1. This is a reference on a case stated under s. 256(1) of the I.T. Act, 1965-66 (referred to hereinafter as 'the said Act'). The facts giving rise to the reference are as follows :
2. The assessment year with which we are concerned is the assessment year 1965-66, the previous year relevant to which ended on March 31, 1965. The assessee was a South African national and stayed in India for more than 30 days during the relevant previous year. He came to India some time in April, 1962, and he left India on May 25, 1964. During this period, he and his family, consisting of his wife and children, stayed with his mother and sister in the premises provided free of cost by M/s. Arvind Industries Pvt. Ltd. of which he was a director. It was common ground that the premises were given in the name of the assessee's mother. With effect from September 1, 1964, these premises were transferred to the name of the assessee's sister, Miss Sudhaben Kanji and the said M/s. Arvind Industries Pvt. Ltd. started charging rent at Rs. 250 per month in respect of the said premises. Even after the assessee left India, his family continued to stay in India in the flat allotted to his sister. According to the assessee, he kept his wife and children in India for the purposes of educating his children. The expenses of the family as well as the sister were borne by the assessee even after his departure. The assessee claimed that he was a non-resident during the relevant year. The ITO held that he was a resident, but not ordinarily resident in view of the provisions of s. 6(1)(b) of the said Act. The assessee preferred an appeal against this decision to the AAC. The order of the AAC shows that the AAC found that the assessee was born in Johannesberg, South Africa, where his father had set up a substantial business. According to the AAC, the assessee, his wife, three children, sister and his mother returned to India in April, 1962, and the said M/s. Arvind Industries Pvt. Ltd. allowed the family to stay in the said flat at the request of the mother of the assessee. From September, 1964, the said flat was allotted to the sister of the assessee as aforesaid. On these facts, the AAC came to the same conclusion as of the ITO and held that the assessee was a resident but not ordinarily resident within the contemplation of s. 6(1)(b) of the said Act. This conclusion was challenged by the assessee before the Tribunal, but the appeal of the assessee was dismissed by the Tribunal. There were two other contentions raised by the assessee, one was in respect of the interest received by the assessee from the Bank of India on the money standing to his credit in a non-resident account. In respect of this amount, the assessee claimed exemption under s. 10(a) of the said Act, inasmuch as according to the assessee, he was a non-resident under the said Act. Following upon the conclusion that the assessee was not a non-resident, this claim of the assessee was rejected by the ITO, the AAC, as well as the Tribunal. The third and the last contention of the assessee was regarding the inclusion of a sum of Rs. 4,000 in his total income under s. 2(24)(iv) of the said Act on account of the benefit derived by the assessee from the said M/s. Arvind Industries Pvt. Ltd., by permitting him to stay in its flat free of cost. The Tribunal held, following its order for the assessment year 1963-64, that the assessee did drive the benefit of free accommodation, but that such benefit was restricted to a period of only six months, because rent was charged from October 1, 1964, which was more or less equal to the value of the benefit. They, therefore, gave relief of Rs. 2,500 to the assessee retaining the addition to the extent of Rs. 1,500. From this decision of the Tribunal, the following three questions have been referred to us for our consideration :
'1. Whether, on the facts and circumstances of the case, the Tribunal was right in holding that the assessee was a 'resident' but no 'ordinarily resident' during the year under appeal ?
2. Whether, on the facts and circumstances of the case, the assessee is entitled to the exemption under section 10(4A) of the Income-tax Act, 1961 ?
3. Whether, on the facts and in the circumstances of the case, the sum of Rs. 1,500 can be taxed in the hands of the assessee under the provisions of section 2(24)(iv) of the Income-tax Act, 1961 ?'
3. The submission of Mr. Joshi, learned counsel for the Commissioner, is that, in reality, the said flat was given by the said M/s. Arvind Industries Pvt. Ltd. to the assessee, who was a director and a substantial shareholder in the said Arvind Industries. The entire expenses of the household were paid by the assessee and even after he left India on May 25, 1964, his wife and children continued to live in the flat with his sister and the entire expenses of the entire household including that of the sister were borne by the assessee. He pointed out that although the mother of the assessee might have been a director of the said M/s. Arvind Industries, his sister had nothing to do with the said concern and submits that, really speaking, the said flat was given to the assessee although the tenancy was later given in the name of his sister. It is urged by him that in this case, the said flat must be regarded as a dwelling house maintained by the assessee. It is, on the other hand, contended by Mr. Khatri, learned counsel for the assessee, that there is nothing to show that the assessee regarded the said flat as his dwelling house. He stayed there only for a short span of 54 days in the relevant previous year and then left it. The flat never belonged to him nor was it ever rented out to him. It fact, from September, 1964, it was rented out to his sister. It is submitted by him that, in these circumstances, the flat could not be regarded as a dwelling house either maintained by him or caused to be maintained for him for a period amounting to 182 days or more in the relevant previous year.
4. Before considering the controversy in this regard, we may take a note of the provisions of s. 6 of the said Act and that of s. 6(1)(b) in particular. Section 6 of the said Act deals with the question of resident in India. Sub-section (1) of s. 6 lays down when an individual can be said to be a 'resident' in India in any previous year and cl. (b) therefore runs as follows :
'For the purposes of this Act -
(1) an individual is said to be resident in India in any previous year if he - ...
(b) maintains or causes to be maintained for him a dwelling place in India for a periods amounting in all to one hundred and eighty-two days or more in that year and has been in India for thirty days or more in that year.'
5. A plain reading of this clause shows that what it requires, in order that the assessee may be considered as a 'resident' in India, is that the assessee must have maintained or caused to be maintained for him a dwelling place in India for the period stated in the said clause and also resided in India for a period 30 days or more during the relevant previous year. The question which arises for our consideration, in this case, is whether it can be said that the assessee had maintained or caused to be maintained for him a place of residence in India and whether that place can be regarded as a dwelling place of the assessee. In connection with that question, there are few relevant decisions of which a note can usefully be taken at this stage.
6. We first propose to consider the decision of this court in CIT v. Fulabhai Khodabhai Patel : 31ITR771(Bom) . In that judgment, Chagla C.J. laid down certain principles regarding the question as to when a residence can be considered to be considered to be a dwelling place or house. In that case, the assessee's father had four sons including the assessee. The assessee went to East Africa in 1931. The assessee's father and his other three sons lived in Kaira in the Bombay Presidency. The father had four houses and in 1942, he made a gift of these four houses, one to each of his four sons, and as the father had no house and the assessee was in East Africa, the father lived in the house gifted to the assessee. On April 17, 1946, the assessee's wife came to India with her children and resided up to February 14, 1947, in the assessee's house with her father-in-law. The assessee himself came to India on September 3, 1946, and stayed in this house for about four months. The I.T. authorities, held on these facts that for the assessment year 1947-48 the assessee had maintained for him a dwelling place in India for more than 182 days and was, therefore, a 'resident' within s. 4A(a)(ii) of the Indian I.T. Act, 1922 as it then stood. In connection with what can be considered as a dwelling place, Chagla C.J., with his usual felicity of expression, observed as follows (p. 777) :
'The connotation of a dwelling place is undoubtedly different from a mere residence or a mere house in which one finds oneself for the temporary or short period. A dwelling place connotes a sense of permanency, a sense of attachment, a sense of surroundings, which would permit a person to say that this house is his home. Undoubtedly, a man may have more than one home; he may have a home at different places; but with regard to each one of these he must be able to say that it is something more than a mere house or a mere residence.'
7. It is not sufficient in order to satisfy this test that there is a dwelling place in the taxable territories in which the assessee goes and lives. What is required is that there must be a house or a building or a part of the building which must be set apart and made available for him, in which he could live, if he so desires as a home. There must also be in him a right to live in such a dwelling place maintained for him, because without that right, it could not be said that he has either maintained a dwelling place or a dwelling place has been maintained for him. We may point out that the provisions of s. 4A(a)(ii) of the Indian I.T. Act, 1922, are in pari materia with the provisions of s. 6(1)(b) of the said Act.
8. In Pickles v. Foulsham  9 TC 261 , it has been observed by Rowlatt J., after considering several relevant decision, as follows, at p. 275 :
'Those are roughly the cases, but it seems to me that it is very essentially a question of fact when you get on the border line. I can understand a man who is abroad and who has, in a real sense, a residence at home, like the sailor who is not resident anywhere else, and, a step further, a man who is not on the sea, but a man who is, we will say, travelling to represent somebody, all the time, in Africa, one might say it is perfectly obvious that he was resident in England if he had a wife and family established and resident in England. It is not very far beyond that where you get a man who is in a better services, and has not to travel and camp out, but is at the establishment of his company in Africa. It seems to me that a good deal depends upon rather minute colouring in a case like this, as to which the Commissioners are proper judges, and can make the proper inferences. A man, I suppose, may keep a house for his wife and come there merely as a visitor; he may keep a house for his mother, and, when he can get away, always go there to see her; but it may be that it is his mother's house, even if he is paying for it, and he is going there as a visitor. He keeps the house for his wife and children; it may be that he is going there as going home; it may be that that is the centre really of his life, that he keeps many belongings there, and so on, and his time in Africa is really, in truth, a period of enforced absence from what is truly his residence. Now it may be one, or it may be the other.'
9. The principles laid down by Chagla C.J. in CIT v. Fulabhai Khodabhai Patel : 31ITR771(Bom) have been approved by the Supreme Court in CIT v. K. S. Ratnaswamy : 122ITR217(SC) . It was held that the expression 'a dwelling place' in s. 4A(a)(ii) of the Indian I.T. Act, 1922, primarily meant 'residence', 'abode' or 'home' where an individual was supposed usually to live and sleep and since the expression was used in a taxing statute in the context of a provision which laid down a technical test of territorial connection amounting to residence, the concept of an 'abode' or 'home' was implicit in it. It was further held that the expression 'he has maintained for him a dwelling place' in s. 4A(a)(ii) of the Indian I.T. Act, 1922, meant 'he causes to be maintained for him a dwelling place'. In either of these expressions, the volition on the part of the assessee in the maintenances of a dwelling place emerged very clearly; whether he maintained it or he caused it to be maintained the maintenance of the dwelling place had to be at his instance, behest or request and when it was maintained by someone else other than the assessee, it had to be for the assessee or for his benefit.
10. In Shiva Narayan Sharma v. CIT : 18ITR844(All) , one of the questions referred to the High Court was as follows (p. 848) :
'Whether, on the facts and in the circumstances of the case, the applicant is a resident of British India under the provisions of section 4A(a), sub-clause (ii), of the Indian Income-tax Act ?'
11. In connection with this question, Malik C.J., who delivered the judgment on behalf of the Division Bench, observed as follows (p. 848) :
'Ordinarily, a question whether a person is or is not a resident in British India is a question of fact for the decision of the Appellate Tribunal but in referring the question, we assume they intended to have out opinion on the point, whether, on the facts found by them, they could come to the conclusion that the assessee was a resident in British India as defined in section 4A(a)(ii).'
12. Now, coming to the case before us, it is true that a residence was provided by the said Arvind Industries, where during the relevant previous year the assessee lived for 54 days with his wife, children and his sister and mother. After the said period of 54 days, the said premises was occupied by the assessee's mother and sister, his wife and children, but the expenses therefore were paid by the assessee. There is no material to show that the assessee kept his belongings there or that after he left India, he regarded the said premises as his home or that he intended to return. It is true that the premises were maintained by the assessee, but as Rowlatt J. put it it Pickles v. Foulsham  9 TC 261 , what is material is not whether that residence was maintained by the assessee, but whether be maintained it as his own residence or a residence of his wife and children or his mother and sister. Now, in the present case, the facts clearly show that the assessee lived for a long time in South Africa and came to India in April, 1962, and left India on May 25, 1964, and there is nothing to show that he returned to India after May 25, 1964, for any sizeable time or with a view to live in India. In fact, the Tribunal has noted that the assessee appeared to be withdrawing his interest in India gradually. It is true that the Tribunal has observed that till the interests were withdrawn, it might have been necessary for him to keep a dwelling place in India. In the statement of the case, there is, however, no mention of the assessee having returned to India, although the order of the AAC does mention that he came to India again in 1969. If these facts noted by the AAC are taken into account, even then it would show that for a period of five years or so, the assessee never returned to India on May 25, 1964. We, therefore, find it difficult to accept the conclusion of the Tribunal that the assessee maintained the said flat belonging to the Arvind Industries as his dwelling house. We are fully conscious of the fact that, as pointed out by Justice Rowlatt in Pickles v. Foulsham  9 TC 261, this is primarily an inference from the facts. But as pointed out by Malik C.J. in Shiva Narayan Sharma v. CIT : 18ITR844(All) , the question whether a person is or is not a resident of British India is a question of fact for the decision of the Tribunal but, in making the reference of the question it must be assumed they intended to have the opinion of the court on the point whether, on the facts found by them, they could come to the conclusion that the assessee was a resident of British India. We may also point out that although the assessee's wife and children appeared to have continued to stay in India after he left, there is no clear finding as to how long they continued to stay here or whether they continued to stay here in the said premises as in their own dwelling or home or they continued to reside here as guests in the home of the assessee's sister or mother only for some particular purpose. In our view, the Tribunal, with respect, has gone wrong because it did not take into account that although the assessee might, in a given case, maintain a residential premises, where he did not stay long during the relevant previous year, but where his wife and children continued to stay, without treating those premises as his home or residence. It has not taken into consideration that in a case where the real question is whether the assessee regarded the flat here as his dwelling house or residence or whether he maintained it for his own wife and children. Moreover, in the present case, from September 1, 1964, onwards, the said flat was rented out to the assessee's sister, Sudhaben, and the assessee's wife and children continued to live there. In these circumstances, we fail to see how it could be said, at any rate, that from that time the assessee regarded the said premises as his own residence or dwelling place. It may be that he paid the expenses of running the said premises, but we do not think that it could be said that he regarded them as his own dwelling or that he had a legal right to stay in the said premises. In any event, the facts on record are not such as to sustain a conclusion that the said premises were regarded by the assessee as his own residence or dwelling place.
13. Before parting with the matter, we may mentioned that at the hearing before us, Mr. Khatri sought to rely upon a supplementary statement of the case disclosing a copy of the letter dated May 2, 1962, addressed by the assessee's mother to the said Arvind Industries, requesting for permission to stay in the company's flat at Arvind House, the said flat being the premises in question before us, and a copy of the resolution dated July 2, 1962, passed by the board of directors of Arvind Industries Pvt. Ltd., resolving that the assessee's mother be and was provided with the free residential accommodation at the said flat. Mr. Khatri pointed out that both these documents have been noted in the order of the AAC, but have not been annexed to the original statement of the case and hence they should be taken on record by way of a supplementary statement of the case. Mr. Joshi has strongly objected to the supplementary statement of the case being taken on record and submitted that the parties are completely bound by the agreed statement of the case and documents annexed thereto. In our view, it is not necessary for us to resolve this controversy, because even without taking the supplementary statements on record, we are of the view that the said premises at Arvind House cannot be considered to be a dwelling house maintained by or caused to be maintained for the assessee during the relevant year.
14. As far as question No. 2 referred to us is concerned, it is common ground that the answer to that would follow the answer to question No. 1.
15. As far as question No.3 is concerned, it is agreed between the counsel for the assessee and the Commissioner, that the said question is covered by the decision of a Division Bench of this court in CIT v. Shri Ramnath A. Podar : 112ITR436(Bom) , and in accordance with the said decision, the said question is liable to be answered in the negative and in favour of the assessee.
16. In the result, the questions referred to us are answered as follows :
Question No. 1 : In the negative.
Question No. 2 : In the affirmative. Question No. 3 : In the negative.
17. It is clarified that all the questions are answered in favour of the assessee. The Commissioner to pay costs of this reference to the assessee.