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P. B. I. Bava (Deceased) (by Legal Vs. Commissioner of Income-tax, - Court Judgment

LegalCrystal Citation
CourtIncome Tax Appellate Tribunal ITAT Cochin
Decided On
Reported in195527ITR463(Coch.)
AppellantP. B. I. Bava (Deceased) (by Legal
RespondentCommissioner of Income-tax,
Excerpt:
.....resident in travancore in any year if he has not been resident in travancore in nine out of ten years preceding that year or if he has not during the seven preceding that year been in travancore for a period of or for periods amounting in all to, more than two years." 2. under section 5 (a) of the travancore income-tax act, 1121, an individual is "resident" in travancore in any year if he, - (i) is in travancore in that year for a period of or period amounting in all to one hundred and eighty-two days or more; or (ii) maintains or has maintained for him a dwelling place in travancore for a period or periods amounting in all to one hundred and eighty-two days or more in that year, and is in travancore for any time in that year; or (iii) having within the four years preceding that year.....
Judgment:
M. S. MENON, J. - This is a reference by the Income-tax Appellate Tribunal Madras Bench A, the question referred being : "Whether the assessee is not ordinarily resident in the accounting years 1945, 1946, 1947 and 1948 (relevant assessment years being 1122, 1123, 1124 and 1125 M. E.) within the meaning of section 6 (a) of the Travancore Income-tax Act corresponding to section 4B (a) of the Indian Income-tax Act".

It was agreed at the Bar that we need concern ourselves only with the first portion of section 6 (a) of the Travancore Income-tax Act, 1121 [Section 4B (a) of the Indian Act], which we have underlined in the extract given below.

"an individual is not ordinarily resident in Travancore in any year if he has not been resident in Travancore in nine out of ten years preceding that year or if he has not during the seven preceding that year been in Travancore for a period of or for periods amounting in all to, more than two years." 2. Under section 5 (a) of the Travancore Income-tax Act, 1121, an individual is "resident" in Travancore in any year if he, - (i) is in Travancore in that year for a period of or period amounting in all to one hundred and eighty-two days or more; or (ii) maintains or has maintained for him a dwelling place in Travancore for a period or periods amounting in all to one hundred and eighty-two days or more in that year, and is in Travancore for any time in that year; or (iii) having within the four years preceding that year been in Travancore for a period of or for periods amounting in all to three hundred and sixty-five days or more, is in Travancore for any time in that year otherwise than on an occasional or causal visit; or (iv) is in Travancore for any time in that year and the Income-tax Officer is satisfied that such individual having arrived in Travancore during that year is likely to remain in Travancore for not less than three years from the date of his arrival," and there is no dispute that on the basis of that provision the assessee has not been "resident" in Travancore in nine out of the ten years preceding the accounting years in question, viz., 1945, 1946, 1947, 1948. His contention - a contention which was accepted by the Appellate Assistant Commissioner of Income-tax, Trivandrum, but was rejected by the Income-tax Appellate Tribunal, Madras Bench A, - is that he must hence be considered as "not ordinarily resident" in Travancore during the four accounting years above mentioned. The contention of the learned counsel for the Department is that in order to be considered as "not ordinarily resident" it is not enough if the assessee establishes, as he has done in this case, that he has not been "resident" in Travancore in nine out of the ten years preceding the accounting years concerned. According to him what he should establish is that he was "not resident" in Travancore "in nine out of the ten years" preceding the accounting years 1945, 1946, 1947 and 1948.

3. We cannot agree. The clause no doubt is a model of ambiguous and obscure drafting" as observed by Sir Jamshedji Kanga in his "Law and Practice of Income-tax" but the basic outlines are clear enough to support the conclusion reached by the Appellate Assistant Commissioner of Income-tax, Trivandrum. His approach was right when he said : "In my opinion, the only direct way of deciding whether the appellant was not ordinarily resident in the relevant years is to formulate and answer the direct question, Has the appellant been resident in Travancore in 9 out of such 10 year This question permits of only one answer to the question, how can I help treating the appellant as not ordinarily resident The answer which the Income-tax Officer seeks to get can be obtained only if the question could be framed as Has the appellant been not resident (or non-resident) in Travancore in 9 out of such 10 years ?" But this is not the direct question but very indirect and roundabout and is, in my opinion, quite inappropriate".

4. The broad distinction is between those who are resident and those who are not resident, in other words, between those coming under section 5 of the Travancore Income-tax Act, 1121 (section 4A of the Indian Act) and those who do not. It is only after an assessee has been found to be a resident that the further question will arise as to whether he was "ordinarily resident". Among those who are resident, a company, firm or others association of persons will be deemed to be "ordinarily resident" in Travancore by the mere fact that it was "resident" in Travancore [section 6 (c) corresponding to section 4B (c) of the Indian Act]. But such is not the case as far as an individual is concerned. In order to be "ordinarily resident" an individual has to be "resident" in Travancore in nine out of ten years preceding the accounting year in respect of which the assessment is made. "Not resident" and "not ordinarily resident" are not positive concepts but only the converse of "resident" and "ordinarily resident" and a category of persons "not resident and not ordinarily resident" is impossible to imagine and unknown to the Act.

5. In other words the position was correctly summed up by sir James Grigg during the Assembly Debates on section 4B when he said "a man is not ordinarily resident unless he satisfies both of those conditions amount to saying that he must have been resident in nine out of ten years and he must have been here for substantial periods in the preceding seven years." "An individual is ordinarily resident in Travancore if he has been resident as defined above in 9 out of 10 years preceding that year and has been in Travancore for period amounting in all to more than 2 years during the 7 years preceding that year". (Travancore Income-tax Manual, p. 229).

6. The decisions cited before us were Mari Muthu Pillai v. Commissioner of Income-tax, Madras, Swaminathan Chettiar v. Commissioner of Income-tax, Madras, and Manibhai S. Patel v. Commissioner of Income-tax, Bombay North. It is agreed that the first portion of section 4B (a) did not directly arise for consideration in those cases and it is hence unnecessary for us to discuss them in this judgment.

7. In the light of what is, stated above the assessee has to be considered as "not ordinarily resident" in the accounting years 1945, 1946, 1947 and 1948 within the meaning of section 6 (a) of the Travancore Income-tax Act, 1121, and we answer the reference accordingly. The assessee will have his costs from the Department; advocates fee Rs. 100.


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