TaxTMI 
TaxTMI 
2018 (10) TMI 283
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....or the assessment years under consideration, the assessee 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. ....
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....ning Factory at Minicoy, Lakshadweep. These units are run for social objectives of providing employment to the local islanders 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 divi....
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....t assessment years were operating tuna canning factory and desicated coconut powdering manufacturing factory and oil extracting units in Lakshadweep Islands. It was marketing the local produce 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 abun....
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....ng entities are eligible for exemption: a) The income must be of Corporation established by a Central, State or Provincial Act where such corporation 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. 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....
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....rt in its judgment reported in 290 ITR 139 held that: "Clause (26B), therefore, deserves to be interpreted in such a way as to promote the schemes undertaken for ameliorating the lot of the members of the Scheduled Castes or the Scheduled Tribes or of both. A corporation or other bodies may be formed having one of 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....