P) Ltd v. Cit ((2000) 243 Itr 626)(Sikkim

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE P.R.RAMAN & THE HONOURABLE MR. JUSTICE K.P.BALACHANDRAN THURSDAY, THE 7TH DECEMBER 2006 / 16TH AGRAHAYANA 1928 ITR.No. 66 of 2000() -------------------- AGAINST THE ORDER DATED 15/4/1998 IN ITA.483/COCH/94 IN RA.337/COCH/199/1998 of I.T.A.TRIBUNAL,COCHIN BENCH AGAINST THE ORDER DATED 15/4/1998 IN ITA.483/COCH/94 IN .................... APPLICANT: ----------- THE COMMISSIONER OF INCOME TAX (APPEALS),TRIVANDRUM. BY ADV. SRI.P.K.R.MENON,SR.COUNSEL,(TAXES) SRI.GEORGE K. GEORGE, SC FOR IT RESPONDENTS: ------------ M.S.HAMEED,P/O.M/S.M.MOLHAMED KHAN AND BROS.,CHALAI, TRIVANDRUM. BY ADV. SRI.D.S.SREEKUMARAN SMT.T.S.MAYA (THIYADIL) THIS TAX REFERENCE HAVING BEEN FINALLY HEARD ON 21/11/2006, THE COURT ON 07/12/2006 DELIVERED THE FOLLOWING: P.R.RAMAN & K.P.BALACHANDRAN,JJ. ---------------------------------------- ----------------------------------------Dated this the 7th day of December, 2006 O R D E R Raman,J. ITR.NO.66/2000 received a sum of Rs.4,50,000/- as winningsfrom lottery conducted by the Skimm Government.In the return of the income filed by him duringthe relevant year he included this amount alsofor the purpose of computation of the totalincome. But subsequently in the revised returnfiled on 27/2/1991 he excluded the winningsfrom Sikkim lottery from the computation of thetotal income. It was the claim of the assesseethat the winnings from Sikkim lotteries werenot includible in his taxable income, in viewof the fact that Income Tax Act was madeapplicable to the State of Sikkim only from theassessment year 1990-91. The Assessing OfficerOfficer did not accept the contention, as hewas of the view that the assessee being aresident in India any income which accrued orarose or deemed to accrue or arise to him wasincludible in the total income. The assessee canvassed the correctness of the said decisionin the appeal filed by him before the Commissioner of Income Tax (Appeals). The Commissioner of Income Tax (Appeals) held that the winning from Sikkim lottery was not includible in the assessment years prior to1990-91 and placed reliance on the decision ofthe Tribunal, Delhi Bench in ITA. No.3334(Del)/87 dated 12/3/1990. Revenue appealed to theTribunal. The Tribunal agreed with the view ofthe Commissioner of Income Tax (Appeals) anddismissed the appeal preferred by the revenue.The order of the Tribunal is produced asAnnexure-C in this case. 3. While dismissing the appeal filed by therevenue, the Tribunal relied on the decision ofthe Delhi Bench of the Tribunal, wherein it isheld that the income arising from Sikkim couldnot be brought to tax in the hands of the ITR.NO.66/2000 assessee, as a resident in India. The same viewwas taken by the Madras Bench of the Tribunalin ITA.NO.258(Mds)/88 dated 6/10/1992. In theabsence of any contra decision, the Tribunalagreed with the view expressed by the Co-ordinate Bench while dismissing the appeal. 4.Learnedseniorcounsel,SriP.K.Ravindranatha Menon apparing on behalf of the revenue contended that as per the provisions of the income tax Act, in the caseof an ordinary resident in India not only hisincome received in India but also income fromoutside India are liable to be assessed. Themere fact that Income Tax Act was madeapplicable to the Sikkim State only with effectfrom the assessment year 1990-91 is of noconsequence. It is also contended that Sikkimbecame a part of Indian Union with effect from26/4/1975 and hence, his income received from ITR.NO.66/2000 -5- Sikkim lotteries being the income received in India, is assessable in the hands of the assessee under the Income Tax Act. He placed reliance on the decision in Alankar Commercial (P) Ltd. v. CIT ((2000) 243 ITR 626)(Sikkim) and also the decision reported in AlankarCommercial Pvt.Ltd. v. Assistant Commissioner provisions of the income tax Act, in the caseof an ordinary resident in India not only hisincome received in India but also income fromoutside India are liable to be assessed. Themere fact that Income Tax Act was madeapplicable to the Sikkim State only with effectfrom the assessment year 1990-91 is of noconsequence. It is also contended that Sikkimbecame a part of Indian Union with effect from26/4/1975 and hence, his income received from ITR.NO.66/2000 -5- Sikkim lotteries being the income received in India, is assessable in the hands of the assessee under the Income Tax Act. He placed reliance on the decision in Alankar Commercial (P) Ltd. v. CIT ((2000) 243 ITR 626)(Sikkim) and also the decision reported in AlankarCommercial Pvt.Ltd. v. Assistant Commissioner of Income Tax New Delhi and others((2001) (9) SCC 380). He also placed reliance on some ofthe passages from the Law and Practice of Income Tax by Kanga (9th Edition) in support ofhis contention. The learned counsel appearingon behalf of the assessee, on the other hand,contended that by virtue of Article 371F of the Constitution of India, the law that is applicable to the State of Sikkim is the lawwhich was in force in that State before itsjoining the Indian Union and thus the SikkimIncome Tax Manual, 1948 alone is applicable to ITR.NO.66/2000 the case and since the income has suffered taxas per the law in force in the territory of Sikkim the same amount cannot be taxed againin the hands of the assessee. According to him, the applicability of the law is to bedecided with reference to the State from wherethe income was received. Reference was alsomade to the decision of Gauhati High Court in Ghisalal Agarwala v. CIT ((2001)165 CTR (Gau) 667). He also contended that by virtue of acircular issued by the Central Board of DirectTaxes dated 27th March, 2000, no appeal can befiled in cases where the tax effected exceedsthe revised monetary benefits of Rs.2 lakhs.Copy of the said circular is also produced onrecord as Ext.R1(b) along with the counteraffidavit filed in this case. 5. We have heard both sides. 6. Admittedly, Sikkim became a part of the ITR.NO.66/2000 -7- Indian Union from 26/4/1975. So however theIncome Tax Act was extended to the State ofSikkim only from the assessment year 1990-91. The question that arises for consideration isas to whether the income received in Sikkimprior to the introduction of the Income Tax Actfor the period in question is assessible in thehands of the assessee, as per the provisions ofthe Indian Income Tax Act. Article 371 F of theConstitution of India is a special provisionapplicable to the lotteries of Sikkim. Article371F was inserted by the Constitution (thirtysixth amendment Act, 1975) with effect from26/4/1975, which reads as follows: "371F. Special provisions with respect to the State of Sikkim.-- Notwithstanding anything in thisConstitution, -- (b) asfromthedateofcommencement of the Constitution (Thirty-sixth Amendment) Act, 1975(hereafter in this article referred toas the appointed day)-- (i) the Assembly for Sikkim formedas a result of the elections held inSikkim in April, 1974 with thirty-twomembers elected in the said elections(hereinafter referred to as thesitting members) shall be deemed to bethe Legislative Assembly of the Stateof Sikkim duly constituted under thisConstitution; (ii) the sitting members shall bedeemed to be the members of theLegislative Assembly of the State ofSikkim duly elected under thisConstitution; and (iii)thesaidLegislativeAssembly of the State of Sikkim shallexercise the powers and perform thefunctions of the Legislative Assemblyof a State under this Constitution; (c), (d) & (e) xx xx(Omitted as N.A.) (Thirty-sixth Amendment) Act, 1975(hereafter in this article referred toas the appointed day)-- (i) the Assembly for Sikkim formedas a result of the elections held inSikkim in April, 1974 with thirty-twomembers elected in the said elections(hereinafter referred to as thesitting members) shall be deemed to bethe Legislative Assembly of the Stateof Sikkim duly constituted under thisConstitution; (ii) the sitting members shall bedeemed to be the members of theLegislative Assembly of the State ofSikkim duly elected under thisConstitution; and (iii)thesaidLegislativeAssembly of the State of Sikkim shallexercise the powers and perform thefunctions of the Legislative Assemblyof a State under this Constitution; (c), (d) & (e) xx xx(Omitted as N.A.) (f) Parliament may, for thepurpose of protecting the rights andinterests of the different sections ofthe population of Sikkim makeprovision for the number of seats inthe Legislative Assembly of the Stateof Sikkim which may be filled bycandidates belonging to such sections and for the delimitation of theAssembly constituencies from whichcandidates belonging to such sectionsalone may stand for election to theLegislative Assembly of the State ofSikkim; (g), (h), (i), (i) xx xx (omitted asN.A.) (k) all laws in force immediatelybefore the appointed day in theterritories comprised in the State ofSikkim or any part thereof shallcontinue to be in force therein untilamended or repealed by a competentLegislatureorothercompetentauthority;" 7. Thus, all laws in force immediately before the appointed day continue to be thelaw that applied to the territories comprisedin the State of Sikkim. Admittedly, the IncomeTax Act, 1961 was extended to the territoriesof Sikkim with effect from 1st April, 1990 inrelation to the assessment year 1990-91 andsubsequent years. The law corresponding tothe Income Tax Act, 1961 which immediately was ITR.NO.66/2000 in force in the State of Sikkim was tocontinue to be in force for and upto theprevious year beginning with 1st April, 1988and ending on 31st March, 1989. Till then thelaw relating to the Income Tax which was inforce was the Sikkim State Income Tax Manual,1948. Hence, in the present case the incomereceived within the territories of Sikkimwould be governed by the provisions containedin the Sikkim Income Tax Manual, 1948. 8. But according to the learned counsel for the revenue, by virtue of the provisionscontained in the Income Tax Act, if the incomeis otherwise assessable, the fact that theIncome Tax Act was extended to the territoriesof Sikkim only from the assessment year 1990-91 will be of no consequence. Reference wasmade to Section 5 of the Income Tax Act tocontend that the total income of any previous ITR.NO.66/2000 -11- year of a person, who is a resident includesall income from whatever source derived whichis received or is deem to be received in Indiain such year by or on behalf of such person;or accrues or arises or is deemed to accrue or arise to him in India during such year; oraccrues or arises to him from outside Indiaduring such year. This argument prima facieappears to have some force; but considered inthe light of the special constitutionalprovisions contained in Article 371F and also considering the fact that the amount has already suffered tax under the Sikkim IncomeTax Manual, 1948 and to include the same againfor the purpose of taxation under the IncomeTax Act, 1961 thereby resulting in double taxation, we find it difficult to accept thecontention. When the income has already suffered tax as per the law of Income Tax ITR.NO.66/2000 -12- applicable to the State, from where the incomeis received, to bring the same income to taxunder the Income Tax Act, 1961 will amount todouble taxation. 9. The Apex Court in State of Sikkim v. considering the fact that the amount has already suffered tax under the Sikkim IncomeTax Manual, 1948 and to include the same againfor the purpose of taxation under the IncomeTax Act, 1961 thereby resulting in double taxation, we find it difficult to accept thecontention. When the income has already suffered tax as per the law of Income Tax ITR.NO.66/2000 -12- applicable to the State, from where the incomeis received, to bring the same income to taxunder the Income Tax Act, 1961 will amount todouble taxation. 9. The Apex Court in State of Sikkim v. Surendra Prasad Sharma (AIR 1994 SC 2342)considered the scope and effect of Article371F of the Constitution of India and heldthat the said Article begins with a non-obstante clause which to the extent relevantand contextually permissible, applies all theprovisions of the Constitution. The Article isa special provision relating to the state ofSikkim. It was further held that on a plainreading of this provision it becomes clearthat all laws which were in force prior to26th April, 1975 in the territories nowfalling within the State of Sikkim or any partthereof were intended to continue to be in ITR.NO.66/2000 force until altered or repealed. Although the expression 'all laws in force' has not beendefined the said expression must receive its ordinary, natural and grammatical meaning.The latter part of the clause --'until amended or repealed by a competent legislature orother competent authority'-- is indicative of the fact that the said expression was not intended to be confined to only legislative enactments but also laws which could be altered or amended or repealed by 'other competent authority', i.e. other than thelegislature itself. This supplies a clearindication that the said expression is wideenough to include sub ordinate legislations,e.g. rules, regulations, orders etc. The expression 'existing law' is defined by Article 366(10) to include any rule, regulation, bye-law, etc., and the expression ITR.NO.66/2000 'all laws in force' means all existing laws.It was made clear that the said expression is wide enough to include the Establishment Rules of 1974. A reference was also made in this connection to the decision of the Supreme Court in Edward Mills Co. Ltd. v. State of Ajmir (AIR 1955 SC 24 at 30-31) wherein a similar expression used in Article 372 was construed. The Apex Court held that "Thus Article 371F occupies a special position to cope with a special situation with a special historical backdrop. Article 371F is, as stated earlier, a special constitutionalprovision with respect to the State of Sikkim.The reason why it begins with a non-obstante clause obviously is that the matters referredto in the various clauses immediately following required a protective cover so that such matters are not struck down as ITR.NO.66/2000 unconstitutional because they do not satisfythe constitutional requirement. Unless such immunity was granted, 'the laws in force'would have had to meet the test of Article 13of the Constitution. This being the objective, the existing laws in force came to beprotected by Clause (k) added to Article 371F.The said laws in force in the State of Sikkim were, therefore, protected, until amended orrepealed, to ensure smooth transition fromthe Chogyal's rule to the democratic ruleunder the Constitution." Based on the abovedecision, the legal position that emerges thusis that until the Income Tax Act, 1961, wasmade applicable to the State of Sikkim (fromthe assessment year 1990-91 (previous year1989-90) the Sikkim Income Tax Manual, 1948 continued to be in force. In Nirmala L. Mehtav. A. Balasubramanian, Commissioner of Income ITR.NO.66/2000 -16- immunity was granted, 'the laws in force'would have had to meet the test of Article 13of the Constitution. This being the objective, the existing laws in force came to beprotected by Clause (k) added to Article 371F.The said laws in force in the State of Sikkim were, therefore, protected, until amended orrepealed, to ensure smooth transition fromthe Chogyal's rule to the democratic ruleunder the Constitution." Based on the abovedecision, the legal position that emerges thusis that until the Income Tax Act, 1961, wasmade applicable to the State of Sikkim (fromthe assessment year 1990-91 (previous year1989-90) the Sikkim Income Tax Manual, 1948 continued to be in force. In Nirmala L. Mehtav. A. Balasubramanian, Commissioner of Income ITR.NO.66/2000 -16- Tax & Others ((2004) 269 ITR 1 (BOM.)) theBombay High Court considered the similarsituation where the petitioner therein, who isa resident of Mumbai, won a lottery of theGovernment of Sikkim, having a prize money ofRs.6,30,000/-. The Government of Sikkimdeducted income tax therefrom as per Sikkimtax laws from the prize money and the balanceamount alone was paid. The petitioner claimeddeduction of the amount by way of tax on the ground that the said sum was deducted asincome tax at source while making the payment.The Income Tax Officer did not give credit forthe said claim as the tax deducted from theprize money of the lottery by the Sikkim StateGovernment was not paid to the Indian treasuryand tax was not deducted as per Section 199 ofthe Income Tax Act, 1961. The petitioner approached the Commissioner of Income Tax, ITR.NO.66/2000 BombayCityIV,inhisrevisional jurisdiction. The CIT, Bombay modified the order only to the limited extent. Thequestion which was raised by way of additionalground regarding taxability under the IndianIncome Tax Act, however was not permitted to be raised at the stage of hearing of therevision. It was held by the Bombay High Courtthat the prize money of the lottery of theGovernment of Sikkim won by the petitioner was not chargeable to tax under the Income Tax Act, 1961. It was also held that the IncomeTax Act, 1961 was made applicable and cameinto force in the State of Sikkim from theAssessment Year 1990-91 (previous year 1989-90). The President of India in exercise ofhis powers conferred under Clause (n) ofArticle 137F extended the Income Tax Act,1961, for the first time for the assessment ITR.NO.66/2000 year 1990-91, as the Income Tax Act, 1961 came into force in the State of Sikkim with effect from 1st April, 1990. Until then, all laws including the Income Tax Law in force before the State of Sikkim became a component Stateof the Indian Union were in operation and theIncome Tax in Sikkim was governed by theof the Indian Union were in operation and theIncome Tax in Sikkim was governed by the Sikkim Income Tax Manual, 1948. Thus, for theassessment year 1988-89 (the previous yearassessment year 1988-89 (the previous year during which the petitioner won the lottery ofthe Sikkim Government), the said income wasthe Sikkim Government), the said income was chargeable to tax under the Sikkim Income Tax Manual. The Income Tax Act, 1961 was not applicable at the relevant time in Sikkim. So long as the Income Tax Act, 1961 did not become applicable to the State of Sikkim, Income Tax Act, 1961 could not be applied to the income earned in Sikkim. In thecircumstances, the prize money won by thecircumstances, the prize money won by the ITR.NO.66/2000 petitioner from the lottery of the Governmentof Sikkim could have been charged to tax onlyin accordance with the existing IT laws in theState of Sikkim and could not be charged totax under the IT Act, 1961. The assessmentorders were accordingly quashed. chargeable to tax under the Sikkim Income Tax Manual. The Income Tax Act, 1961 was not applicable at the relevant time in Sikkim. So long as the Income Tax Act, 1961 did not become applicable to the State of Sikkim, Income Tax Act, 1961 could not be applied to the income earned in Sikkim. In thecircumstances, the prize money won by thecircumstances, the prize money won by the ITR.NO.66/2000 petitioner from the lottery of the Governmentof Sikkim could have been charged to tax onlyin accordance with the existing IT laws in theState of Sikkim and could not be charged totax under the IT Act, 1961. The assessmentorders were accordingly quashed. 10. The above decision squarely applies tothe facts of this case. The contention by thelearned counsel for the revenue that SikkimLaws will apply only to the person, who is aresident of Sikkim, does not appeal to us. Itis the place where the income accrued that isrelevant to decide as to which law will apply.It is true that in the case of ordinaryresident even the income received from a placeof outside India is also includible for thepurpose of assessment of Income Tax. But inthis case after the Sikkim joined the IndianUnion in 1975, by virtue of Article 371F (k) ITR.NO.66/2000 of the Constitution, all laws then existing inthe territories of Sikkim continued to be in force. As far as the Income Tax is concerned,it is governed by the provisions of the Sikkim Income Tax Manual, 1948, until the Income Tax Act, 1961 was made applicable to that State. Therefore, by virtue of the provisions contained in Article 371F as far as the Stateof Sikkim is concerned, the income received in that State is liable to pay tax only under the provisions contained in the Act as found applicable to that State. If the argument of the learned counsel for the revenue is accepted, the amount of income already assessed in the hands of the assessee underthe provisions of the Sikkim laws, will again be assessed to tax under the Income TaxAct amounting to double taxation. 11. In this connection, we may refer to ITR.NO.66/2000 -21- the decision of the Gauhati High Court in Ghisalal Agarwala v. Commissioner of Income Tax ((2001) 248 ITR 506). There is also an identical question arose regarding thechargeability of the income winning from Sikkim Lottery and the tax was deducted atsource from the lottery prize under the Sikkim State Income Tax Manual, 1948. It was held that there is no provision in the Income Tax Act, 1961 for including such income as assessee's total income under the Income Tax Act. In Jain Brothers v. Union of India ((1979) 77 ITR 107 (SC)) it was held las follows: "It is not disputed that therecan be double taxation if thelegislature has distinctly enacted it. It is only when there aregeneral words of taxation and theyhave to be interpreted, they cannotbe so interpreted as to tax the subject twice over to the same tax (vide Channell J. in Stevens v.Durban Roodepoort Gold Mining Sikkim Lottery and the tax was deducted atsource from the lottery prize under the Sikkim State Income Tax Manual, 1948. It was held that there is no provision in the Income Tax Act, 1961 for including such income as assessee's total income under the Income Tax Act. In Jain Brothers v. Union of India ((1979) 77 ITR 107 (SC)) it was held las follows: "It is not disputed that therecan be double taxation if thelegislature has distinctly enacted it. It is only when there aregeneral words of taxation and theyhave to be interpreted, they cannotbe so interpreted as to tax the subject twice over to the same tax (vide Channell J. in Stevens v.Durban Roodepoort Gold Mining Co.Ltd.). The Constitution does notcontain any prohibition againstdouble taxation even if it beassumed that such a taxation isinvolved in the case of a firm andits partners after the amendment ofS.23(5) by the Act of 1956. Nor isthere any other enactment whichinterdicts such taxation. It istrue that S.3 is the generalcharging Section. Even if S.23(5)provides for the machinery forcollection and recovery of the tax,once the legislature has, in clearterms, indicated that the income ofthe firm can be taxed in accordancewith the Finance Act of 1956 as alsothe income in the hands of thepartners, the distinction a chargingand a machinery section is of noconsequence. Both the sections haveto be read together and construedharmoniously. It is significantthat similar provisions have alsobeen enacted in the Act of 1961.Secs.182and183correspondsubstantially to S.23(5) except thatthe old section did not have aprovision similar to Sub Section (4)of S.182. After 1956, therefore, sofar as registered firms areconcerned the tax payable by thefirm itself has to be assessed andthe share of each partner in theincome of the firm has to beincluded in his total income andassessed to tax accordingly. If anydouble taxation is involved, the ITR.NO.66/2000 legislature itself has, in expresswords, sanctioned it. It is notopen to any one thereafter to invokethe general principles that thesubject cannot be taxed twice over." 12. Thus double taxation is permissibleprovided specific provision has been made by the legislature. In the absence of anyprovision in the Income Tax Act, 1961 forincluding the income received from Sikkimlottery and subjected to tax under the SikkimIncome Tax Manual, 1948, the assessee cannotbe burdened to pay tax twice over the same income, as it will amount to double taxation. 13.Alankar Commercial Pvt. Ltd. v. Assistant Commissioner of Income Taxl and others ((2000) 243 ITR 626) was a case wherethough the company registered in Sikkim wascarrying on business activities and earningincome outside Sikkim but within India. Thequestion that arose for consideration before ITR.NO.66/2000 the Sikkim High Court was as to whether theincome accrued or received outside Sikkim is liable to tax under the Indian Income Tax Act.In those circumstances, it was held that if income which accrued or was received outsideSikkim was liable to tax under the IndianIncome Tax Act, it cannot be said that thesame would not be liable to tax under thatAct, merely because of the provisions of Clause 1(k) of Article 317F. There can be nodoubt that the Sikkim State Income Tax Manual,being a State law cannot have its operation beyond the limits of Sikkim. If thepetitioner had carried on its businessactivities or otherwise earned or receivedincome outside the State of Sikkim but withinIndia, the same would be liable to tax underthe Indian Income Tax Act. It was thisdecision which was challenged before the Apex ITR.NO.66/2000 Court. 14. The decision of the Apex Court is reported in Alankar CommercialPvt.Ltd.'s case income which accrued or was received outsideSikkim was liable to tax under the IndianIncome Tax Act, it cannot be said that thesame would not be liable to tax under thatAct, merely because of the provisions of Clause 1(k) of Article 317F. There can be nodoubt that the Sikkim State Income Tax Manual,being a State law cannot have its operation beyond the limits of Sikkim. If thepetitioner had carried on its businessactivities or otherwise earned or receivedincome outside the State of Sikkim but withinIndia, the same would be liable to tax underthe Indian Income Tax Act. It was thisdecision which was challenged before the Apex ITR.NO.66/2000 Court. 14. The decision of the Apex Court is reported in Alankar CommercialPvt.Ltd.'s case ((2001)9 SCC 380). The Apex Court dismissedthe Special Leave Petition. It was contended before the Apex Court that Sikkim was not a part of India at the relevant point of time the Income Tax Act is not applicable in respect of the assessment year for whichnotice was served. Though the assessee relied on the decision inState of Sikkim v. Surendra Prasad Sharma ((1994) 5 SCC 282), in thesaiddecisionthequestionof applicability of the Income Tax Act did notarise. That was also a case where the questionwas whether the Indian Law applied or not.15. Thus in the above case, the Apex Courtheld that the income received was admittedlyfrom a business carried on in a place outside ITR.NO.66/2000 Sikkim and such income is liable to beassessed under the Income Tax Act, 1961. Per contra, in the present case, the income was received by winning the lottery in Sikkim,which is already subjected to tax at source asper the Sikkim Income Tax Manual, 1948 andhence the decision cited supra has noapplication to the factual situation of thiscase. On the other hand, the above decisionlay support to the argument of the respondentthat the law that is to apply depends on theplace where the income was received. 16. The assessee having won the lottery ofSikkim, which is a part of Indian Union since1975 and the prize money won by the assesseeis within the territory of India, and prior tothe Income Tax Act, 1961 was extended to Sikkim. The relevant assessment year in thepresent case is 1987-88 and the law that is ITR.NO.66/2000 applicable to the State of Sikkim is the IncomeTax Manual of 1948 and since the tax amount ofRs.44,088/- was paid under the Sikkim StateIncome Tax Manual which has been claimed bythe assessee as the Tax deducted at source hasto be given credit to and not assessable againunder the Income Tax Act 1961. 17. The learned counsel for the assesseealso contended based on the Circular dated 27thMarch, 2000 of the Government of India, Ministry of Finance Department of Revenue, thatreference itself is not maintainable as itinvolves an amount of less than Rs.2 lakhs. TheCircular was produced as Ext.R1(b) in thcounter affidavit. As per the Circular, theBoard decided that appeals under Section260A/reference under Section 256(2) would befiled before the High Court, only the taxeffect exceeds an amount of Rs.2,00,000/-. But ITR.NO.66/2000 the Circular does not apply to the referencemade under Section 256(1) of the Income TaxAct. Further when the Tribunal has referred toa question of law for answer of this Court, weare bound to answer the question referred to usand hence this contention is rejected. 18. In the result, we answer the questionreferred to us in the affirmative in favour ofthe assessee and against the revenue. A copy of this order shall be forwarded tothe Tribunal for passing consequential ordersin accordance with law. P.R.RAMAN, Judge. K.P.BALACHANDRAN,Judge. kcv. ITR.NO.66/2000 -29- P.R.RAMAN & K.P.BALACHANDRAN,JJ. -------------------------- I.T.R.NO.66 OF 2000 -------------------------- O R D E R ITR.NO.66/2000 the Circular does not apply to the referencemade under Section 256(1) of the Income TaxAct. Further when the Tribunal has referred toa question of law for answer of this Court, weare bound to answer the question referred to usand hence this contention is rejected. 18. In the result, we answer the questionreferred to us in the affirmative in favour ofthe assessee and against the revenue. A copy of this order shall be forwarded tothe Tribunal for passing consequential ordersin accordance with law. P.R.RAMAN, Judge. K.P.BALACHANDRAN,Judge. kcv. ITR.NO.66/2000 -29- P.R.RAMAN & K.P.BALACHANDRAN,JJ. -------------------------- I.T.R.NO.66 OF 2000 -------------------------- O R D E R 7th December, 2006