1957 (2) TMI 64 - HC - Income Tax

Assessee's Residence Status: Dwelling Place Maintenance Criteria Clarified

COMMISSIONER OF INCOME-TAX, BOMBAY NORTH, ETC. Versus FULABHAI KHODABHAI PATEL

COMMISSIONER OF INCOME-TAX, BOMBAY NORTH, ETC. Versus FULABHAI KHODABHAI PATEL - [1957] 31 ITR 771 (Bom) Issues:Determining the residential status of the assessee for the assessment year 1947-48 under section 4A(a)(ii) based on the maintenance of a dwelling place in the taxable territories.Analysis:The judgment of the Bombay High Court, delivered by CHAGLA, C.J., and TENDOLKAR, J., addressed the issue of whether the assessee could be considered a resident for the assessment year 1947-48 under section 4A(a)(ii) based on the maintenance of a dwelling place in the taxable territories. The case involved the assessee, who had his father and brothers living in Bombay, and the father gifted a house to each son, including the assessee. The critical question was whether the house gifted to the assessee could be deemed a dwelling place maintained by or for him in the taxable territories. The court emphasized that a dwelling place signifies a sense of permanency and attachment, going beyond mere residence. It must be available for the assessee's use as a home, either maintained by him or someone else for him.The court analyzed the legislative intent behind section 4A(a)(ii), highlighting the requirement that the dwelling place must be maintained for the assessee, irrespective of ownership. The right to reside in the dwelling place is crucial, indicating that the building must be ready and fit for occupation by the assessee without external permission. The judgment emphasized that the mere fact of residing in a house does not establish it as a maintained dwelling place for the assessee unless it can be considered his home. The court referred to precedents, including an Indian decision and two English judgments, to interpret the concept of maintaining a dwelling place for tax residency determination.Referring to the Indian decision, the court clarified that the right to occupy a dwelling place need not be proprietary but should allow the assessee to use it as a home. The English judgments highlighted that a house could be deemed a dwelling place even if not owned by the assessee, as long as it is available and set apart for his use. The court concluded that, based on the facts presented, the house in Kaira was considered the dwelling place of the father of the assessee, and it was not established that it was maintained for the assessee as a dwelling place. Therefore, the court ruled in favor of the assessee, determining that he was not a resident for the assessment year in question under section 4A(a)(ii).In conclusion, the court answered the question submitted in the negative, absolving the assessee of resident status for the assessment year 1947-48. The judgment underscored the importance of the concept of a maintained dwelling place for tax residency determination under section 4A(a)(ii), focusing on the right to occupy and use the property as a home.