Gauhati H.C : The benefit of exemption thereunder being extendable to the petitioners, consequential reliefs by way of annulment of the impugned orders and the related assessment proceedings.

High Court Of Gauhati

Neepco Tribal Employees’ Welfare Association vs. Union Of India & Ors.

Section 10(26), Art. 342, Art. 366(25)

Asst. Year 2000-01 to 2002-03

Amitava Roy, J.

Writ Petn. No. 200 (SH) of 2001

22nd June, 2005

Counsel Appeared :
S.P. Sharma & B.K. Dey Roy, for the Petitioners : V.K. Jindal, L. Lyndoh, R. Deb Nath, J.K. Joshi, U. Bhuyan & P. Dey, for the Respondents
JUDGMENT
Amitava Roy, J. :
This batch of writ petitions raise a common question pertaining to the true purport of s. 10(26) of the IT Act, 1961 (hereinafter referred to as the “Act”). Contending that the benefit of exemption thereunder being extendable to the petitioners, consequential reliefs by way of annulment of the impugned orders and the related assessment proceedings have been prayed for.
By separate orders passed at the time of issuance of the rule, this Court had granted interim protection staying the realisation of the tax assessed denying the exemption. I have heard Mr. S.P. Sharma, learned counsel for the petitioners, Mr. U. Bhuyan, learned counsel for the Department and Mr. V.K. Jindal, senior advocate for the North Eastern Electrical Power Corpn. Ltd. (hereinafter referred to as the “NEEPCO”). A brief narration of the individual facts is advisable. The petitioner in Writ Petn. (C) No. 200 (SH)/2001 is a registered association comprised of the members of the Scheduled Tribes community serving in the Department. According to it, the members thereof by virtue of their status as members of the Scheduled Tribes under Art. 366(25) of the Constitution of India have been enjoying the benefit of tax exemption envisaged under s. 10 (26) of the Act while posted in the specified areas as mentioned thereunder. By the impugned communication dt. 29th June, 2001, the ITO (TDS), Ward-3, Shillong, directed deduction of tax from the salary of the members of the petitioner association. Accordingly, the concerned authority of NEEPCO issued letters dt. 20th July, 2001, to the aggrieved members of the association requiring them to furnish exemption certificates from the IT authorities with particulars for calculation and deduction of tax from  their  salaries.  The  Departmental  authorities  having  been  approached  for  the  income-tax  exemption certificates, by the impugned communication dt. 7th Aug., 2001, the concerned members of the association were informed, for reasons recorded therein, that they were not covered under s. 10(26) of the Act.
The petitioner in Writ Petn. (C) No. 340(SH)/2002, a member of the Kachari community of Assam belonging to the recognised Scheduled Tribe of the State is aggrieved by the impugned notice dt. 23rd July, 2002, issued under s. 142 of the Act by the ITO, Ward-3, Shillong, asking her to file the return of her income for the asst. yrs. 2001-02 and 2002-03. Her representations before the Departmental authorities contending that she was entitled to the exemption under s. 10(26) of the Act, having failed to evoke any response and she being again asked by the impugned communication dt. 8th Aug., 2002, to submit her IT return, she is before this Court.The petitioner in Writ Petn. (C) No. 14(SH)/2004 who, at the relevant time was serving as a Dy. Manager in the Engineering and FQA Department of Regional Head Quarters of the Power Grid Corpn. of India Ltd. at Shillong belongs to Miri (Mishing) tribe, a recognised Scheduled Tribe of the State of Assam. She initially submitted an application to the ITO, Ward-3, Shillong for issuing tax exemption certificate under s. 10(26) of the Act. However, due to non-issuance thereof, her employer started deducting tax at source from her salary every month for which she was compelled to file her return claiming therein the refund of TDS. She filed her first return on 24th June, 1999, at Shillong for the financial year ending 31st March, 1999, and claimed a refund of Rs. 13,064. The AO while refusing to make any refund passed the impugned assessment order dt. 7th Aug., 2000, under s. 154 of the Act and raised a demand of Rs. 8,540. Being aggrieved, the petitioner took the matter in appeal to the CIT(A) which, however, remained undisposed of. Her grievance is that the employer had continued to deduct tax at source from her salary compelling her to file returns of her income for the assessment years, i.e., 2000-01, 2001-02 and 2002-03  claiming  refund.  Lastly,  the  ITO,  Ward-3,  by the  impugned  communication  dt.  28th  March,  2003, intimated the petitioner that she was not entitled to any refund.
The petitioner in Writ Petn. (C) No. 15(SH)/2004 at the relevant time was serving as manager (distribution management services) in the office of the Dy. General Manager (Finance), Power Grid Corpn. of India Ltd., Shillong, on being transferred from Salakati in Kokrajhar District of Assam. He belongs to the Bodo Kachari community, a recognised Scheduled Tribe of the State of Assam. He too, on 4th Feb., 2000, submitted an application to the ITO, Ward-3, Shillong for exemption from payment of income-tax. He was eventually informed on 26th June, 2000, that the matter had been referred to the CIT who had opined that the benefit of tax exemption was not available to him. The petitioner in the circumstances thus, filed his return of income claiming therein refund of the TDS. He submitted his return on 24th June, 1999, for the period ending 31st March, 1999, and claimed a refund of Rs. 5,522. No refund was made and instead, the AO passed the impugned assessment order dt. 7th Aug., 2000, under s. 154 of the Act raising an additional demand of Rs. 2,846. Being aggrieved, the petitioner filed an appeal before the CIT(A), which was dismissed on 19th Aug., 2003. As the employer company continued to deduct tax at source from his salary, the petitioner being without any alternative submitted his returns for the subsequent asst. yrs. 2000-01, 200102, 2002-03, claiming refund. The ITO, Ward-3, Shillong did not allow refund of the amounts claimed and instead issued the impugned notification on 4th April, 2003, under s. 143(1) of the Act intimating him that he was not entitled to any refund.  Miscellaneous Case No. 188(SH)/2001 has been filed on behalf of the Department for modification/cancellation of the order dt. 29th Aug., 2001, passed in Writ Petn. (C) No. 200 (SH)/2001, granting interim relief to the petitioner. While asserting that the petitioners [including the members of the petitioner association in Writ Petn. (C) No. 200(SH)/2001] were not eligible for exemption granted under s. 10(26) of the Act, the Departmental respondents have, in their written response pleaded that the benefit of the above provision of the Act is available only to the members of the Scheduled Tribes comprehended under Art. 366(25) of the Constitution of India of the areas as specified in Part I and Part II of the Table appended to para 20 of the Sixth Schedule to the Constitution and the areas covered by the notification issued by the Governor of Assam under the proviso to sub-para 20 of the Sixth Schedule to the Constitution. As the petitioners are not members of the Scheduled Tribes(s) of the Sixth Schedule area as above, they are not entitled to the benefit of exemption. They being members of the Scheduled Tribes of the State of Assam within the Fifth Schedule to the Constitution of India, their claim is misconceived. The answering respondents have supported the impugned communications and the assessment proceedings contending that the opinion of the Departmental authorities in individual cases relied upon by the petitioners is not binding in law and therefore cannot decisively concede the issue in their favour, as claimed.
Learned counsel for the petitioners has argued that as the employees whose case is espoused in the instant proceedings are admittedly members of the Schedule Tribes, residing in the areas as envisaged in s. 10(26) of the Act, they are apparently entitled to the exemption thereunder and therefore, the impugned decision to the contrary as manifested in the related communications/notifications is per se, illegal, unconstitutional, null and void. According to him, the word “residing” appearing in the above provision of the Act does not connote a domicile of the persons concerned in the area specified therein and a member of the Schedule Tribe within the meaning of Art. 366(25) of the Constitution even if posted in such an area by way of incidence of service is entitled to the benefit of exemption. Mr. Sharma has asserted that having regard to the underlying purpose of the exemption, insistence on the requirement of permanent residence or stay of the concerned member of such Scheduled Tribe would be opposed  to  the  legislative  objective.  Drawing  the  attention  of  the  Court  to  the  interpretation  of  various Departmental authorities, vis-a-vis, s. 10(26) of the Act in the same lines, learned counsel has argued that the respondents are estopped in law from taking a contrary view. Mr. Sharma placed reliance on a decision of the apex Court in ITO vs. N. Takin Roy Rymbai 1976 CTR (SC) 154 : (1976) 103 ITR 82 (SC) and of the Delhi High Court in J. Lalhmingliana vs. Union of India (1989) 77 CTR (Del) 101 : (1989) 177 ITR 24 (Del). In reply, Mr. Bhuyan has urged that the purpose of providing exemption from tax as contemplated in s. 10(26) thereof, is to grant relaxation in the matter of payment of tax out of the income of a member of the Scheduled Tribe belonging to the specified area as well as to provide an impetus to the economic growth of the region. The benefit under the said provision of the Act is accordable only to an indigenous member of the Scheduled Tribe of the area specified and not to any member of any Scheduled Tribe having a fleeting presence in the said area. According to him, therefore, for the applicability of s. 10(26) of the Act, the person concerned has to be a member of the Scheduled Tribe of the area specified with his permanent residence there and in the context of the basal object of such exemption, the word “residing” needs to be interpretated as “having domicile” or “having permanent residence”. Mr. Bhuyan contended that as the members of the petitioner association in Writ Petn. (C) No. 200(SH)/2002 and other writ petitioners are not members of the Scheduled Tribes comprehended in Art. 366(25) of the Constitution of India for the area, having either their domicile or permanent residence there as specified in s. 10(26) of the Act, they are not entitled to the exemption granted thereby and therefore, the impugned decision of the Revenue authorities is perfectly legal and valid. To buttress his arguments, Mr. Bhuyan placed reliance on the following decisions : (i) S.K. Dutta, ITO vs. Lawrence Singh Ingty (1968) 68 ITR 272 (SC); (ii) Dr. Curzon G. Momin vs. I.S. Phukan, ITO (1973) 92 ITR 425 (Gau); (iii) ITO vs. N. Takin Roy Rymbai (supra); (iv) J. Lalhmingliana vs. Union of India (supra); and (v) Onkarlal Nandlal vs. State of Rajasthan AIR 1986 SC 2146.
Mr. Jindal, learned senior counsel for NEEPCO without offering any comment on the competing contentions, has submitted that in terms of the decision of the assessing authorities, the corporation has been deducting tax from the pay/salary of the petitioners at source. I have lent a careful consideration to the arguments advanced. As the assertions centre around cl. (26) of s. 10, it would be essential to first examine the key features thereof.
14. A reading of the said clause presents the following attributes :  (a) the person concerned has to be a member of the Scheduled Tribe as defined in cl. (25) of Art. 366 of the Constitution of India; (b) he must reside in any area specified in Part I or Part II of the Table appended to para 20 of the Sixth Schedule to the Constitution or in the other areas/regions as mentioned therein. (c) The income must accrue or arise to him from any source in such area(s) or by way of dividend or interest on securities. As the said provision of the Act provides for the exemption from exigibility of income-tax, the essential preconditions therefor as envisaged thereby logically will have to be complied with to avail of such benefit.
15. Article 366(25) of the Constitution defines “Scheduled Tribes” as hereunder : “’Scheduled Tribes’ means such tribes or tribal communities or parts of or groups within such tribes or tribal communities as are deemed under Art. 342 to be Scheduled Tribes for the purposes of this Constitution.”  In view of the definition, as above, reference to Art. 342 of the Constitution of India becomes imperative. Under the said provision of the Constitution, the President may with respect to any State or Union Territory, after consultation with the Governor, if it relates to a State, may by public notification specify, any tribe or tribal communities or parts of or groups within tribes or tribal communities, which for the purpose of the Constitution would be deemed to be Scheduled Tribes in relation to that State or Union Territory as the case may be.
16. Pursuant to the above Constitutional provision, the President of India in exercise of powers thereunder has made the Constitution (Scheduled Tribes) Order, 1950 (hereinafter referred to as the “Scheduled Tribes Order”). Clause 2 of the said order reads as follows : “The tribes or tribal communities, or parts of, or groups within, tribes or tribal communities, specified in Parts I to XIX of the Schedule to this order shall, in relation to the States to which those parts respectively relate, be deemed to be Scheduled Tribes so far as regards members thereof are residents in the localities specified in relation to them respectively in those parts of that Schedule.”
17. A bare reading of Art. 342 of the Constitution of India and cl. 2 of the Scheduled Tribes Order makes it obvious that the tribes or tribal communities specified under different parts of the Schedule to the said order, are in relation to the States to which those parts respectively relate, the Scheduled Tribes so far as the members thereof are  residents  in  the  localities  relatable  to  those  parts  of  the  Schedule.  In  other  words,  the  tribes  or  tribalmcommunities or parts or groups within the said tribes or tribal communities are to be identified with the localities of which they are the residents and in relation to which such tribes or tribal communities are declared to be Scheduled Tribes within the meaning of Art. 366(25) of the Constitution of India.
18. While dwelling on the question as to whether a member of the Scheduled Tribe in relation to a particular State as specified in the Schedule Tribes Order would carry with him the same status in another State, the apex Court in Marri Chandra Shekhar Rao vs. Dean, Seth G.S. Medical College (1990) 3 SCC 130, answering in the negative held that the expressions “for the purpose of this Constitution” and “in relation to that State” appearing in Arts. 341 and 342 of the Constitution of India must be harmoniously construed so as to give each of them its full meaning and full effect so that one may not annul the other, it ruled that the Scheduled Castes or Scheduled Tribes of a State are entitled to the privileges and rights under the Constitution in that State, but when a member thereof migrates, he does not and cannot carry any special right or privilege attributed or granted to him in the original State. It was of the view that if such a member is not accorded the rights or privileges of the reserved category of his State in the migrated State, it does not interfere with his constitutional right of equality or of migration or of his carrying on trade or business or profession. This opinion of the Constitution Bench of the Supreme Court found reiteration in the decision of another Constitution Bench in Action Committee on issue of Caste Certificate to Scheduled Castes & Scheduled Tribes in the State of Maharashtra vs. Union of India (1994) 5 SCC 244, where it was held as under : “What is important to notice is that the castes or tribes have to be specified in relation to a given State or Union Territory. That means a given caste or tribe can be a Scheduled Caste or a Scheduled Tribe in relation to the State or Union Territory for which it is specified.”
19. The same view was taken in Municipal Corporation of Delhi vs. Veena (2001) 6 SCC 571 holding that the considerations for specifying a particular caste in a particular group belonging to other backward class (OBC) depending on the nature and extent of disadvantages and social hardships suffered by that caste or group in one State may not exist or be relevant for another State to which such a person may visit by migration.
20. The apex Court in U.P. Public Service Commission vs. Sanjay Kumar Singh (2003) 7 SCC 657 on a survey of the above law rejected a similar claim advanced on behalf of the respondent therein claiming reservation in the State of U.P. on the ground that he belonged to a member of the Scheduled Tribe in the State of Nagaland.
21. The pronounced judicial opinion, therefore, is that a particular tribe notified to be a Scheduled Tribe in relation to a State or a Union Territory in the Scheduled Tribes Order would not automatically be treated to be a Scheduled Tribe in any other State or Union Territory unless it is declared to be so as well in the latter State. It accords fully with the definition of Scheduled Tribe under Art. 366(25) of the Constitution r/w Art. 342 thereof and cl. 2 of the Scheduled Tribes Order. In other words, a notified Scheduled Tribe is clearly identifiable with a corresponding State or Union Territory for which it is declared to be so. An element of particularity in the identification of the tribe vis-a-vis the State or the Union Territory concerned is discernible. It is only if the tribe is also recognised and declared to be a Scheduled Tribe for any other State or any Union Territory that it can be accepted to be so and consequentially a member thereof would be extended the preferential benefits under the Constitution or any other law thereunder. Acceptance of a Scheduled Tribe notified to be so for a particular State or Union Territory to be also a Schedule Tribe for any other State or Union Territory without any declaration therefor would be fundamentally antithetical to the edict of Arts. 342 and 366(25) and the Scheduled Tribes Order.
22. The petitioners in the instant case have not produced any material to establish that the tribes to which they belong have been notified to be the Scheduled Tribes of the State of Meghalaya within which their places of posting are located. There is, however, no dispute that their places of posting are in the area specified in s. 10(26) of the Act. In the above view of the matter, the petitioners cannot be construed to be members of a Scheduled Tribe or Tribes as defined in Art. 366(25) of the Constitution of India vis-a-vis the area mentioned in s. 10(26) of the Act.
23. It is necessary at this stage to trace the incorporation of s. 10(26) of the Act. The Indian IT Act, 1922, did not contain any provision exempting members of the Scheduled Tribes from the levy of income-tax. Such a provision was introduced for the first time by the Finance Act, 1955, in the said Act. The original provision after its amendment and regularisation by s. 3 of the Finance Act, 1958, assumed the form of s. 4(3)(xxi) which is extracted hereinbelow : “Sec. 4(3)(xxi). Any income of a member of a Scheduled Tribe as defined in cl. (25) of Art. 366 of the Constitution, residing in any area specified in Part A or Part B of the Table appended to para 20 of the Sixth Schedule to the Constitution or in the Union Territories of Manipur and Tripura, provided that such member is not in the service of Government.”
24. This clause was re-enacted in the IT Act, 1961, as s. 10(26). The State of Nagaland was added to the areas specified in s. 10(26) by the State of Nagaland (Adaptation of Laws of Union Subjects) Order, 1965, so that the tribal people of the said State could also be extended the benefit of exemption. The words “who is not in the service of the Government” appearing in s. 10(26) of the Act at the inception were deleted by the Taxation Laws (Amendment) Act 42 of the 1970 following the decision of the apex Court in S.K. Dutta, ITO vs. Lawrence Singh Ingty (supra). The provision underwent further amendments, inter alia, through the North Eastern Areas (Reorganisation) (Adaptation of Laws on Union Subjects) Order, 1974, and eventually emerged in the following form : “10(26) in case of a member of a Scheduled Tribe as defined in cl. (25) of Art. 366 of the Constitution, residing in any area specified in Part I or Part II of the Table appended to para 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 dt. the 23rd Feb., 1951, issued by the Governor of Assam under the proviso to sub-para (3) of the said para 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) way of dividend or interest on securities.”
The pre-eminent features of the above provision of the Act have already been noticed and the eligibility criteria as prescribed thereby have to be essentially satisfied to entitle a member of the Schedule Tribe comprehended therein to be sanctioned the benefit of exemption.
The authorities cited at the Bar may now be referred to. The question which arose for consideration of the apex Court in  S.K.  Dutta,  ITO  (supra),  was  whether  the  exclusion  of  Government  servants  from the  purview  of exemption granted by s. 4(3)(xxi) of the Indian IT Act, 1922 and later by s. 10(26) of the IT Act, 1961, was violative of Art. 14 of the Constitution of India. The respondent there belonged to the Mikir Scheduled Tribe and was a permanent inhabitant of the United Khasi-Jaintia Hills District, an autonomous District included in Part A of the Table appended to para 20 of the Sixth Schedule to the Constitution of India. He was a Government servant and in view of the exclusionary clause in the then existing provision of the Act was not entitled to the benefit of exemption. The apex Court held that the exemption under s. 4(3)(xxi) of the Indian IT Act, 1922, and s. 10(26) of the IT Act, 1961, was intended to be provided to the members of certain Scheduled Tribes and, therefore, some of the members of that tribe could not be denied the benefit thereof unless they could be considered as belonging to another well defined class for the purpose of income-tax. It was observed that there was no distinction between the income earned by a Government servant and that earned by persons serving in a company or by a private individual and, therefore, the differentiation borne by the provision was discriminatory. Consequently, as alluded hereinabove, the words “who is not in service of the Government” were deleted from s. 10(26) of the Act by the Taxation Laws (Amendment) Act, 1970 (Act 42 of 1970).
27. In ITO vs. N. Takin Roy Rymbai (supra) the respondent who belonged to the Jaintia Scheduled Tribe and was a permanent resident of the United Khasi-Jaintia Hills Autonomous District under the Sixth Schedule to the Constitution within the State of Meghalaya was denied the benefit of s. 10 (26) of the Act as at the relevant time his place of posting was not within the area described in para 20 of the Sixth Schedule. The consequential assessment orders were impugned by him under Art. 226 of the Constitution of India before this Court challenging the vires of sub-cl. (a) of s. 10 (26) of the Act. This Court upheld the challenge and quashed the impugned notices and the orders of assessment. The apex Court after a detailed survey of the evolution of s. 10(26) of the Act and on an indepth analysis of the essential attributes of the said statutory provision allowed the appeal of the Revenue. On the aspect of the legality of classification for the purpose of exemption between the income of a member of a Scheduled Tribe accruing or arising from an area, State or Union Territory specified in s. 10(26) of the Act, and an income from a source outside such area, the apex Court by noticing s. 5 of the Act, held that chargeability of income was dependent on the locality of the accrual or receipt thereof. Referring to various provisions of the Act exempting certain sources of income from tax while subjecting others thereto, the apex Court concluded that the classification introduced by s. 10(26) of the Act conforms to the legislative pattern of the statute and was based on intelligible differentia. It ruled that the objective behind such differentiation between the two sources of income was not only to benefit the members of the Scheduled Tribe residing in the specified areas but also to upgrade economically, the said areas. The classification was, therefore, upheld.
28. The facts in Dr. Curzon G. Momin (supra) carried the same grievance. The petitioner who belonged to the Garo community, a Scheduled Tribe defined in Art. 366(25) of the Constitution of India and a permanent inhabitant of Garo Hills District which is an area specified in Part A of the Table appended to para 20 of the Sixth Schedule to the Constitution, at the relevant time was posted as Resident Medical Officer at Gauhati under an autonomous institution receiving grant-inaid from the Government of Assam. The petitioner claimed exemption from payment of tax under s. 10(26) of the Act. Being denied, he challenged the action of the Revenue authorities and also questioned the validity of the said provision of the Act. This Court before which the grievance was brought declined to interfere on the ground that the petitioner’s claim was not within the purview of s. 10(26) of the Act as his income did not accrue or arise within the area mentioned in the said clause. It was held that the incorporation of the exemption clause was in the interest of the Scheduled Tribe as well as of the area in which the member thereof resides and by exempting his income accruing or arising in such area not only the members of the tribe are assisted but also the interest of the area is furthered. Holding that the members of the Scheduled Tribes earning income accruing in the tribal area as specified are a well defined class and that there is a reasonable nexus for exempting this class from the other members of the Scheduled Tribe deriving income from a place or area outside the specified areas, this Court concluded that the classification was founded on an intelligible differentia having a rational nexus with the object sought to be achieved by the exemption clause.
29. The same question arose before the Delhi High Court in J. Lalhmingliana vs. Union of India (supra), where the petitioners, who were members of the Scheduled Tribes as defined under Art. 366(25) of the Constitution of India, and in Government service, though permanent residents of the area specified in s. 10(26) of the Act, were posted outside thereof. Their Lordships of the Delhi High Court taking note of the decision of the apex Court in N. Takin Roy Rymbai (supra), negated the contention raised on their behalf that the purpose of s. 10(26) of the Act being to benefit a tribe, a person belonging thereto is entitled to the exemption whether he was physically residing in the specified locality or not.
30. The unequivocal judicial dicta that is decipherable from the above authorities supports the view that the underlying objective of the exemption visualised by s. 10(26) of the Act is not only to benefit the members of the Scheduled Tribe of the area(s) specified therein, but also to advance thereby the economic growth thereof to which the exempted members belong. The insistence, therefore, is for the accrual of the income from any source in such area(s) consequently requiring the physical presence of the member thereat. The expression “residing” therefore, deserves its due interpretation. Does it denote permanent residence or an intention of domicile or whether even a temporary presence in the specified area would be in consonance with the letter and spirit of the provision ?
31. Black’s Law Dictionary defines “reside” as live, dwell, abide, sojourn, stay, remain, lodge. Though the word “residing” read in isolation therefore may not necessarily imply an act of permanent residence, the same has to be construed in the context in which it appears as well as the legislative intent conveyed thereby. The meaning to be accorded to the expression has to be necessarily in tune with the views expressed in N. Takin Roy Rymbai (supra). In Dr. Curzon G. Momin (supra) that the underlying purpose of exemption is not only in the interest of the members of the Scheduled Tribe of the area but also of the locality in which they reside and the situs of source of their income rests. As noticed in the above decision the chargeability of income is dependent upon the locality of accrual or receipt thereof and the scheme and pattern of the Act acknowledges relevance of territorial nexus with the assessable income.
32. As economic advancement of the area is made consequential on the benefit of exemption granted to the members of the Scheduled Tribe(s) thereof, a passing presence of the person concerned in such area(s) would be incompatible with the legislative objective. For the desired contribution by such a member of the Scheduled Tribe for the economic growth of the specified area, his continuous presence is indispensable. The economic prosperity of the area, being inextricably linked with the individual empowerment of the residing member of the Scheduled Tribe (s), any transient stay in the specified area would not sub-serve the purpose comprehended through the exemption. It is a trite principle of statutory interpretation that a construction that effectuates the object of a legislation has to be preferred to the one which defeats it. In my view, therefore, the word “residing” connotes permanent residence of the members of the Scheduled Tribe(s) visualised in s. 10(26) of the Act in the areas specified therein. Had the legislature thought otherwise, the provision would have been accordingly worded.
33. The apex Court in State of Jharkhand vs. Ambay Cements (2005) 1 SCC 368, had held that an exception or exemption provision in a taxing statute has to be construed strictly and that the conditions prescribed for grant thereof have to be scrupulously adhered to.
34. While dealing with the principles of interpretation of statutes in deciphering the true meaning of a word used in an enactment, the apex Court in Workmen of Dimakuchi Tea Estate vs. Management of Dimakuchi Tea Estate AIR 1958 SC 353 held that in case of a doubt about the meaning of a word, it has to be understood in a sense in which it best harmonises with the subject of the enactment and the object which the legislature has in view. The meaning is found not so much in a strictly grammatical or etymological propriety of language nor even in its popular use as in the subject or in the occasion in which it is used and the object to be attained.35. The law on this aspect of statutory interpretation was authoritatively laid down by the apex Court in Dy. Chief Controller of Imports & Exports vs. K.T. Kosalram AIR 1971 SC 1283, in the following words : “In our opinion dictionary meanings, however, helpful in understanding the general sense of the words, cannot control where the scheme of the statute or the instrument considered as a whole clearly conveys a somewhat different shade of meaning. It is not always a safe way to construe a statute or a contract by dividing it by a process of etymological dissection and after separating words from their context to give each word some particular definition given by lexicographers and then to reconstruct the instrument upon the basis of those definitions. What particular meaning should be attached to words and phrases in a given instrument is usually to be gathered from the context, the nature of the subject-matter, the purpose or the intention of the author and the effect of giving to them one or the other permissible meaning on the object to be achieved.”
The above view in a summarised version found reiteration in the decision of the apex Court in Rai Vimal Krishna vs. State of Bihar (2003) 6 SCC 401, where it was held that it is an elementary principle of interpretation that the words in a statutory provision take their colour from the context and object keeping pace with the time when the word is being construed.
Having regard to the underlying legislative intendment in incorporating the exemption provision in the form of s. 10(26) of the Act and the interpretation which s. 10(26) of the Act has received in the hands of the apex Court as well as of this Court in the earlier decisions as well as the judicially evolved principles bearing on the relevant aspect of statutory interpretation, I am of the considered view that a person to be qualified for the exemption contemplated in the above provision of the Act has to be essentially a member of a Scheduled Tribe notified under the Scheduled Tribes Order to be so for the area(s), must be a permanent resident thereof and his income has to accrue from any source located therein. It is only if the above three conditions coexist that the benefit envisaged under the above provision of the Act would be available. The interpretation provided to s. 10(26) of the Act by the Departmental and other authorities to the contrary as is sought to be relied upon on behalf of the petitioners, in view of the judicial determination made in N. Takin Roy Rymbai (supra) and in Dr. Curzon G. Momin (supra) as well as the above is inconsequential and is of no assistance to the petitioners. The petitioners therefore cannot be adjudged to be eligible for the exemption under s. 10(26) of the Act. In the wake of the above, I do not find any merit in the petitions, which are accordingly dismissed. No costs.
 [Citation : 290 ITR 481]
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