A critical analysis of Section 10(26) of Income Tax Act 1961

Introduction:

Section 10(26) of Income Tax Act 1961 says

“In the case of a member of a Scheduled Tribe as defined in clause (25) of article 366 of the Constitution, residing in any area specified in Part I or Part II of the Table appended to paragraph 20 of the Sixth Schedule to the Constitution or in the States of Arunachal Pradesh, Manipur, Mizoram, Nagaland and Tripura or in the areas covered by notification No. TAD/R/35/50/109, dated the 23rd February, 1951, issued by the Governor of Assam under the proviso to sub-paragraph (3) of the said paragraph 20 as it stood immediately before the commencement of the North-Eastern Areas (Reorganisation) Act, 1971 (81 of 1971) or in the Ladakh region of the State of Jammu and Kashmir, any income which accrues or arises to him,—

(a) from any source in the areas or States aforesaid, or

(b) by way of dividend or interest on securities;

Meaning of Scheduled Tribe:

Scheduled Tribes means such tribes or tribal communities or parts of or groups within such tribes or tribal communities as are deemed under Article 342 to be Scheduled Tribes for the purposes of this Constitution;

Article 342 in The Constitution of India 1949 says

(1) The President may with respect to any State or Union territory, and where it is a State, after consultation with the Governor thereof, by public notification, specify the tribes or tribal communities or parts of or groups within tribes or tribal communities which shall for the purposes of this Constitution be deemed to be Scheduled Tribes in relation to that State or Union territory, as the case may be

 (2) Parliament may by law include in or exclude from the list of Scheduled Tribes specified in a notification issued under clause (1) any tribe or tribal community or part of or group within any tribe or tribal community, but save as aforesaid a notification issued under the said clause shall not be varied by any subsequent Notification Part XVII Official Language Chapter I Language Of The Union

Meaning of Tribal Areas

(1) Areas inhabited by tribal in the state of of Arunachal Pradesh, Manipur, Mizoram, Nagaland and Tripura

or

The areas specified in Parts 1, II, IIA and III of the table below shall respectively be the tribal areas within the State of Assam, the State of Meghalaya, the State of Tripura and the State of Mizoram.

(2) Any reference in Part I, Part II or Part IIA, Part III of the table below to any district shall be construed as a reference to the territories comprised within the autonomous district of that name existing immediately before the day appointed under clause (b) of section 2 of that North-Eastern Areas (Reorganization) Act, 1971:

PART I

1. The North Cashar Hills District.

2. The Karbi Anglang District.

PART II

1. Khasi Hills District.

2. Jaintia Hills District.

3. The Garo Hills District.

PART IIA Tripura Tribal Areas District.

PART III

1. The Chakma District

2. The Mara District.

3. The Lai District.

or

In the areas covered by notification No. TAD/R/35/50/109, dated the 23rd February, 1951, issued by the governor of Assam.

Or

In the Ladakh region of the State of Jammu and Kashmir,

Gist of The Above Discussion

The income of the tribals of North Easter India and ladakh will be exempted from income tax if the persons fulfills all the below three conditions simultaneously:

(i) He should be a member of Scheduled Tribe as defined in clause (25) of article 366 of the Constitution; and

(ii) He should be residing in the specified tribal areas and

(iii) The income in respect of which exemption is claimed must be an income which accrues or arises to him-

a) from any source in the area, State or Union territories mentioned in the provision, or

b) by way of dividend or interest on securities.

*****

CA NITISH AGARWALLA | [email protected]

Author Bio

Qualification: CA in Practice
Company: N/A
Location: GUWAHATI, Assam, India
Member Since: 07 Jun 2021 | Total Posts: 1

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