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AI Drafter - (New and Powerful) ✕ Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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Issues: Whether a member of a Scheduled Tribe residing in Shillong was entitled to exemption under section 10(26) of the Income-tax Act, 1961 in respect of income arising from the Khasi and Jaintia Hills areas, notwithstanding the proviso to paragraph 20 of the Sixth Schedule to the Constitution of India.
Analysis: Section 10(26) exempts the income of a member of a Scheduled Tribe residing in any area specified in Part I or Part II of the Table appended to paragraph 20 of the Sixth Schedule when such income accrues or arises from any source in those areas. Paragraph 20(2) treats references to Khasi Hills District and Jaintia Hills District as references to the territories comprised within the autonomous district existing immediately before the appointed day under section 2(b) of the North Eastern Areas (Reorganisation) Act, 1971. The proviso carves out the Shillong municipality only for the limited purposes specifically listed in that proviso and does not exclude it for the purposes of the Income-tax Act. The territorial reference in the Sixth Schedule therefore continues to cover Shillong for the exemption in question.
Conclusion: The assessee was entitled to exemption under section 10(26) of the Income-tax Act, 1961, and the departmental objection based on the proviso to paragraph 20 of the Sixth Schedule failed.
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