(Judgment of the Court was delivered by Patanjali Sastri, J.)
This reference arises out of an assessment made upon one Marimuthu Pillai as manager of the joint Hindu family consisting of himself and his undivided brother for the year 1940-41.
It is common ground that the family (hereinafter referred to as the assessee) was 'resident' in British India within the meaning of Section 4-B (b) of the Indian Income-tax Act, but the assessee was also treated as 'ordinarily resident' in British India within the meaning of Section 4-B of that Act. The question whether the assessee was not ordinarily resident in British India became material in connection with the assessment of the income of certain tea estates owned in Ceylon. If the assessee was also 'ordinarily resident' in British India, such income would be assessable to tax in British India, irrespective of whether or not it was received in or brought into British India. The income-tax authorities assessed the income on that footing, rejecting the contention that the assessee was not ordinarily resident in British India, as Marimuthu Pillai who was the manager of the family during the year of account (1939-40) had not been in British India for more than two out of seven years preceding that year. The assessees appeal to the income-tax Appellate Tribunal having proved unsuccessful, he applied to the Tribunal under Section 66 (1) of the Act for a statement of the case to this Court as a point of law was involved, and the following question has accordingly been referred for our decision :-
'Whether, in the circumstances of the case, the assessee which is a Hindu undivided family must be deemed to be not ordinarily resident in the material year of account within the meaning of Section 4-B of the Indian Income-tax Act ?'
The relevant facts may be briefly stated :- Sellamuthu Pillai, the father of Marimuthu Pillai, died on the 12th September 1937, having made a will whereby he bequeathed, among other properties, his share in the tea estate in question to his two sons with whom he formed a joint family. It was found, and the finding has not been challenged before us, that the sons took the properties under their fathers will as members of a joint family. Sellamuthu Pillai was in British India throughout. Marimuthu Pillai, who was in Ceylon before the death of his father, returned to British India in September 1937 and has since been here. He became the manager of the family after his father died and was the manager during the year of account (1939-40). On these facts the question arises whether the assessee can be said to have been 'ordinarily resident' in British India in the year of account within the meaning of Section 4-B of the Act.
Section 4.B (so far as it is material here) reads as follows :-
'For the purpose of this Act :-
(a) an individual is not ordinarily resident in British India in any year if he has not been resident in British India in nine out of the ten years preceding that year of if he has not during the seven years preceding that year been in British India for a period of, or for periods amounting in all to, more than two years.
(b) a Hindu undivided family is deemed to be ordinarily resident in British India if its manager is ordinarily resident in British India;'
It will be seen that the test of a joint Hindu family being 'ordinarily resident' in British India is the ordinary residence (to adopt the expression used in the marginal note) in British India of its manager, and this test has to be determined with reference to clause (a) of the section, read with Section 4-A (a) as the manager is an individual. That is to say, in order to be ordinarily resident in British India, the manager must have been 'resident' in British India within the meaning of Section 4-A (a) for a period of nine out of the ten preceding years and must also have been here for at least two years during the previous seven years. It is argued by Mr. Subbaraya Aiyar for the assessee that the residence or stay in British India relevant under Section 4-B (b) is only that of the person who happened to be the manager of the family during the year of account, as the residential qualification has, under Section 4 (1) to be determined with reference to that year, and that the period or periods of residence or stay of any previous manager should not be taken into account. We cannot agree. There is nothing in Section 4-B to indicate that the periods of residence and stay in British India of the successive managers of a Hindu undivided family during its continued existence should not count for purposes of this section. The joint family now assessed has been in existence from before Sellamuthus death in September 1937, and, under the Hindu law, he was the manager and was admittedly in British India throughout. The conditions of Section 4-B are, therefore, satisfied, and the decision of the Income-tax Appellate Tribunal is right. The answer to the question referred is that the assessee must be deemed to be ordinarily resident in British India in the year of account within the meaning of section 4-B of the Income-tax Act.
The assessee will pay the Commissioner of Income-tax Rs. 250 for his costs.
Reference answered accordingly.