TaxTMI 
TaxTMI 
1972 (6) TMI 3
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....ing. All the four partners are residing in India. The firm was constituted on November 10, 1937. On July 15, 1942, the four partners executed a power of attorney in favour of one V. Mariappa Pillai, who is residing in Ceylon. The assessee-firm had all along been assessed as a resident and ordinarily resident, but for the assessment year 1962-63, the assessee claimed that it should be assessed as a non-resident on the ground that the management and control of the business vested in the power of attorney agent who was a permanent resident of Ceylon and that no part of the management and control is exercised from India. The Income-tax Officer rejected the claim in the view that the power of attorney gave a series of directions to the agent whi....
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....essment year. At this stage it would be useful to refer to the relevant clauses of the deed dated July 15, 1942, appointing Mariappa Pillai as the power of attorney. After stating that the partners were carrying on in partnership as pawn-brokers and money-lenders in Ceylon the deed proceeded to state that the partners were desirous of appointing some fit and proper person as their attorney to manage and transact their business in Ceylon and appointed the said Mariappa Pillai " to be the true and lawful attorney of us and each of us and of the survivors and on our behalf and in the name of us.........for all and each and every or any of the following purposes : To superintend, manage and control the said business and to make all such appli....
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....rney, we hereby promising and agreeing to ratify, allow and confirm all and whatsoever our said attorney shall lawfully do or cause to be done in the premises by virtue hereof. And we do hereby direct that all acts which shall be had, made or done by our said attorney before he shall have received notice of our death or the revocation of the authority contained in these presents shall be as binding and valid to all intends and purposes as if the same had taken place previous to our death or before such revocation, any rule of law or equity to the contrary notwithstanding. " It is seen from these clauses set out above that the entire de facto control of the business was given to the power of attorney agent. It enables the agent to carry o....
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....and the Tribunal has actually given a finding that that view was not correct and the power of attorney vested the entire control and management of the business in the agent. As pointed out by the Tribunal, it was open to the department to further investigate into the accounts and examine the account books of the firm, scrutinise the passports and visas, if any, and to gather other evidence to prove that the partners or some of them did exercise actual control or management of the business in spite of the full power given to the agent to manage and run the business but that has not been done. As has been held in a number of cases, mere proof of power or capacity to control and manage was not enough but a de facto or actual control and manag....