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TMI Blog2018 (10) TMI 283X X X X Extracts X X X X X X X X Extracts X X X X ..... ndra Poojari, AM Shri George George K, JM For the Appellant : Sri.A.Santham Bose, CIT-DR For the Respondent : None ORDER PER GEORGE GEORGE K., JM These appeals at the instance of the Revenue are directed against two separate orders of the CIT(A), both dated 06.04.2018. The relevant assessment years are 2013-2014 and 2014-2015. 2. Since common issues are raised in these appeals, they were heard together and are being disposed off by this consolidated order. 3. The common issue raised in both the appeals is whether the CIT(A) is justified in granting the assessee benefit of section 10(26B) of the I.T.Act ? 4. Brief facts of the case are as follows:- The assessee is a Government of India undertaking and its primary objective is development and upliftment of members of the Scheduled Tribe community in the Union Territory of Lakshadweep. For the assessment years under consideration, the assessee had filed its returns of income claiming its entire income as exemption u/s 10(26B) of the I.T.Act. The assessments u/s 143(3) of the I.T.Act were completed by denying the exemption claimed by the assessee u/s 10(26B) of the I.T.Act. 5. Aggrieved, the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... civil supplies operations, industrial raw materials and finished industrial products. iv) To carry on the business of operation of ships, both passenger and cargo and also acquire ships for operation and act as agents for operating and maintenance of both passengers and cargo vessel of UT of Lakshadweep Administration (UTLA) and other Government and private bodies. 7.1 It is stated in the written submission that the assessee company undertakes various activities for promoting the interest of scheduled tribe living in the Lakshadweep Islands. The relevant portion of the written submission for ready reference, reads as follows: The appellant is involved in the following activities: A) Desicated Coconut Powder manufacturing units and Oil Extraction units at Kadamat, Androth, Amini and Kalpeni and Tuna Canning Factory at Minicoy, Lakshadweep. These units are run for social objectives of providing employment to the local islanders and to provide market for their local produce. These units are all at a loss. Employments to 110 islanders who are members of the scheduled tribes are given in the above factories for a total annual expenditure of ₹ 162 Lakhs towards ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ional Scheduled Tribe Financial Development of Corporation (NSTFDC). The appellant is entrusted with the disbursement and recovery of loans granted to scheduled tribes from NSTFDC. There is no revenue from this activity. The appellant is carrying out the said activity only for the benefit of the Scheduled Tribes in Lakshadweep. E) The appellant coordinates and monitors the procurement of vessels on behalf of UTL. The funds for this purpose are transferred to the appellant and disbursement is made as per the instruction of UTL. There is no revenue from this activity. 7.2 On a perusal of the Financial Statements of the assessee for the assessment years 2011-12 and 2012-13, it is clear that the assessee company had undertaken the above activities. The assessee company for the relevant assessment years were operating tuna canning factory and desicated coconut powdering manufacturing factory and oil extracting units in Lakshadweep Islands. It was marketing the local produce like tuna, coconut etc. and providing employment to the Islanders. The assessee is also operating ships owned by the Lakshadweep administration which is the main transportation facility available to the res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ced by Government) where such corporation or other body or institution or association has been established or formed for promoting the interests of the members of the Scheduled Castes or the Scheduled Tribes or backward classes or of any two or all of them. (a) Scheduled Castes and Scheduled Tribes shall have the meanings respectively assigned to them in clauses (24) and (25) of article 366 of the Constitution; (b) backward classes means such classes of citizens, other than the Scheduled Castes and the Scheduled Tribes, as may be notified- (i) by the Central Government; or (ii) by any State Government, as the case may be, from time to time; 7.5 The above provision makes it clear that the income of the following entities are eligible for exemption: a) The income must be of Corporation established by a Central, State or Provincial Act where such corporation has been established or formed for promoting the interest of the members of schedule castes or schedule tribes or backward classes or any of two or all of them. b) The income must be of any other body, Institution or Association being wholly financed by the Government where such other body, Institut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has some other main objects besides one of the objects for promoting the interests of the members of the Scheduled Castes, there seems to be no good reason to deny the exemption, envisaged by Clause (26B). The principle of severability of common law is well recognised in our country. In so far as the income of the assessee from the main object No.1, is severable from the income accruing to it from other main income attributable to the housing schemes undertaken for promoting the interests of the members of the Scheduled Castes will be entitled to exemption under Clause (26B). 7.8 Adopting the above observation and relying as Articles 46 and 47 of the Constitution of the India, Gauhati High Court in its judgment reported in 290 ITR 139 held that: Clause (26B), therefore, deserves to be interpreted in such a way as to promote the schemes undertaken for ameliorating the lot of the members of the Scheduled Castes or the Scheduled Tribes or of both. A corporation or other bodies may be formed having one of the objects for promoting the interests of the members of the Scheduled Castes or the Scheduled Tribes or of both and if strict interpretation is put on Clause (26B), then ..... X X X X Extracts X X X X X X X X Extracts X X X X
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