Tax Exemption is Allowable to Officer belong to Scheduled Tribe: Gauhati HC Upholds Refund of Income Tax Deducted u/s 10(26) from Salary [Read Order]

The Gauhati High Court allowed a request that the central government reimburse the income tax withheld from the wages of a BSF Assistant Commandant who is a member of the Scheduled Tribe. The bench held that Section 10(26) of the Income Tax Act, 1961, which prescribes tax exemption to members of recognised Scheduled Tribe communities posted in specified areas.

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The appellant revenue challenged  the order passed by the Single Judge allowing the same by holding that the petitioner, therein, i.e. sole respondent, herein, was entitled to the benefits accruing to him under the provisions of Section 10(26) of the Income Tax Act, 1961, with further direction to the appellants, herein, to process the request for refund of income tax deducted from the salary of the sole respondent and to remit the same to him, forthwith.

The sole respondent, Chyawan Prakash belonged to the Meena Community which is considered as a Scheduled Tribe under the Constitution Scheduled Tribe State Order, 1951, in the State of Rajasthan. The sole respondent was recruited in the Border Security Force in the year 1991 as an Assistant Commandant.

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The appellants proceeded to make deductions towards the payment of income tax from the salary of the sole respondent, herein, the sole respondent by contending that being a member of recognized Scheduled Tribe community, is entitled to the benefits flowing from the provisions of Section 10(26) of the Income Tax Act, 1961, and that such deduction from his salary was not permissible; had approached the income tax authorities at Silchar and Agartala where he was so posted, seeking refund of the income tax so deducted from his salary in view of the exemption available to him under the provisions of Section 10(26) of the Income Tax Act, 1961.

The income tax deducted from the salary of the sole respondent not having been refunded, he had approached the writ Court by way of instituting a writ petition being WP(c)404/2023, praying for a direction upon the respondent authorities to forthwith refund the income tax deducted from his salary by reckoning that he was entitled to the exemption provided under the provisions of Section 10(26) of the Income Tax Act, 1961.

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Counsel appearing for the sole respondent  by referring to the provisions of Section 10(26) of the Income Tax Act, 1961, has contended that the same was considered by the Full Bench of this Court in the case of Pradip Kr. Taye & ors.(supra), and had reached a conclusion that even a government employee on being posted out of his place of origin to a place falling within the area specified under the provisions of Section 10(26) of the Income Tax Act, 1961, would be entitled to the exemption flowing therefrom.

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The court found that there is no dispute that the sole respondent belongs to a notified Scheduled Tribe community of the State of Rajasthan. The respondent, during his service career, had been posted out of the State of Rajasthan and had also rendered service in areas specified under the provisions of Section 10(26) of the Income Tax Act, 1961.

Although Mr. Keyal  counsel for the appellants had, earlier in the course of consideration of the present proceeding, raised an issue as to whether the sole respondent, herein, would be entitled to claim such income tax exemption for the period he was posted at Silchar, Assam.

The Court thus dismissed the appeal preferred by the Commissioner of Income Tax against single judge direction to process the request for refund of income tax deducted from the Respondent's salary.

The Respondent belongs to the Meena Community which is considered as a Scheduled Tribe under the Constitution Scheduled Tribe State Order, 1951, in the State of Rajasthan. He was recruited in the Border Security Force in the year 1991 as an Assistant Commandant.

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A division bench of Chief Justice Vijay Bishnoi and Justice N. Unni Krishnan Nair that the sole respondent, herein, while being posted at Agartala, Tripura; was so posted in a specified area in terms of the provisions of Section 10(26) of the Income Tax Act, 1961, it is to be held that he would be entitled to the benefits of exemption from income tax flowing from the provisions of Section 10(26) of the Income Tax Act, 1961.

The court dismissed the department’s appeal and held that Section 10(26) of the Income Tax Act, 1961, which prescribes tax exemption to members of recognised Scheduled Tribe communities posted in specified areas.

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