TaxTMI 
TaxTMI 
TaxTMI 
2017 (8) TMI 849
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....income on 30-09-2011, claiming the entire income as exempted from taxation u/s. 10(26B) of the I.T. Act. The assessment u/s. 143(3) of the Act was completed vide order dated 31.01.2014 by disallowing the exemption claimed by the assessee u/s. 10(26B) of the Act. Further, the Assessing Officer added back a sum of Rs. 18,36,040/- to the taxable income of the assessee for the reason that there was delay in payment of bonus. The Assessing Officer also added a sum of Rs. 1,28,92,551/- as interest income for the reason that the assessee had under-reported its interest income. 3.1 For the assessment year 2012-13, the return of income was filed on 07-06- 2013 claiming the entire income as exempted from taxation u/s. 10(26B) of the Act. The assessment was taken up for scrutiny by issuance of notice u/s. 143(2) of the Act. The assessment u/s. 143(3) of the Act was completed vide order dated 18.03.2015, disallowing the exemption claimed by the assessee u/s. 10(26B) of the I.T. Act. Further, the Assessing Officer disallowed ex-gratia payment of Rs. 27,03,939/- on the ground that the payment was effected beyond the due date. The Assessing Officer also disallowed depreciation claimed on vehicle....
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....the Lakshadweep Islands, the assessee is entitled to the benefit u/s. 10(26B) of the Act. The Ld. Sr. Counsel also relied on the judgment of the Hon'ble Allahabad High Court in the case of CIT vs. Harijan Evam Nirbal Varg Avas Nigam (226 ITR 696) and the judgment of the Hon'ble Gauhati High Court in the case of Arunachal Pradesh Forest Corporation Ltd. vs. ACIT (2007) 290 ITR 139. 6. The Ld. DR on the other hand submitted that the assessee is not established by a Central, State or Provincial Act, but a company incorporated under the Companies Act. It was stated that assessee company was doing business and was earning huge profits. It was submitted that the assessee has not been able to prove that its activities and earning of income has benefited or promoted the interest of the members of the scheduled tribe living in the Lakshadweep Islands and therefore provisions of section 10(26B) of the Act cannot have application to the facts of the instant case. 7. We have heard the rival submissions and perused the material on record. The assessee was established on 22.12.1987 under the Companies Act, 1956. The shares of the assessee-Company is entirely held by the Fisheries Department of....
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....factories for a total annual expenditure of Rs. 162 Lakhs towards salary. And an amount of Rs. 65 lakhs were paid during April 2016 to Feb 2017 for the procurement of local produce to provide market for the islanders who are members of the scheduled tribes. A true copy of the statement showing the purchases made by the appellant from the Islanders and also the statement showing the salary paid to the staff of the appellant during the year 2010-11 and 2011-12 is produced herewith and marked as Annexure B. Annexure B B) The appellant is also entrusted by operation of Port Control Towers in Lakshadweep by the Union Territory of Lakshadweep, Administration. For operation and maintenance of Port Control Towers a commission of 2.5% is provided to the appellant as stated above. Employment to 74 islanders who are members of the scheduled tribes are given in the above division for total annual expenditure of Rs. 229 lakhs towards salary. C) The appellant is also engaged in the operation and maintenance of vessels between mainland and Lakshadweep Island Union Territory of Lakshadweep consist of 36 islands and are peculiarly located in such a manner that there is no direct connection ei....
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....ion facility available to the residents of the Lakshadweep islands. The assessee is also the nodal agency for channelizing of loan to islanders under the NSTFDC (National Scheduled Tribe Finance and Development Corporation) Scheme. All the activities of the assessee are directly or indirectly benefiting the Islanders who are all Scheduled Tribes living in remote areas and not for any commercial purpose. It is also clear from the Annexure C and C1 of the paper book that the employment preferences are given to scheduled tribes living in Lakshadweep Islands. The assessee has also filed the roaster list of its employees and it is clear that majority of the employees of the assessee-Company are Islanders. From the totality of the activities mentioned above, and the employment preferences given to the local Islanders, it is abundantly clear that the assessee-Company is established for the development of the scheduled tribe community in the Lakshadweep Islands. Having understood the assessee-Company and its activities, now let us examine the relevant provisions, namely, section 10(26B) of the I.T. Act and whether the assessee would be entitled to the benefit of section 10(26B) of the Act.....
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....itution or Association 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. 7.6 From the above, two categories of entities are forthcoming (i) corporation established by a Central, State or Provincial Act (statutory corporations) and (ii) other body, Institution or Association being wholly financed by the Government. The statute does not by any stretch of imagination makes exclusion of entities based on nature of incorporation. Any entities be it a company, firm, society, association, institution which are wholly financed by the Government are entitled to the benefit under Section 10(26B). A close reading of the Section 10(26B) also makes it clear that the object for which a statutory corporation, or any other body, association or institution is created is the crucial aspect for determining the eligibility for availing benefit u/s. 10(26B). The Assessing Officer and the CIT(A) wrongly assumed that the activities carried on by the assessee-company are not for the benefit of the scheduled tribes inhabiting the Lakshadweep Islands. According to us, the paramount consideration ....