SECTION 10(26A) – RESIDENTS OF LADAKH DISTRICT
153. Exemption of income accruing to residents of Ladakh – Scope thereof explained
1. References have been received by the Central Board of Direct Taxes seeking information regarding the exemption from income-tax available to residents of Ladakh in general and Government officers stationed there in particular. The position in law as obtaining at present is explained in the following paragraphs.
2. The provisions in the Income-tax Act providing for exemption of certain incomes in the case of residents of Ladakh are incorporated in clause (26A) of section 10 as amended recently by the Finance (No. 2) Act, 1971. Under this clause, as it stood prior to its amendment, income accruing or arising to a resident of Ladakh from any source in that district or outside India was completely exempt from income-tax for all assessment years from 1962-63 to 1969-70 (inclusive). The exemption was available only in the case of persons other than Government servants, who, having been resident in Ladakh district in the previous year relevant to the assessment year 1962-63, were also resident in that district during the relevant previous year for which the exemption is sought.
3. Under the relevant provision, an individual is considered to be a resident in Ladakh in any previous year if, he
a. was in that district in that year for a period or periods amounting in all to 182 days or more; or
b. maintained or caused to be maintained for him a dwelling place in that district for a period or periods amounting in all to 182 days or more in that year, and had been in that district for 30 days or more in that year; or
c. having within the four years preceding the relevant year been in that district for a period or periods amounting in all to 365 days or more, and was in that district for a period or periods amounting in all to 60 days or more in that year.
A Hindu undivided family, a firm or other association of persons would normally be presumed to be resident in that district in the relevant previous year except where, during that year, the control and management of its affairs was situated wholly outside that district. A company would be deemed to be resident in that district if it is a company registered under any law in force in the State of Jammu and Kashmir and had its registered office in that district in the relevant previous year, or if the control and management of its affairs was, during the year, wholly situated in that district irrespective of its place of registration.
4. Under the amendment of clause (26A) of section 10 by the Finance (No. 2) Act, 1971, the period of exemption has been extended by another five years, namely, the assessment years 1970-71 to 1974-75. Further, the exemption has now been made available also to Government servants, with retrospective effect from the assessment year 1962-63, subject to the fulfillment of other conditions mentioned in the provision, as already explained. The effect of this change would be that Government employees who were resident in the district of Ladakh (in accordance with the criteria set forth in para 3 above) during the financial year 1961-62, which is the “previous year” relevant to the assessment year 1962-63, and were also similarly resident in that district in a later financial year, will now be entitled to claim refund of the tax paid by them in respect of their income of such later financial year which arose from a source in that district or outside India (but not in respect of their income arising from any source in India excluding Ladakh).
5. Any Government employee who comes within the scope of these provisions, may address his claim for refund to the Income-tax Officer by whom he is assessed. In a case, where no assessment has been made for the relevant year (due to the correct amount of tax having been deducted at source from the salary), the claim should ordinarily be made before (i) expiry of four years from the end of the assessment year, where it relates to the assessment year 1967-68 or any earlier year, or (ii) April 1, 1972, where it relates to the assessment year 1968-69 or 1969-70. Claims made in such cases up to March 31,1972 Will, accordingly, be in time for the assessment years 1967-68,1968-69 and 1969-70, i.e., in respect of the income of the financial years 1966-67, 1967-68 and 1968-69. In regard to earlier years, the statutory time limit for making the claim has already expired. In cases where an assessment has been made, the claim for rectification of such assessment may be made any time up to four years from the date of the assessment. Even on this basis, some claims may be out of time. However, having regard to the special circumstances in which the claim could not be made earlier, the Board will be prepared to consider relaxation of the time limit in such cases. The necessary requests in this behalf may be addressed to the Secretary, Central Board of Direct Taxes, New Delhi, for this purpose.
Circular : No. 67 [F. No. 152(15) 71-TPL], dated 23-9-1971.