Interpretation of "seven years" under tax residence rules read as seven continuous calendar years immediately before the relevant previous year.

The interpretation of "seven years" in Section 4-B turns on the Act's scheme of taxing the total income of the previous year and applying residential status by reference to that year. A general definition of "year" in the General Clauses Act cannot be used where it would create a gap before the relevant previous year or conflict with Sections 4(1), 4-A and 4-B. The expression is therefore treated as seven consecutive calendar years of twelve months each immediately preceding the commencement of the relevant previous year, so the residential-status test is applied over that continuous preceding period.

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Issues: Whether the expression "seven years" in Section 4-B of the Indian Income-tax Act is to be reckoned as seven calendar years or as seven previous years immediately preceding the relevant previous year.

Analysis: The scheme of the Act charges tax on the total income of the previous year and applies the tests of residence and ordinary residence with reference to that year. The meaning of "year" in the General Clauses Act could not be applied where it would create a gap before the commencement of the previous year and would be repugnant to the structure of Sections 4(1), 4-A and 4-B. The construction urged for the assessee also did not accord with the language of the provision or remove the practical anomaly relied upon.

Conclusion: The expression "seven years" means seven years of twelve calendar months each immediately preceding the commencement of the relevant previous year, and the answer is against the assessee.

Final Conclusion: The reference was answered by holding that the residential-status test under Section 4-B must be applied by looking to the seven immediately preceding calendar years as a continuous period ending with the start of the relevant previous year.

Ratio Decidendi: Where the language and scheme of a taxing provision fix the reference point to the commencement of the previous year, a general definition of "year" cannot be applied so as to defeat that context; the relevant period must be construed as the continuous immediately preceding period of twelve-month years.

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