Held in the case of  146 taxmann.com 271 (SC) Association of Old Settlers of Sikkim V Union of India the Hon’ble Supreme Court struck down the proviso of Section 10(26AAA) which denies the exemption to a sikkimese woman who marries a non-sikkimese & ruled out the proviso as unconstitutional.
Section 10(26AAA) of the Income Tax Act, 1961 grant exemption to
However, the exemption to Section 10(26AAA) is not available to a sikkimese woman who on or after 01.04.2008 marries an individual who is not an sikkimese as per the aforementioned definition.
The Exemption benefits is also not available to the Individual Indians who have settled in the state of Sikkim prior to the merger of Sikkim with the Independent India on 26.04.1975 & results in discrimination.
The Hon’ble Supreme Court of India struck down the proviso to Section 10(26AAA) as being ultra vires Article 14,15 & 2 of the Constitution of India.
The Hon’ble Supreme Court of India further held that the all the citizens of India, having a domiciled in Sikkim on the day of merger i.e. on or before 26.04.1975 must be covered under the definition of Sikkimese as per Explanation to Sikkimese & accordingly they are also entitled for exemption u/s 10(26AAA) of the Income Tax Act, 1961. Further, the Hon’ble Apex Court also direct the Union of India to make suitable amendments in Section 10(26AAA) so as to extend the benefit of exemption u/s 10(26AAA) to the old settlers of Sikkim & also to those Sikkimses woman marries a person other than Sikkimese.