UTANKAMONI CHAKMA Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) THE petitioner belongs to the Chakma tribe of Tripura which is a scheduled tribe as defined in Clause (25) of article 366 of the Constitution. He is a permanent resident of village Hajachara in Sub-room division of Tripura. He joined the defence service as a Commissioned Officer of the Indian Army in 1946. THEreafter, he became a member of the Indian Frontier Administrative Service in 1954 and served at various places in the then North Eastern Frontier Agency (NEFA), now Arunachal Pradesh. From 1972, he started working as a Security Commissioner of Arunachal Pradesh and at the relevant time was posted at Tezpur. THE occasion to file this writ application under article 226 of the Constitution arose following the advice of the Income-tax Officer, Tezpur, to the Treasury Officer, Darrang, Tezpur, to deduct income-tax from the salary of the petitioner. His assertion is that he is not liable to pay any income-tax in view of what has been stated in Section 10(26) of the Income-tax Act, 1961, hereinafter "the Act". THE stand of the petitioner not having been accepted, he has approached this court to seek a direction not to deduct any income-tax from his salary.

(2.) THE stand of the Department is that the petitioner's case is not covered by the aforesaid Section inasmuch as (1) he is not residing in the area mentioned in Section 10(26), and (2) the source of his income is not from the area in question. We may note the relevant provision of law. Section 10(26) reads as below :

(3.) BEFORE examining the validity of the second reason mentioned above, we may say that Sub-clause (a) of Clause (26) of Section 10 of the Act dealing with the source of income had been held violative of article 14 of the Constitution by a Full Bench of this court in the aforesaid case of Rymbai (Civil Rules Nos. 292-293, etc., of 1970, etc., disposed of on 11-10-1974), but that decision was set aside on appeal by the Supreme Court in, 1976 103 ITR 82 . So, to claim exemption, the source of income must be in the specified area. Shri Barua has accordingly urged that the income in question had accrued or arisen in the Union Territory of NEFA and not in Tezpur. To satisfy us in this regard, it is urged by Shri Barua that to decide the situs of accrual or arising of income, the place where the same is . received is not material. In this connection, learned counsel had referred us to CIT v. Anamallais Timber Trust Ltd, 1950 18 ITR 333 where it was held that to decide the place where the income accrues or arises, the actual receipt of the income is not material but these words have to be understood as conveying the area of an enforceable right to receive the income. In E. D. Sassoon and Co. Ltd. v. CIT, 1954 26 ITR 27 the place of accrual or arising of income was held to be the place where the right to receive the income had arisen. In so far as the present case is concerned, it is difficult to say that the right to receive the income had accrued in Arunachal Pradesh merely because the petitioner is a Government servant of Arunachal Pradesh. According to us, the right to receive income had arisen at Tezpur. To fortify his submission, Shri Barua has, however, referred us to a case law noted at page 179 of the Law and Practice of Income-tax by Kanga and Palkhivala, 7th Edn., where the decision rendered in CIT v. P. P. Salarak, 1928 3 ITC 237 was noted, where a Forest Officer of the Siamese Government employed at a fixed remuneration was posted to work in India in whose case it was held that the income had accrued in Siam where the agreement of service was entered into and the remuneration was payable and, in fact, paid. This case cannot assist the petitioner inasmuch as in the present case, the salary had not been paid in Arunachal Pradesh but was paid at Tezpur. The observations made in Shoorji Vallabhdas and Co. v. CIT, 1960 39 ITR 775 would also support the aforesaid view taken by us because it has been held in this case that the commission payable to the managing agent accrues at the place where the business is actually done, i.e., where the services of the managing agent are performed. In the present case, the services of the petitioner were rendered at Tezpur and it can well be said that the salary had accrued at Tezpur.