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2019 (12) TMI 258 - AT - Income TaxBenefit of section 10(26B) - both the authorities below held that the assessee is a Section 25 Company fully owned by the Government of India - HELD THAT - As names suggests the assessee has been engaged in the work of development of the National Safai Karamcharis who are involved in the upliftment of Safai Karamcharis Manual Scavengers who belong to Scheduled Caste, Scheduled Tribe or Other Backward Classes and also in the inhumane practice of scavenging and other sanitation activities. Safai Karamcharis Manual Scavengers are the poorest of the poor in the society and it does not require any Certificate to know the said fact. Further, Section 10(26B) clearly says that the target group could be the members of the Schedule Castes or the Scheduled Tribes or other backward classes or any two or all of them. It, therefore, makes the things clear that if an entity is a corporation established by a Central or State Act is engaged in the upliftment of SC or ST or OBC or a mix of them is entitled to claim benefit u/s 10(26B). As we have observed above, it could be said that any category of members in the activity of Manual Scavengers or Safai work could fall in any of these three categories. Section 10(26B) contemplates not only the caste but also class. Letter dated 22.03.2000 clinches the issue wherein the state agency clearly stated that the finances from the assessee to the State agency was exclusively for the benefit of SC community inhabiting the Delhi area and possessing the Certificate to such an effect. It also stated therein that a general agreement was on this aspect between the assessee and state agency. These circumstances do not admit of any doubt as to the entitlement of the assessee to claim the benefit under section 10(26B) and with that view of the matter we find it difficult to agree with the view of the authorities below. We, therefore, set aside both the orders and direct the AO to allow the assessee to benefit of section 10(26B) - Appeal of the assessee is allowed.
Issues:
Interpretation of Section 10(26B) for tax exemption Analysis: The case involved an appeal by the National Safai Karamcharis Finance and Development Corporation ("the Assessee") against the denial of tax exemption under Section 10(26B) for the Assessment Year 2014-15. The Assessing Officer had disallowed the exemption, stating that the beneficiaries were not limited to Scheduled Caste, Scheduled Tribe, or Other Backward Classes. The Assessee contended that the interpretation of Section 10(26B) should align with the Constitution of India's objectives, focusing on uplifting marginalized communities. The Assessee argued that funds were exclusively channeled for the benefit of Safai Karamcharis and Manual Scavengers from these communities. The Assessee provided certificates and agreements to support their claim. The Revenue, on the other hand, argued that there was a lack of evidence showing exclusive work for the specified communities. They highlighted a letter indicating that funds were used only for the Scheduled Caste community in Delhi. The core issue revolved around whether the Assessee met the criteria of working solely for the promotion of Scheduled Caste, Scheduled Tribe, or Other Backward Classes to qualify for tax exemption under Section 10(26B). The Tribunal analyzed Section 10(26B) requirements, emphasizing that a corporation wholly financed by the government and working for the mentioned communities could claim the exemption. The Tribunal noted that the Assessee, being a government-owned entity, focused on the upliftment of marginalized communities like Safai Karamcharis and Manual Scavengers from Scheduled Caste, Scheduled Tribe, or Other Backward Classes. It highlighted that Section 10(26B) allowed for the inclusion of any or all of these communities. The Tribunal considered the evidence provided, including the agreement between the Assessee and the state agency, which confirmed exclusive funding for the Scheduled Caste community in Delhi. Ultimately, the Tribunal ruled in favor of the Assessee, setting aside the previous orders and directing the Assessing Officer to allow the Assessee the benefit of tax exemption under Section 10(26B). The decision was based on the clear alignment of the Assessee's activities with the objectives of Section 10(26B) and the evidence supporting the exclusive funding for the specified communities. In conclusion, the judgment clarified the interpretation of Section 10(26B) for tax exemption, emphasizing the importance of government-owned entities working for the upliftment of marginalized communities to qualify for the benefit. The case highlighted the significance of providing substantial evidence to support claims of exclusive focus on specified communities to avail tax exemptions under the relevant provisions.
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