Residence status and taxable remittances were upheld where the assessee failed to prove a casual visit or capital source.

Residence status under section 4A(a)(iii) turned on whether the assessee's 1947 presence was casual or occasional; on the materials, he failed to prove that it was, so he was treated as resident but not ordinarily resident for 1948-49. Remittances brought into India were also treated as taxable remittances under section 4(1)(b)(iii) because the surrounding facts showed accumulated profits, no business necessity for the transfer, and no satisfactory proof that the funds were capital. The reference was answered for the Revenue.

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Issues: (i) Whether, on the facts and in the circumstances of the case, the assessee was a resident but not ordinarily resident in the taxable territories for the assessment year 1948-49. (ii) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the amount of Rs. 2 lakhs had been remitted to the taxable territories by the assessee during the accounting year out of his accrued profits of earlier years.

Issue (i): Whether, on the facts and in the circumstances of the case, the assessee was a resident but not ordinarily resident in the taxable territories for the assessment year 1948-49.

Analysis: For residence under section 4A(a)(iii) of the Indian Income-tax Act, 1922, it had to be shown that the assessee was in the taxable territories for the prescribed period in the preceding four years and was also present in the relevant previous year otherwise than on a casual or occasional visit. The first two conditions were admitted. The only dispute was the character of the visit in 1947. On the materials, including the assessee's own disclosure and affidavit, the Court held that the assessee had not discharged the burden of proving that the visit was casual or occasional. The surrounding circumstances, including the past conduct and property connections in India, supported the Tribunal's view.

Conclusion: The assessee was rightly treated as a resident but not ordinarily resident for the assessment year 1948-49, and the answer was in favour of the Revenue.

Issue (ii): Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the amount of Rs. 2 lakhs had been remitted to the taxable territories by the assessee during the accounting year out of his accrued profits of earlier years.

Analysis: For section 4(1)(b)(iii) of the Indian Income-tax Act, 1922, the material question was whether the remittances brought to India represented the assessee's profits and not capital. The remittances were made through the firm's account, but the firm had no business need for the transfer, the assessee had a dominant interest in the firm, and the evidence showed accumulated profits in Rangoon. The assessee failed to produce satisfactory accounts or other evidence to show that the remittances were out of capital. On that footing, the Tribunal was justified in drawing the inference that the remittances were out of earlier accrued profits.

Conclusion: The finding that the remittance of Rs. 2 lakhs represented taxable remittance out of accrued profits was upheld, and the answer was in favour of the Revenue.

Final Conclusion: Both referred questions were answered against the assessee, and the reference was disposed of in favour of the Revenue.

Ratio Decidendi: Where the statutory conditions for residence are otherwise satisfied, the assessee bears the burden of proving that the relevant visit was casual or occasional; and where remittances to India are shown from the assessee's business funds, the assessee must prove that they were capital and not taxable profits.

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