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TMI Blog1993 (2) TMI 74X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the assessee arising from the cantonment area of Shillong town is exempt under section 10(26) of the Income-tax Act, 1961, merely by reason of the sources of income being located in the Khasi and Jaintia Hills District in spite of the fact that the sources of income of the assessee were at the cantonment area of Shillong ? 2. Whether item 1 of the relevant part appended to paragraph 20 of the Sixth Schedule to the Constitution has not to be read and understood having regard to the provisions contained in sub-paragraphs (1) and (2) of paragraph 20 of the Sixth Schedule to the Constitution for the purpose of determining the scope and effect of section 10(26) of the Income-tax Act, 1961, and whether the Tribunal did not err in law in re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to subparagraph (3) of the said paragraph 20 (as it stood immediately before the commencement of the North-Eastern Areas ( Reorganisation ) Act, 1971 (18 of 1971 any income which accrues or arises to him, (a) from any source in the areas, States or Union Territories aforesaid or (b) by way of dividend or interest on securities...." Arunachal Pradesh and Mizoram are now States, In order that income derived by the assessee is not to be reckoned for the, purpose of the Act, three conditions must be satisfied, namely, (1) the assessee must be a member of a Scheduled Tribe as defined in article 366(25) of the Constitution, (2) the assessee must reside in any area specified in Part I or Part II of the Table appended to paragraph 20 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h (2) of paragraph 10 of this Schedule, no part of the area comprised within the municipality of Shillong shall be deemed to be within the Khasi Hills Districts. " An examination of paragraph 20 of the Sixth Schedule shows that the description of tribal areas has three facets, the first is a description in subparagraph (1) stating that the areas specified in Part II of the Table shall be the tribal areas within the State of Meghalaya. The second facet is the description in sub-paragraph (2) that the reference in the Table to any district shall be construed as a reference to the territories comprised within the autonomous district of that name existing immediately before the day appointed under clause (b) of section 2 of the North-Eastern ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 969 (for short, " the 1969 Act " ). The State of Meghalaya came into existence by virtue of the 1971 Act. The 1969 Act was in force till the coming into force of the 1971 Act. The territories comprised within the autonomous district of Meghalaya, existing immediately before the day appointed under the 1971 Act, are the territories included in the autonomous State of Meghalaya by the 1969 Act. According to section 3 of the 1969 Act, the autonomous State of Meghalaya shall, subject to the provisions of sub-section (2), comprise the area described in two clauses. Clause (1) takes in the United Khasi-Jaintia Hills District as described in sub-paragraph (2) of paragraph 20 of the Sixth Schedule to the Constitution, as it then stood, exclusive of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in the autonomous State of Meghalaya plus some more areas, namely, the areas comprised within the cantonment and municipality of Shillong, which did not form part of the autonomous State of Meghalaya. In other words, while the area specified in Part 11 of the Table includes the larger area (cantonment and municipality area), and narrower connotation is given by sub-paragraph (2) of paragraph 20 as it stood at the time of the 1969 Act. The reference in section 10(26) of the Act is to a member of a Scheduled Tribe "residing in any area specified in Part I or Part II of the Table appended to the Sixth Schedule". The reference is to the area specified in the Table and not to the areas specified in the Table as restricted by sub-paragraph ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s or Union Territories aforesaid. The Government college where the assessee is working is within the cantonment area. Her salary is paid by the State Government of Meghalaya whose capital is in Shillong town. In either view of the case, the income accrues from a source in the areas specified in Part 11 of the Table appended to paragraph 20 of the Sixth Schedule. The third condition is also satisfied, It must, therefore, follow that the assessee "is entitled to exemption under section 10(26) of the Act. We, therefore, answer the questions in the affirmative, that is, in favour of the assessee and against the Revenue. A copy of this judgment under the signature of the Registrar and the seal of the High Court shall be transmitted to the Inco ..... X X X X Extracts X X X X X X X X Extracts X X X X
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