TaxTMI 
TaxTMI 
1950 (12) TMI 2
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....d family) is 'resident' in British India under Section 4A(b) of the Income-tax Act. " The circumstances of the case may be briefly stated as follows. The appellant is the karta of a joint Hindu family and has been living in Ceylon with his wife, son and three daughters, and they are stated to be domiciled in that country. He carries on business in Colombo under the name and style of the General Trading Corporation, and he owns a house, some immovable property and investments in British India. He has also shares in two firms situated at Vijayapuram and Nagapatnam in British India. In the year of account, 1941-42, which is the basis of the present assessment, the appellant is said to have visited British India on seven occasions and the tot....
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....d by the appellant during his stay in British India and therefore he was not liable to assessment in respect of his income outside British India. This view was not accepted by a Bench of the Madras High Court consisting of the learned Chief Justice and Patanjali Sastri, J. They held that the Tribunal had misdirected itself in determining the question of the "residence" of the appellant's family and that on the facts proved the control and management of the affairs of the family cannot be held to have been wholly situated outside British India, with the result that the family must be deemed to be resident in British India within the meaning of Section 4A(b) of the Income-tax Act. In this appeal, the appellant has questioned the correctness o....
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....s what Lord Loreburn intended to convey by the words "where the central management and control actually abides. " The principles which are now well-established in England and which will be found to have been very clearly enunciated in Swedish Central Railway Company Limited v. Thompson, which is one of the leading cases on the subject, are :---- (1) that the conception of residence in the case of a fictitious "person", such as a company, is as artificial as the company itself, and the locality of the residence can only be determined by analogy, by asking where is the head and seat and directing power of the affairs of the company. What these words mean have been explained by Patanjali Sastri, J., with very great clarity in the following....
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....ll be taken to be resident in the taxable territories, but such a presumption will not apply if the case can be brought under the second part of the provision. Secondly, we take it that the word "affairs" must mean affairs which are relevant for the purpose of the Income-tax Act and which have some relation to income. Thirdly, in order to bring the case under the exception, we have to ask whether the seat of the direction and control of the affairs of the family is inside or outside British India. Lastly, the word "wholly" suggests that a Hindu undivided family may have more than one "residence" in the same way as a corporation may have. The question which now arises is what is the result of the application of these principles to this cas....
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....Income-tax in the following passage which occurs in his order dated the 24th February, 1944 :---- " During a major portion of the accounting period (year ending 12th April, 1942) the appellant was controlling the businesses in Burma and Saigon and there is no evidence that such control was exercised only from Colombo. No correspondence or other evidence was produced which would show that any instructions were issued from Colombo as regards the management of the affairs in British India especially as it was an unauthorized clerk who was looking after such affairs. The presumption therefore is that whenever he came to British India the appellant was looking after these affairs himself and exercising control by issuing instructions .............