1952 (10) TMI 34 - HC - Income Tax

Assessee's Status: Not Ordinarily Resident under Indian Income-tax Act

MANIBHAI S. PATEL Versus COMMISSIONER OF INCOME-TAX, BOMBAY NORTH

The High Court held that the assessee was not 'not ordinarily resident' in British India for the year 1944 based on his physical presence exceeding two ... - Issues:- Determination of whether the assessee was 'not ordinarily resident' in British India for the year 1944.- Interpretation of Section 4B of the Indian Income-tax Act regarding the conditions for an individual to be considered 'not ordinarily resident.'Analysis:The judgment pertains to an application where the assessee sought the Appellate Tribunal to refer a question of law to the High Court regarding his residential status in British India for the year 1944. The main issue was whether the assessee was 'not ordinarily resident' in British India during the relevant year, impacting the taxation of income accrued outside India. The Tribunal's decision was based on the provisions of Section 4B of the Indian Income-tax Act, which defines the criteria for an individual to be considered 'not ordinarily resident' in British India.The Tribunal considered the assessee's physical presence and residence history in British India for the preceding years to determine his residential status. The Tribunal found that the assessee was physically present in British India for more than two years during the seven years preceding 1944, which contradicted the assessee's claim of being 'not ordinarily resident.' The Tribunal concluded that the assessee did not meet the conditions specified in Section 4B(a) of the Act to be considered 'not ordinarily resident' for the year 1944.The Court analyzed the legislative intent behind Section 4B, emphasizing that the concept of ordinary residence is linked to an individual's physical presence and residence in the taxable territories. The Court clarified that if an individual resides in the taxable territories for more than two years, they cannot be deemed 'not ordinarily resident.' The Court rejected the assessee's argument that his time spent outside the taxable territories should be considered to satisfy the conditions of Section 4B. The Court upheld the Tribunal's decision, ruling that the assessee was not 'not ordinarily resident' in British India for the year 1944 based on his residence history and the statutory provisions.In conclusion, the High Court answered the question of the assessee's residential status in the negative, affirming that he was not 'not ordinarily resident' in British India for the year 1944. The Court dismissed the motion brought by the assessee and ordered him to pay the costs of the reference and the motion.