(Judgment of the Court was delivered by the Honble the Chief Justice.)
The assessee is the karta of a joint Hindu family which carried on a money-lending business in Muar and Seramban in the Federated Malay States. The year of account is from the 13th April 1940 to the 12th April 1941. The karta went to Muar in the month of November 1938 and remained there until the 20th October 1940 during which time he had control of the familys business in the Federate Malay States. He returned to this Presidency on the 24th October 1940 which means that he was here for a little less than six months of the account year. The Income-tax Officer was of the opinion that the business at Muar and Seramban was controlled by the karta from Madras and consequently the case fell within the second proviso to Section 4 (1) of the Indian Income-tax Act. The Appellate Assistant Commissioner held that there was no evidence that the karta, after his return to this Presidency, had exercised control over the business in Muar and Seramban. Consequently he overruled the Income-tax Officers assessment. His decision was concurred in by the Income-tax Appellate Tribunal, Calcutta Bench. At request of the Commissioner of Income-tax, the Tribunal has referred under Section 66 (1) of the Act the following questions :-
'Whether when it is found that there is no act of control in British India the mere presence of the manager of the joint Hindu family as such in British India will lead to the finding that there has been control and management within British India.'
This question was framed because the Commissioner contended that where the karta is in British India it must be presumed that he has control of a foreign business of the family. The Tribunal expressed its dissent from this proposition and we consider that it was justified in so doing.
The second proviso to Section 4 (1) states that in the case of a person not ordinarily resident in British India income which arise to him without British India shall not be included in the assessment unless it is derived from a business controlled or set up in British India or unless it is brought into or received in British India during the year. There is no question here of income having been brought into British India. The word 'control' must be given its ordinary meaning. Unless there is control in British India of a foreign business the proviso does not apply. The mere fact that the manager of a joint Hindu family happens to be within British India for part of the account year does not necessarily imply that during that period he has exercised control over the management of the business abroad. In fact in this case the karta left his eldest son to manage the businesses in Muar and Seramban.
In a recent case, Commissioner of Income-tax, Madras v. Gangabishan Mohanlal, we had occasion to discuss the meaning of the words 'control and management' used in Section 4-A (b) and we held that there must be some evidence of an act of control or management before the clause applied. We cannot go behind the finding of the Tribunal that in the present case no control was exercised by the karta after he had returned to Madras on the 20th October 1940. Mr. Rama Rao Sahib on behalf of the Commissioner has suggested that we should re-frame the question. He has pointed to a statement in the order of the Appellate Assistant Commissioner that after the karta returned to Madras copies of the day-books kept in the Federated Malay States were sent to him. Learned Counsel argues on this that the question should be whether there is evidence on the record to justify a finding that control was exercised. We are not prepared to fall in with the suggestion. In the first place, the Commissioners case is that the mere presence here of the karta is sufficient to justify a Court in holding that there was control in British India of the foreign business of the family during the account year and it was on this contention that the Tribunal framed the question now before us. In the second place, we do not consider there mere receipt by the karta of copies of the day-books would be sufficient to justify a finding that the control had been exercised by him after his return from the Federated Malay States, especially when he had left his eldest son in management of the business there. For these reasons, we hold that the presence of the manager of a joint Hindu family in British India will not in itself justify a finding that control of a foreign business is exercised within British India.
The assessee is entitled to his costs, Rs. 250.
Reference answered accordingly.