the classification made within this wide and flexible range by a taxing statute does not transgress the fundamental principles underlying the doctrine of equality, it is not vulnerable on the ground of discrimination merely because it taxes or exempts from tax some incomes or objects and not others. Nor the mere fact that a tax falls more heavily on some in the same category, is by itself a ground to render the law invalid. It is only when within the range of its selection, the law operates unequally and cannot be justified on the basis of a valid classification, that there would be a violation of article 14. (See East India Tobacco Co. v. State of Andhra Pradesh ; Vivian Joseph Ferriera v. Municipal Corporation of Greater Bombay ; Jaipur Hosiery Mills v. State of Rajasthan). The validity or otherwise of the classification of income envisaged by sub-clause (a), with reference to the source of income, for the purpose of the exemption under section 10(26) is to be judged in the light of the above principles. Classification for purposes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses of new industrial undertakings employing displaced persons, etc. It is not necessary to multiply such instances. Suffice it to say that classification of sources of income is integral to the basic scheme of the 1961 Act. It is nobody's case that the entire scheme of the Act is irrational and violative of article 14 of the Constitution. Such an extravagant contention has not been canvassed before us. Thus, the classification made, by the aforesaid sub-clause (a) for purposes of exemption is not unreal or unknown. It conforms to a well-recognised pattern. It is based on intelligible differentia. The object of this differentiation between income accruing or received from a source in the specified areas and the income accruing or received from a source outside such areas, is to benefit not only the members of the Scheduled Tribes residing in the specified areas but also to benefit economically such areas. If the contention advanced by Mr. Lahiri is accepted and a member of the Scheduled Tribe residing in a specified area is held entitled to the exemption irrespective of whether the source of his income lies within or outside such areas, it will lead to potentially mischievous res ..... X X X X Extracts X X X X X X X X Extracts X X X X
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