Roshan Agarwal Vs DCIT (ITAT Kolkata)
The Income Tax Appellate Tribunal, Kolkata disposed of a batch of five appeals filed by an individual assessee against separate orders passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, under section 250 of the Income Tax Act, 1961. As the appeals involved common issues arising from the same assessee, they were decided through a consolidated order.
In ITA No. 1743/Kol/2025, the principal issue concerned the disallowance of exemption of ₹3,14,25,287 claimed under section 10(26AAA) of the Act. The assessee had filed a return declaring nil income and claimed exemption on income earned within the State of Sikkim. During scrutiny assessment, the Assessing Officer rejected the exemption on the ground that the assessee failed to satisfy the conditions specified in the Explanation to section 10(26AAA), particularly due to non-furnishing of a Sikkim Subject Certificate. The Commissioner (Appeals) upheld this view.
On appeal, the Tribunal noted that the assessee was a Sikkimese individual, residing and carrying on business exclusively within the geographical boundaries of Sikkim, and that the income arose solely from sources located in the State. It was undisputed that the assessee was a bona fide domicile old settler of Sikkim and a member of the Association of Old Settlers of Sikkim, holding a certificate to that effect. The Tribunal referred to the Supreme Court decision in Association of Old Settlers of Sikkim vs. Union of India (2023 SCC Online SC 58), which struck down the earlier restrictive definition of “Sikkimese” in section 10(26AAA) as unconstitutional for excluding old settlers. The Supreme Court held that old settlers are entitled to exemption and must be treated at par with other Sikkimese individuals. The Tribunal also noted the retrospective amendment introduced by the Finance Act, 2023, effective from 1 April 1990, extending the benefit of section 10(26AAA) to individuals or specified relatives domiciled in Sikkim on or before 26 April 1975, even if their names do not appear in the Register of Sikkim Subjects. Following these developments, the Tribunal set aside the order of the Commissioner (Appeals) and directed the Assessing Officer to allow the exemption under section 10(26AAA).
