TaxTMI 
TaxTMI 
2018 (10) TMI 283
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....sessee had filed its returns of income claiming its entire income as exemption u/s 10(26B) of the I.T.Act. The assessments u/s 143(3) of the I.T.Act were completed by denying the exemption claimed by the assessee u/s 10(26B) of the I.T.Act. 5. Aggrieved, the assessee filed an appeal before the first appellate authority. The CIT(A) allowed the claim of the assessee by relying on the order of the Cochin Bench of the Tribunal in assessee's own case for the immediately preceding assessment years, i.e., A.Ys 2011-2012 and 2012-2013 in ITA Nos.18 & 19/Coch/2017 (order dated 01st August, 2017). 6. Aggrieved by the order of the CIT(A), the Revenue has filed the present appeal before the Tribunal. The learned DR supported the findings of the Assessing Officer. None was present on behalf of the assessee, however, we proceeded to dispose off the appeal on merits. 7. We have heard the learned DR and perused the material on record. We find an identical issue was decided in favour of the assessee by the order of the Tribunal for the Asst.Years 2011-2012 and 2012-2013. The relevant finding of the Tribunal reads as follows:- "7. We have heard the rival submissions and perused the material on ....
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....and to provide market for their local produce. These units are all at a loss. Employments to 110 islanders who are members of the scheduled tribes are given in the above 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 be....
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....ce like tuna, coconut etc. and providing employment to the Islanders. The assessee is also operating ships owned by the Lakshadweep administration which is the main transportation 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 activiti....
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....ackward classes or any of two or all of them. b) The income must be of any other body, Institution or Association being wholly financed by the Government where such other body, Institution 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 t....
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....f the objects for promoting the interests of the members of the Scheduled Castes or the Scheduled Tribes or of both and if strict interpretation is put on Clause (26B), then they will be precluded from taking the benefit of exemption. Clause (26B) is, therefore, to be interpreted in such manner as to encourage the corporations or other bodies to undertake the activities to promote the interests of the members of the Scheduled Castes and the Scheduled Tribes more and more, rather than to defeat the purpose of Clause (26B). Viewed from this angle, there is no justification to put a restricted interpretation on Clause (26B)." 7.9 In the light of the above said reasoning and the judicial pronouncements cited supra, we are of the view that the assessee which is financed and established by the Government for promoting the interest of the members of the scheduled tribes living in the Lakshadweep Islands, is entitled to the benefit of section 10(26B) of the I.T. Act. Since we hold that the assessee is entitled to the benefit of section 10(26B) of the I.T. Act, the other grounds relating to the issue of disallowances/additions made by the Assessing Officer has been rendered infructuous an....