Place of control and management determines resident status; de facto, stable exercise of control during the accounting period is decisive.

Whether the situs of control and management of a Hindu undivided family lay within British India turned on the de facto, contemporaneous seat of control during the accounting year 1938-39; the court applied a permanence and actual-exercise test, holding that occasional visits, isolated acts, presence of family members, prior or subsequent assessments, or mere rights to control do not establish that control was situated in British India. On the facts there was no material of continuous or stable control exercised from British India in the relevant year, so the resident-status finding was untenable and decided for the assessee.

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Issues: Whether the finding that the undivided Hindu family is resident in British India within the meaning of Section 4-A(b) of the Income-tax Act, 1922 is tenable on the facts of the accounting year 1938-39.

Analysis: Section 4-A(b) requires that the control and management of the affairs of a Hindu undivided family be situated wholly outside British India for the family to be non-resident; the term "situated" contemplates a seat of control with some degree of permanence. The test is the actual, de facto exercise of control and management during the accounting period, not mere rights to control, the physical location of business operations, or residence in other years. Occasional or sporadic visits, isolated acts of management (such as attending suits), the fact of prior or subsequent assessments, or the presence of family members in India do not, without evidence of sustained control exercised from British India during the accounting period, establish that the control and management was situated in British India. On the facts found, there was no material showing that the karta exercised continuous or stable control and management of family affairs in British India during the relevant accounting period; the Income Tax Officer and the Appellate Tribunal relied on irrelevant considerations and subsequent years' findings.

Conclusion: Answer: No. The finding that the family was resident in British India within the meaning of Section 4-A(b) is not tenable; decision is in favour of the assessee.

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