1. These are three references made by the Commissioner of Income-tax under Section 66(2) of the Income-tax Act (XI of 1922), at the instance of an assessee, Karuppiah Kangani alias Kumaravelu Ambalam.
2. The assessee is a native of the village of Kakkattiruppupudur in the District of Ramnad. He migrated to Ceylon many years ago and prospered. He now owns tea estates and factories in that Island and carries on money-lending and other forms of business in the Colony. He owns a house on one of the estates and there his first wife and her children live.
3. He has a second house in his native village in which his second wife and his children by her live. He has land in the vicinity and carries on money-lending in that village on a limited scale; and he has a local agent to conduct his affairs. Up to the year 1924-1925, he frequently visited Kakkattiruppupudur, his last visit at that period being from August to October, 1924. His next visit was in October, 1927, and it would appear that from that date he continued to reside there until the date of the reference in O.P. No. 131 of 1928, 11th April, 1928.
4. The common question of law referred for adjudication is. whether in the circumstances of these cases the assessee can be lawfully taxed under the provisions of Sub-section (2) of Section '4 of the Income-tax Act, in respect of three different sums as having accrued or arisen as profits and gains of a business without British India to a person resident in British India. These sums were, in O.P. No. 130 of 1928, Rs. 21,639 (or perhaps more accurately, Rs. 51,639); in O.P. No. 132 of 1928 Rs. 4,798; and in O.P. No. 131 of 1928, Rs. 62,291.
5. We agree with the decision in In re Behari Lal Mullick I.L.R. (1927) C. 630 that, under the Indian Income-tax Act, XI of 1922, the income of the year previous to the year of assessment is not to be taken as merely a guide to the ascertainment of the income of the year of assessment, but as the actual sum which is subject to taxation. This seems clear on the language of Section 3 of the Indian Income-tax Act, XI of 1922, and differentiates the cases under the Indian Act from those under the English Act, so that Brown's anse2 is not an authority that binds us.
6. In O.P. No. 130 of 1928, the profits and gains sought to be taxed accrued or arose outside British India, during the periods of 1922-1923, 1923-1924 and 1924-1925 when the assessee resided at different times in British India; the profits and gains were remitted to British India in 1924-1925 during which period he was resident therein; the year of assessment was 1925-1926 when he was not resident.
7. In O.P. No. 132 of 1928, the profits and gains accrued or arose outside British India in 1922-1923, 1923-1924 and 1924-1925 when the assessee was resident in British India as stated above; they were received in British India in 1925-1926 when he was not resident; the year of assessment was 1926-1927, when also he was not resident.
8. In O.P. No. 131 of 1928, the profits and gains accrued or arose outside British India in 1924-1925 when the assessee was for part of the period physically resident in British India; they were received in British India in 1926-1927 when he was not so resident; the year of assessment was 1927-1928 when he was so resident.
9. That brings the question we have to decide down to this short point : Was the assessee a resident within the meaning of the statute in British India at the material dates which we think must be taken to be the dates when the profits and gains sought to be' taxed accrued to the assessee in Ceylon [Income-tax Act, XI of 1922, Section 4(2) ]. There can be no doubt as to what the answer must be : in all the three cases before us he was physically present in British India at the time when the profits sought to be taxed accrued in Ceylon, though in two of the cases he was not physically present in British India when the remittances were received, and in two similarly he was not physically present during the year of assessment. But we entertain no doubt that he could properly be described as 'residing' here : he owned a house in the Ramnad District, where his second wife and her children by him lived and he stayed in that house whenever he came to British India. The assessee will pay the costs of these references Rs. 250 consolidated for all three.