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of <h1>Tribunal Upholds Income Exemption in Tribal Area Status Dispute</h1> <h3>INCOME TAX OFFICER. Versus BIJOY RYNDEM.</h3> INCOME TAX OFFICER. Versus BIJOY RYNDEM. - TTJ 026, 522, Issues:Claim of income exemption under s. 10(26) of the IT Act, 1961 based on tribal area status for business activities in Shillong; Inclusion of income from transport business and tarpaulin sales; Taxability of interest income from loans given outside tribal area; Interpretation of Sixth Schedule to the Constitution of India.Analysis:The appeals by the Revenue centered around the assessee's claim of income exemption under s. 10(26) of the IT Act, 1961, based on the tribal area status of business activities in Shillong. The Income-tax Officer (ITO) included various sources of income in the total income, disputing the assessee's claim. The ITO contended that certain business activities were conducted outside the tribal area, specifically in Police Bazar, Shillong, which he deemed ineligible for exemption under cl. 20 of the Sixth Schedule to the Constitution of India.Regarding the transport business income, the ITO included 50% of the income, citing that a portion of the business activity was outside the tribal area. Similarly, in the case of tarpaulin sales, the ITO included a portion of the profit due to sales made in Calcutta, which was considered outside the tribal area. Additionally, the interest income from loans given to a resident of Police Bazar was also deemed includible by the ITO.The matter was appealed before the Appellate Tribunal, where the assessee's counsel argued for complete income exemption, emphasizing that all business activities were managed from within the tribal area. The Tribunal considered previous decisions and the interpretation of cl. 20 of the Sixth Schedule, ultimately upholding the assessee's claim for exemption under s. 10(26).However, the Tribunal directed the ITO to reexamine certain aspects, such as the tarpaulin business sales at Calcutta and the transport business activities, to ensure accurate determination of tax liability. The Tribunal found in favor of the assessee on most grounds, dismissing the Revenue's appeals on other points. Consequently, the appeals by the Revenue were partly allowed, with specific directions for further examination by the ITO on certain aspects for fresh disposal.
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