2019 (10) TMI 242 - AT - Income Tax

Tribunal upholds disallowance of tax exemption for Andaman & Nicobar tribes

The Tribunal upheld the disallowance of the exemption claimed under section 10(26) of the Income Tax Act, 1961, as the competent authority had not ... Claim for exemption u/s 10(26) - Claim supported and substantiated by the assessee on the basis of proposal forwarded by the Andaman & Nicobar Island administration to the Government of India for providing such exemption to the tribes of Andaman & Nicobar Island - HELD THAT:- In reply to a query raised by the bench, the learned counsel for the assessee has submitted that the proposal sent by the Andaman & Nicobar Island administration to the Government of India for providing exemption u/s 10(26) to the tribes of Andaman & Nicobar Island is still pending with the Government of India. It is thus clear that the exemption available u/s 10(26) is still not extended by the competent authority to the tribes of Andaman & Nicobar Island so far and the claim of the assessee for exemption u/s 10(26), therefore, cannot be allowed. We therefore, uphold the impugned order passed by the Ld. CIT(A) confirming the disallowance made by the AO for exemption u/s 10(26) of the Act and dismiss this appeal of the assessee. Issues: Disallowance of exemption u/s 10(26) of the Income Tax Act, 1961Analysis:1. Issue: The primary issue in this case is the disallowance of the assessee's claim for exemption u/s 10(26) of the Income Tax Act, 1961.Analysis: The assessee, an individual, claimed exemption of &8377; 90,75,362/- u/s 10(26) in the return of income for the relevant year. The Assessing Officer (AO) disallowed this claim after finding that although the assessee belonged to a Scheduled Tribe, she did not reside in the specified regions as per the Act. The AO's decision was based on the absence of the assessee's residence in the areas mentioned in the relevant provisions of the Act, leading to the disallowance of the claimed exemption.2. Issue: Challenge of the AO's disallowance before the Ld. CIT(A) and subsequent confirmation.Analysis: The assessee challenged the AO's disallowance before the Commissioner of Income Tax (Appeals) [CIT(A)]. During the appellate proceedings, the assessee supported her claim with a proposal from the Andaman & Nicobar Island administration seeking exemption for the tribes of the region. However, the Ld. CIT(A) upheld the AO's decision, noting that the proposal was pending with the Government of India, and no formal acceptance or amendment to section 10(26) had been made. Consequently, the disallowance was confirmed by the Ld. CIT(A).3. Issue: Tribunal's decision on the appeal against the Ld. CIT(A)'s order.Analysis: The Tribunal considered the arguments presented by both sides along with the available evidence. It was noted that the exemption under section 10(26) had not been extended to the tribes of Andaman & Nicobar Island by the competent authority. As a result, the Tribunal upheld the Ld. CIT(A)'s decision to confirm the disallowance made by the AO regarding the exemption u/s 10(26) and dismissed the assessee's appeal.In conclusion, the Tribunal upheld the disallowance of the exemption claimed u/s 10(26) of the Income Tax Act, 1961, as the competent authority had not extended this exemption to the tribes of Andaman & Nicobar Island. The decision was based on the absence of formal acceptance or amendment by the Government of India regarding the proposal for exemption.