Company denied property occupation benefit under proviso; advocates' costs to be settled by Taxing Master

The Calcutta Stock Exchange Association Ltd., IN RE.

The Calcutta Stock Exchange Association Ltd., IN RE. - [1935] 3 ITR 105 (Cal) Issues:
Interpretation of the proviso to Section 9(2) of the Indian Income Tax Act (XI of 1922) regarding the occupation of property for the purpose of residence by a company.

Analysis:
The case involved a mutual benefit liability company that owned a building housing the Calcutta Stock Exchange. The Income Tax Officer assessed the company's income for 1933-34, including income from the building, which was taxed under Section 9 of the Act. The company objected to the assessment, claiming entitlement to the proviso to Section 9(2). The main issue was whether the property could be considered in the occupation of the owner for the purpose of residence under the proviso.

The Commissioner contended that although a company is a 'person' for certain purposes of the Act, the word 'residence' in the proviso does not refer to a company's place of residence. The Commissioner's view was that 'residence' signifies a place where individuals eat, drink, and sleep with some permanence, citing legal precedents to support this interpretation. The Commissioner argued that a company can only 'reside' within the extended meaning of carrying on business, as seen in Sections 4 and 42 of the Act.

The court analyzed the term 'residence' in the proviso and emphasized that the word 'own' inserted in the phrase 'for the purpose of his own residence' indicated applicability to human persons, not fictional entities like companies. The court found no justification for extending the meaning of 'residence' in this context, as it was specific to individual human habitation. The court noted the uniqueness of the proviso and highlighted the lack of clear legislative intent for an extended interpretation.

Ultimately, the court ruled in the negative, stating that the company did not qualify for the proviso's benefit regarding property occupation for residence. The judgment clarified that the proviso's language was intended for human individuals, not corporate entities like the company in question. The costs of the advocates involved in the reference were to be settled by the Taxing Master, as per the court's decision.