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Income Tax Act, 1961 – s.10(26AAA) – Sikkim SubjectsRegulations, 1961 – rr.3 and 4 – Right to Equality – Prohibition ofdiscrimination – Clause 26AAA to s.10 of the Income Tax Act, 1961granted exemption to “Sikkimese” people – Explanation to Clause26AAA defined the term “Sikkimese” – Definition of “Sikkimese”in Explanation to s.10(26AAA) to the extent it excludes the Indians,who have settled in Sikkim prior to the merger of Sikkim with Indiaon 26.04.1975; and proviso to s.10(26AAA) insofar as it excludesfrom the exempted category “a Sikkimese woman, who marries anon-Sikkimese after 01.04.2008” – Challenge to – Held (per M.R.Shah, J.): Total 95% of the population of Sikkim are getting thebenefit of s. 10(26AAA) of the Income Tax Act and only 5% are leftout and out of which only 1% are the persons like the Old IndianSettlers, but their names could not be registered as “Sikkim Subjects”like the petitioner – Purpose of s.10(26AAA) is to grant exemptionto the residents of Sikkim from payment of income tax – All suchIndians/citizens, who have settled in Sikkim prior to the merger ofSikkim with India on 26.04.1975 are to be treated at par – Theyform the same group/class and are entitled to the exemption u/s.10(26AAA) – There is no difference and/or distinction betweenthose “Sikkim Subjects”, whose names are recorded in the registermaintained under the Regulations, 1961 and those Indians, whohave settled in Sikkim prior to the merger of Sikkim, but whosenames were not recorded as “Sikkim Subjects” in the register –Merely because at the relevant time and when the Regulations, 1961was enacted, the Indians settled in Sikkim did not surrender theirIndian citizenship or their fathers/forefathers’ names were not enteredinto the register maintained under the Regulations, 1961, by itself,it cannot be said that they cease to be the “Sikkimese” – Exclusion of old Indian settlers, who have settled in Sikkim prior to the mergerof Sikkim with India on 26.04.1975 from the definit ion of“Sikkimese” in s.10(26AAA) is arbitrary, discriminatory andviolative of Art. 14 – The exclusion has no nexus with the objectand purpose of enacting s. 10(26AAA) of to be achieved – Noreasonable intelligible differentia has been shown and therefore,the same can be termed as arbitrary – Hence, petitioners andsimilarly situated persons who are old Indian settlers who have settledin Sikkim prior to the merger of Sikkim with India on 26th April,1975 shall also be entitled to the exemption under s.10 (26AAA) ofthe I.T. Act, 1961 – Further, there is no justification shown and/ordemonstrated to exclude “a Sikkimese woman, who marries a non-Sikkimese after 01.04.2008” from the exempted category – Thediscrimination is based on gender which is wholly violative of Arts.14, 15 and 21 of the Constitution – To deny the benefit of exemptionu/s. 10(26AAA) of the Income Tax Act to “a Sikkimese woman, whomarries a non-Sikkimese af ter 01.04.2008” is arbitrary,discriminatory and violative of Art. 14 – Therefore the Proviso tos.10(26AAA) insofar as it excludes from the exempted category “aSikkimese woman, who marries a non-Sikkimese after 01.04.2008”has to be struck down – Held (per B.V. Nagarathna, J.): Under the1961 Regulation, for women marriage has been the basis ofacquiring the status of having a domicile in Sikkim and being aSikkim Subject or losing domicile or status as a Sikkim Subject –Marriage of a Sikkimese woman is also the basis for discriminationagainst her whereas there is no such discrimination vis-à-vis aSikkimese man marrying a Sikkimese or a non-Sikkimese womanon or after 1st April, 2008 – When the Explanation to s.10(26AAA)refers to an “individual”, it includes both Sikkimese men and women,in fact, all genders – Therefore, it cannot have a restrictive or myopicreference to only Sikkimese men and exclude those Sikkimese women– In the instant case, the proviso is overriding the provision as wellas the Explanation in respect of those categories of marriedSikkimese women – The proviso is inherent ly arbitrary anddiscriminatory against a particular category of Sikkimese women –Hence, al l Sikkimese women are entitled to the benefit ofs.10(26AAA) as per the Explanation thereto irrespective of whetherthey marry a Sikkimese or a non-Sikkimese – The proviso toClause(26AAA) of s. 10 of the I.T. Act, 1961 is struck down as being in violation of Arts. 14 and 15 – The object and purpose of theexemption is only to exempt the settlers in Sikkim or personsdomiciled in Sikkim in terms of the 1961 Regulation or theGovernment Orders – All individuals domiciled in Sikkim till 26thApril, 1975 and who have since become citizens of India are entitledto exemption from payment of income tax – Only such individualsare entitled to the exemption who fall within the three clauses of theExplanation – All other citizens of India who do not fall within theambit of the Explanation and who have been domiciled in SikkimState subsequent to 26th April, 1975 would not have the benefit ofexemption – This would be discriminatory insofar as those settlersin Sikkim are concerned who have been domiciled in Sikkimsubsequent to promulgation of 1961 Regulation and till 26th April,1975 – Such individuals are old settlers who have become citizensof India from 26th April, 1975 but who were domiciled in Sikkimprior to the said date – These old settlers are also entitled to theexemption under s.10 (26AAA) – Hence, directions in that regardhave to be issued to fill the Legislative vacuum and amendment tothe Explanation is necessary – Directions issued to eliminate thediscrimination and to save the Explanation from being renderedunconstitutional – Constitution of India – Arts. 14, 15, 21 and 142.Interpretation of Statutes – Internal Aid – Proviso – Functionof – Held: The normal function of a proviso is to except somethingout of the provision or to qualify something enacted therein which,but for the proviso, would be within the purview of the provision –A proviso is added to an enactment to qualify or create an exceptionto what is in the enactment – A proviso cannot be construed asnullifying the provision or as taking away completely a rightconferred by the enactment – If it does so and is discriminatorythen it falls foul of the equality clauses of the Constitution of India. |
