Page No.# 1/6 vs M/S. Capital Hardware Enterprises And ...
2025 Latest Caselaw 3172 Gua

Gauhati High Court

Page No.# 1/6 vs M/S. Capital Hardware Enterprises And ... on 14 February, 2025

Author: Devashis Baruah

Bench: Devashis Baruah

                                                                              Page No.# 1/6

GAHC010271092017




                                                                    2025:GAU-AS:1541

                          THE GAUHATI HIGH COURT
  (HIGH COURT OF ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH)

                           Case No. : CRP(IO)/273/2017

         UNION OF INDIA
         REP. BY GENERAL MANAGER, NORTHEAST FRONTIER RAILWAY,
         MALIGAON, GUWAHATI, DIST. KAMRUP M, ASSAM, PIN-781011



         VERSUS

         M/S. CAPITAL HARDWARE ENTERPRISES and ANR.
         GANGA MARKET, ITANAGAR, ARUNACHAL PRADESH, PIN-791111, REP. BY
         ITS PROPRIETOR/ATTORNEY

         2:COMMISSIONER OF INCOME TAX TDS
          NER
          MINISTRY OF FINANCE
          DEPTT. OF REVENUE
          GOVT. OF INDIA
         AYAKAR BHAWAN
          CHRISTIAN BASTI
          G.S. ROAD
          GUWAHATI-78100

          For the Petitioner(s)           : Mr. B. Sarmah, Standing Counsel

          For the Respondent(s)           : Mr. S. Chetia, SC, Income Tax


                   Date of Hearing         : 14.02.2025
                   Date of Judgment        : 14.02.2025
                                                                         Page No.# 2/6

                                 BEFORE
                  HONOURABLE MR. JUSTICE DEVASHIS BARUAH

                           JUDGMENT AND ORDER (ORAL)

Heard Mr. B. Sarmah, the learned Standing counsel appearing on behalf of the N.F. Railway and Mr. S. Chetia, the learned Standing counsel appearing on behalf of the Income Tax Department. None has appeared on behalf of the Respondent No.1 in spite of effecting service.

2. The instant proceedings have been initiated by invoking the supervisory jurisdiction of this Court under Article 227 of the constitution challenging the orders dated 06.01.2017 and 09.06.2017 passed in Case No. Ex. A-50/2016 in OAI 178/2006 whereby there was a direction to the NF Railway to pay the tax which was deducted at source to the decree holder i.e. the Respondent No.1 herein on the ground that in terms with Section 10(26) of the Income Tax Act, 1961 (for short 'the Act of 1961'), there is an exemption of Income Tax on Scheduled Tribes.

3. Mr. B. Sharma, the learned standing counsel appearing on behalf of the Railways submitted that a perusal of Section 10(26) of the Act of 1961 would show that the benefit of exemption is granted to those Scheduled Tribes who are listed as Scheduled Tribes in terms with the Constitution (Scheduled Tribes) Order, 1950 whereas both the orders dated 06.01.2017 as well as 09.06.2017 do not show as to whether the applicant was a Scheduled Tribe so recognized within the State of Assam taking into account that the right to the compensation had accrued only within the State of Assam as the consignment was from Jharkhand to North Lakhimpur. He submitted that this aspect having not been considered, the orders dated 06.01.2017 as well as Page No.# 3/6

09.06.2017 are required to be interfered with. In addition to that, the learned counsel submitted that the amount which have been deducted have been deposited in the Income Tax Department and the claimant i.e. the Respondent No.1, if entitled to any exemption, can very well claim refund of the said amount from the Income Tax Department.

4. Mr. S. Chetia, the learned Standing counsel appearing on behalf of the Income Tax Department drawing the attention of this Court to Section 10(26) of the Act of 1961 submitted that a Schedule Tribe which is recognized as per the Constitution (Scheduled Tribes) Order, 1950, insofar as the State of Assam is concerned would be entitled to exemption. He submitted that the well settled law mandates that if the person liable to pay and not otherwise, tax can be deducted at source. The learned counsel submitted that from the materials on record, it is seen that there is no mention whatsoever as to what tribe the decree holder was and as to whether the said decree holder is a recognized Scheduled Tribe within the State of Assam. He therefore supported the contention of the learned Standing counsel appearing on behalf of the petitioner.

5. This Court had duly heard the learned counsels appearing on behalf of the parties and has perused the materials on record.

6. Section 10(26) of the Act of 1961 reads as under:

"10. Incomes not included in total income.--In computing the total income of a previous year of any person, any income falling within any of the following clauses shall not be included--

(26). in the case of a member of a Scheduled Tribe as defined in clause (25) of article 366 of the Constitution, residing in any area specified in Page No.# 4/6

Part I or Part II of the Table appended to paragraph 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, dated the 23rd February; 1951, issued by the Governor of Assam under the proviso to sub-paragraph (3) of the said paragraph 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 arise to him, -

(a) from any source in the areas, [or States aforesaid], or,

(b) by way of dividend or interest on securities;"

7. It is seen that Section 10 of the Act of 1961 mandates that in computing the total income of a previous year of any person, any income falling within the various clauses shall not be included. In terms with Sub- Section (26) of Section 10 of the Act of 1961, it has been mandated that in the case of a member of a Scheduled Tribe as defined in Clause (25) of Article 366 of the Constitution, residing in any area specified in Part I or Part II of the table appended to paragraph 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 dated 23.02.1951 issued by the Governor of Assam under the proviso to Sub- Paragraph (3) of the said paragraph 20 as it stood immediately before the commencement of the North-Eastern Areas (Reorganisation) Act, 1971 or in the Ladakh region of the State of Jammu and Kashmir, any income which accrues or arise to him from any source in the areas or States aforesaid or by way of dividend or interest on securities, shall not be taken into Page No.# 5/6

consideration while computing the total income.

8. In the case of Pradip Kumar Taye Vs. Union of India and Others reported in (2010) 2 GLR 367, the Full Bench of this Court while interpreting Section 10(26) of the Act of 1961 and more particularly to the expression "residing in any area specified" observed that the said phrase cannot be given a narrow and restricted meaning to imply that the members of the Schedule Tribe migrating from their place of origin which happens to fall in one of the areas specified in the said sub-section to another area, although once again falling within the areas specified in the sub-section would not get the benefit of exemption under Section 10(26) of the Act of 1961.

9. It is relevant to take note of that in the instant case, the consignment was booked from Jharkhand to North Lakhimpur. The entitlement of the interest on the compensation has to be taken as an income accrued at North Lakhimpur. The said area i.e. North Lakhimpur do not fall within the ambit of Paragraph 20 of the Sixth Schedule insofar as the State of Assam is concerned.

10. Considering the above, as the benefit under Section 10(26) of the Act of 1961 can only be permissible to a Schedule Tribe when the income had to accrue in the areas as specified in Section 10(26) of the Act of 1961, this Court is of the opinion that the learned Railway Tribunal erred in law and committed an error in exercising its jurisdiction while passing the orders dated 06.01.2017 as well as 09.06.2017 which have been impugned in the instant proceedings only on the ground that the claimant was a tribal of Arunachal Pradesh. The said being an error in exercise of jurisdiction, this Court interferes with the said orders dated 06.01.2017 as well as Page No.# 6/6

09.06.2017.

11. With above observations and directions, the instant petition stands disposed of.

JUDGE

Comparing Assistant