Company residence turns on real control and management, with Bombay directing the assessee's affairs despite overseas managers.

A company's residence under Section 4A(c) of the Income-tax Act, 1922 depends on where its real, central control and management of affairs is de facto exercised, not where its business is carried on or income is earned. Day-to-day operations by managers or agents outside the taxable territories do not determine residence if they remain subject to the directions of the central authority. On the facts, the directors in Bombay retained the company's head and brain despite wide managerial powers in Ceylon, so the company was held resident in the taxable territories and the issue was answered for the Revenue.

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Issues: Whether the assessee company was resident in the taxable territories within the meaning of Section 4A(c) of the Income-tax Act, 1922, having regard to the place where its control and management of affairs was situated.

Analysis: For a company, residence depends on whether the control and management of its affairs is situated wholly in the taxable territories. The relevant inquiry is not where the business is carried on or where income is earned, but where the central directing power functions. The mere fact that agents or managers conduct day-to-day operations outside the taxable territories does not make them the seat of control if they remain subject to directions from the central authority. The place where the company keeps its head and brain is the decisive factor, and the evidence showed that the directors in Bombay retained and exercised that central control notwithstanding the extensive powers given to the managers in Ceylon.

Conclusion: The assessee company was resident in the taxable territories, and the question was answered in the affirmative, in favour of the Revenue.

Ratio Decidendi: A company is resident where its real and central control and management of affairs is de facto exercised, and the existence of wide managerial authority in agents outside the taxable territories does not displace residence if the head and brain of the company remain within the taxable territories.

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