Residence exemption for assessed owner: a beneficiary assessed as owner may claim the proviso's tax relief accordingly.

Beneficiary assessed under Section 9(1) in respect of occupation of trust property may claim the proviso to Section 9(2) in the same capacity in which he was assessed (i.e., as owner). The court reasoned that assessment under Section 9(1) treated the beneficiary as owner for tax liability, and therefore limiting the benefit to the legal owner would be inconsistent with the fact of assessment; broader questions about the distinction between legal and beneficial ownership or trustees' assessment amounts were left undecided. The reference was answered affirmatively for the beneficiary and costs were awarded against the Commissioner.

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Issues: Whether a beneficiary who has been assessed under Section 9(1) of the Income-tax Act, 1922 in respect of occupation of trust property is entitled to the benefit of the proviso to Section 9(2) (the residence exemption limiting tax to ten per cent of total income).

Analysis: The Court confined its decision to the narrow question whether the beneficiary, having been assessed under Section 9(1), may claim the relief provided by Section 9(2). The Court observed that the authorities assessed the beneficiary under Section 9(1) and that only an owner can be made liable under that provision; therefore the beneficiary has been treated as owner for assessment purposes. The Advocate-General's contention that the benefit of Section 9(2) is limited to the legal owner (the trustees) was rejected as inconsistent with the fact of assessment. The Court declined to decide broader questions concerning whether trustees could be assessed in larger amounts than beneficiaries or whether 'owner' in Section 9 denotes beneficial owner rather than legal owner, and limited its reasoning to the consequence of the beneficiary's assessment under Section 9(1).

Conclusion: The beneficiary assessed under Section 9(1) is entitled to the benefit of the proviso to Section 9(2) in the same capacity in which he was assessed (i.e., as owner). The reference is answered in the affirmative and costs are ordered against the Commissioner; decision is in favour of the assessee.

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