Goswami C.J.
1. The petitioner belongs to the Garo community, which is a Scheduled Tribe as defined in Clause (25) of Article 366 of the Constitution, and is a permanent inhabitant of the Garo Hills District, which is an area specified in Part-A of the Table appended to paragraph 20 of the Sixth Schedule to the Constitution. He is a Resident Medical Officer in the Lokapriya Gopinath Bordoloi Memorial T. B. Aid Society at Gauhati, an autonomous institution, which received grants-in-aid from the Government of Assam. The Income-tax Officer (respondent No. 1) wrote to the secretary of the society (respondent No. 3) to deduct income-tax of the petitioner at source under the appropriate provisions of the Income-tax Act, 1961 (briefly 'the Act'), and the society is accordingly complying with the direction of the department. The petitioner claims an exemption from payment of tax as, according to him, a member of the Scheduled Tribe as such is not liable to pay income-tax. He further submits that the decision of the Supreme Court in S.K. Dutta v. Lawrence Singh Ingty, [1968] 68 I.T.R. 272 ; [1968] 2 S.C.R. 165 (S.C.) affirming the decision of this court, governs his case and he is not liable to pay Any tax under the Act. By an amended application, the petitioner challenges the validity of Section 10(26) of the Act, being violative of Article 14 of the Constitution.
2. The department resists all the pleas of the petitioner. With regard to Section 10(26) of the Act, the Income-tax Officer states in his counter-affidavit as follows:
'I say that the intention of the legislature is to provide relief to members of the Scheduled Tribe residing in the specified areas with a purpose to raise their socio-economic set-up and to give a fillip for advancement of trade, business, profession, occupation or vocation within the specified areas. I say that Section 10(26) of the Income-tax Act, 1961, in any view of the matter, is not liable to be struck down as illegal and ultra vires.'
3. Before proceeding further, we may set out the impugned provision of the Act:
'10. 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 Part A or Part B of the Table appended to paragraph 20 of the Sixth Schedule to the Constitution or in the State of Nagaland or in the Union Territories of Manipur and Tripura, any income which accrues or arises to him,
(a) from any source in the area, State or Union Territories aforesaid, or
(b) by way of dividend or interest on securities.'
4. In Lawrence Singh Ingty's case the Supreme Court struck down the words 'who is not in the service of Government' in Clause (26) and the same have been omitted by Act 42 of 1970, and shall be deemed to have been always omitted.
5. Section 4 is the charging section, and taxation is the rule and exemption is the exception. Section 5 describes the scope of total income. Section 10 appears in Chapter III of the Act with the heading 'Incomes which do not form part of total income' which includes all income from whatever source derived which 'is received' under Section 5(1)(a) and which 'accrues or arises', etc., under Section 5(1) (b) and (c). By Section 5, the territorial nexus of the taxing country with the income of the assessee is made the basis for chargeability to tax. Under Section 4, it is only when any Central Act enacts that income-tax shall be charged for any assessment year at any rate or rates, income-tax at that rate or those rates shall be charged for that year. It is obvious that there is always a minimum limit of income which is not chargeable to tax. Income-tax is, therefore, concerned with only persons who are chargeable to tax in accordance with the rates prescribed by the Central Act of the relevant year. Section 4 is again subject to other provisions of the Act, which includes Section 10. The argument, therefore, that a marginal assessee, like the petitioner, with a low level of chargeable income residing at Gauhati, may be hard hit whereas his counterpart in the Hills will be unaffected is not relevant for the proper determination of the question that arises for consideration. We have to decide this question on the scheme and provisions of the Act and particularly of the provisions of Section 10 while considering the challenge made against the impugned provision under Article 14 of the Constitution.
6. After making the above general observations, we will now deal with the submission of the learned counsel. It is contended that Section 10(26) is violative of the Constitution as it discriminates between persons belonging to the same Scheduled Tribe without any rational basis whatsoever. The petitioner, it is said, is a member of the Scheduled Tribe and there is no rational basis to charge him to tax at Gauhati, while if he earned the particular income in Garo Hills, he would have been exempted under the impugned clause. This provision, therefore, treats unequally persons equally circumstanced and placed. We have already noticed that income-tax is chargeable under Section 4 and at the rates prescribed by an appropriate Central Act.
7. Section 4, inter alia, is subject to Section 10. An assessee is liable to pay income-tax under Section 4 of the Act subject to Section 10. The burden is, therefore, upon him to bring his case within any of the clauses in that section. Apparently, his case does not come under Clause (26) of Section 10 as his income accrues or arises outside the area mentioned in the clause. We have, therefore, to see whether this provision in Section 10(26), namely, about the accrual or arising of the income from any source in the area, State or Union Territory, is violative of Article 14 of the Constitution. We have seen above that the scheme and pattern of the Income-tax Act is to give relevance to a territorial nexus with the assessable income. As has been held in Commissioner of Income-tax v. Chunilal B. Metha, [1938] 6 I.T.R. 521 (P.C.) the place where the trade is exercised and the place where the source of income is situate are irrelevant under Section 5 (old Section 4) which makes the place of accrual or arising of the income the sole test of chargeability. This provision is unlike its counterpart in the English Act. As held by the Privy Council in the above case, to discriminate between all kinds of profits according to the place at which they accrue or arise is a plain dictate of the statute. The scheme and the pattern of the Act, therefore, definitely point to the relevance of the accruing or arising of the income in the taxing State in a particular area. It is this pattern which is followed in enacting the exemption Clause (26). In this context, we may bear in mind the object for which such an exemption clause has been inserted in the Act. The object clearly is in the interest of the Scheduled Tribe, as also in the interest of the area which that Tribe makes the lot to live in. By exempting the Scheduled Tribe in this behalf for earning income which accrues or arises in the area, not only the members of the Tribe are helped but also the interest of the area is adequately furthered.
8. The members of the Scheduled Tribe earning income which accrues in the Tribal area as specified are a well-defined class and there is a reasonable nexus for exempting this class from other members of the Scheduled Tribe who may have income accruing to them in a place or area outside those Tribal areas. In view of the object of the provision, to which we have already adverted, the classification in this case is well-defined. The classification is founded on an intelligible differentia and that differentia has a rational nexus with the object sought to be achieved by the exemption clause. There can, therefore, be no legitimate grievance on the score of Article 14 of the Constitution. The challenge to the validity of Section 10(26) is, therefore, of no avail.
9. It is, therefore, clear that if the assesses being a member of the Scheduled Tribe has any income which accrues or arises in the area specified in Section 10(26), that income will not be chargeable to income-tax. But if any income accrues or arises outside the area, he cannot take advantage of this provision.
10. We may observe that the counsel of both sides referred to Lawrence Singh Ingty's case, in the course of their arguments, submitting at the same time that the Supreme Court in that decision was not called upon to decide the question that is posed in the present proceeding. We find that the Supreme Court had to decide the validity of excluding the Government servants from the benefit of the exemption clause, notwithstanding that such a Government servant answered to all the other qualifications mentioned therein. In the words of that decision ;
'The complaint in this case is that within the range of the selection made by the State for the purpose of exemption, namely, members of certain Scheduled Tribes residing in specified areas, the law operates unequally and the inequality in question cannot be justified on the basis of any valid classification.'
11. The Supreme Court observed :
'The exemption in question was not given to individuals either on the basis of their social status or economic resources. It was given to a class. Hence, individuals as individuals do not come into the picture.'
12. Earlier, the Supreme Court observed:
'We know of no legislative practice or history treating Government servants as a separate class for the purpose of income-tax. The Government servants' income has all along been treated in the same manner as the income of other salaried officers.'
13. In that case, the assessee had all the qualifications to entitle him to the exemption except that he was a Government servant and the Supreme Court struck down that clause, which led later on to parliamentary legislation deleting the clause. We cannot but quote the following principles of law reiterated in that decision which must guide in a case of this nature :
'...in deciding whether a taxation law is discriminatory or not it is necessary to bear in mind that the State has a wide discretion in selecting persons or objects it will tax and that a statute is not open to attack on the ground that it taxes some person or objects and not others; it is only when within the range of its selection, the law operates unequally, and that cannot be justified on the basis of any valid classification, that it would be violative of Article 14. It is well-settled that a State does not have to tax everything in order to tax something. It is allowed to pick and choose districts, objects, persons, methods and even rates for taxation if it does so reasonably.'
14. In the result, the application fails and is dismissed. We will, however, make no order as to costs.
B.N. Sarma, J.
15. I agree.
Application dismissed.