TMI Blog2021 (11) TMI 576X X X X Extracts X X X X X X X X Extracts X X X X ..... ilable from the expression used in Section 10(26B) of the Act. This Court is construing Section 10(26B), both by keeping in mind the golden rule of construction and also Noscitur a Sociis, a nd the inescapable conclusion is that the assessee though incorporated under the Companies Act falls within the ambit of exemption envisaged by Section 10(26B) and is entitled to benefit of exemption. Centre/State Governments, as the case may be, bring into existence what is known as Government Companies. All these companies are not immediately entitled to be bracketed within the ambit of Section 10(26B) because the existence of that Company is relatable to the primary aim of promoting the interests of the members of the Scheduled Castes or the Scheduled Tribes or backward classes or of any two or all of them. The assessee is a body viz., incorporated under the Companies Act and formed to achieve or promote the interests of the members of the Scheduled Castes or the Scheduled Tribes or backward classes or of any two or all of them, receives full financial assistance from the Government, hence is entitled to exemption. We are in agreement with the reasoning and the conclusion recorded by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Whether, on the facts and in the circumstances of the case and the reasoning and conclusion of the Tribunal being based on the submissions, statements and written submissions of the assessee and without any independent finding being rendered and evidence relied on by the Tribunal, is not the conclusion of the Tribunal perverse and unreasonable? 3. Whether, on the facts and in the circumstances of the case, the Tribunal is right in law and in fact interfering with the order of the Assessing Officer? 3. ITA No.5/2018 is treated as the representative appeal and consideration of details and circumstances of this appeal would be sufficient for disposing of the other matter as well. In both the appeals, the questions arising for consideration are under Section 10(26B) of the Income Tax Act, 1961 (for short the Act ). The controversy is whether the assessee being a Company formed under the Companies Act, in spite of satisfying the qualifying requirements of Section 10(26B), can, being a Corporation incorporated by the Central Government under the Companies Act, claim exemption of income from income tax. ITA No.5/2018 4. The assessee for the Assessment Year 2011-12 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the Government for promoting the interest of the members of the scheduled tribes living in the Lakshadweep Islands, is entitled to the benefit of section 10(26B) of the I.T. Act. Since we hold that the assessee is entitled to the benefit of section 10(26B) of the I.T. Act, the other grounds relating to the issue of disallowances/additions made by the Assessing Officer has been rendered infructuous and we dismiss the same as not adjudicated. It is ordered accordingly. Hence the appeals filed by the assessee for the assessment years 2011-12 and 2012-13 are partly allowed as indicated above. Hence the appeal. 6. The learned counsel appearing for the parties have made detailed submissions on substantial question no.1, and, independent of the instant observation, we are of the view that substantial question nos.2 and 3 are dependent on the outcome of substantial question no.1. Secondly, the findings recorded by the Tribunal, whether would merit consideration for interference under Section 260A of the Act. Hence, we take up substantial question no.1 for discussion. Question no.1 7. Senior Advocate Mr P K Ravindranatha Menon appearing for Revenue argues that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reported in State Level Committee v. Morgardshammar India Ltd (1996) 101 Sales Tax Cases 1 to argue that the choice between a strict and a liberal construction arises only in a case of doubt in regard to the intention of the Legislature. The interpretative process arises where meaning is not manifest in the plain words of the Statute. The word ' established ' is given its due and literal meaning, then the assessee is satisfying the requirement of Section 10(26B) of the Act. 8. Adv. Bobby John prefaces his arguments that to answer substantial question no.1, the origin and existence of the assessee read with the assessee s objectives are appreciated. The assessee is a Government-owned Company established for the people of Union Territory of Lakshadweep. It is not in dispute that the assessee is established to provide benefits and welfare measures to Scheduled Tribes of Lakshadweep Union Territory. The construction now commended by the Revenue to this Court excludes an entity of Government of India from availing the exemption benefit, even though the entity satisfies the entities covered by words body, institution, or association , the second portion of Section 10( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9.2 Section 10 is part of Chapter III dealing with incomes which do not form part of total income. In other words, it deals with the income exempted from computation under the Act. By applying the interpretative tool of literal construction to Section 10(26B), we notice that the sub-section deals with entities that fall within the exempted purview and the qualification required for claiming status and the purpose for which the entity is established. Section 10(26B) literally read, deals with exemption from income computation in the following cases: Firstly, any income of a Corporation established by a Central (Government), where such Corporation has been established for promoting the interests of the members of the Scheduled Castes or the Scheduled Tribes or backward classes or of any two or all of them. Secondly, any income of a Corporation established by a State (Government), where such Corporation has been established for promoting the interests of the members of the Scheduled Castes or the Scheduled Tribes or backward classes or of any two or all of them. Thirdly, any income of a Corporation established by a provincial Act, where such Corporation has been establi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orporation in the manner known to law. These entities automatically do not become eligible for exemption under section 10(26B). They become eligible for claiming exemption only when these entities are formed for promoting the interests of the members of the Scheduled Castes or the Scheduled Tribes or backward classes or of any two or all of them. When it comes to income of any other body, institution or association, firstly it is wholly financed by Government and Sub-section (26B) refers to such body, institution or association formed for promoting the interests of the members of the Scheduled Castes or the Scheduled Tribes or backward classes or of any two or all of them. The incorporation of assessee under the Companies Act gives the assessee the status of a body corporate and the objects, indisputably, of the assessee are promoting the interests of the members of the Scheduled Castes or the Scheduled Tribes or backward classes or of any two or all of them of Lakshadweep Union Territory. The argument of learned Senior Counsel that Corporation established by Provincial Act does not fit into the literal or plain reading of Section 10(26B). The argument that the Corporation is estab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble conclusion is that the assessee though incorporated under the Companies Act falls within the ambit of exemption envisaged by Section 10(26B) and is entitled to benefit of exemption. 9.8 We take judicial notice of the fact that Centre/State Governments, as the case may be, bring into existence what is known as Government Companies. All these companies are not immediately entitled to be bracketed within the ambit of Section 10(26B) because the existence of that Company is relatable to the primary aim of promoting the interests of the members of the Scheduled Castes or the Scheduled Tribes or backward classes or of any two or all of them. The assessee is a body viz., incorporated under the Companies Act and formed to achieve or promote the interests of the members of the Scheduled Castes or the Scheduled Tribes or backward classes or of any two or all of them, receives full financial assistance from the Government, hence is entitled to exemption. We are in agreement with the reasoning and the conclusion recorded by the Tribunal and for the above reasons as well, substantial question no.1 is answered in favour of the assessee and against the Revenue. Question Nos.2 and 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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