The Bombay High Court has directed the income tax commissioner to reconsider the applications of Bollywood actor Danny Denzongpa alias Tshering Pintso for tax exemptions on dividends and interests since 1997-98. A division bench of the high court has set aside the order passed by the income-tax commissioner rejecting nine applications filed by Denzongpa seeking the exemptions as per the amendment to the Finance Act in 2008.
In May 2008, Section 10(26 AAA) was incorporated in the Finance Act, which entitled tax exemptions to Sikkimese nationals on dividends and interest on securities. The exemption was to have retrospective effect from April 1990.
Denzongpa’s assessment was completed for the relevant years and an order was already passed accepting total income mentioned by him for each of the said assessment years. After the amendment in the Finance Act, Denzongpa made applications on September 4, 2008, seeking exemptions from the assessment years 1997-98 to 2008-09.
Being of Sikkimese origin, Denzongpa claimed that the amounts that he has received as and by way of dividend and interest in each of the assessment years would be exempt from tax by virtue of the newly inserted provision. For the assessment year 2002-03, Denzongpa had shown dividend amount of Rs 26,73,023 and interest of Rs 1,250.
Denzongpa had attached a certificate issued by the land revenue department of the Government of Sikkim, stating that he is a Sikkimese national and registered under the Sikkim subject register. He also produced a certificate issued by the sub-divisional magistrate (adm.), Gyalshing, West Sikkim, disclosing that he owns landed property-bearing holding no. 5, plot no. 91, admeasuring 8,860 hectare, situated at Yuksam and that he is from the schedule tribe belonging to the Bhutia community.
On March 4, 2010, the income-tax commissioner rejected the applications without giving a detailed order. Denzongpa then moved high court, challenging the I-T commissioner’s order.
While setting aside the commissioner’s order, high court observed: “By the said provision, the assessee (Denzongpa), who is Sikkimese by origin, was entitled to certain benefits. Obviously, there seems to be a rational in introducing the said provisions, as maybe the government was of the view that the said benefit is required to be granted for the upliftment of the Sikkimese people.”
The court further observed: “In matters of this kind, wherein a benefit is sought to be given to an assessee, that too with retrospective effect, a highly technical and pedantic approach is required to be eschewed and an approach which furthers the intent and purport of the legislation is required to be adopted.”