JAGADISAN J. - The question that has been referred to us under section 66(1) of the Indian Income-tax Act is :
'Whether the assessee is a resident for the assessment year 1950-51 within the meaning of section 4A(a)(ii) of the Act ?'
The assessee is a native of Koothanallur in Tanjore district, owning properties in India, and also having a business interest in a foreign firm called J. M. Mohammad Ismail Fils Aziz & Co., carrying on business at Saigon, Indo china. His main source of income is from his foreign assets. For the assessment year 1950-51 in respect of the previous year 1949-50, he declared his status as that of a non-resident. The department as well as the Income-tax Appellate Tribunal have now declared him as 'a resident but not ordinarily resident'. The contention of the assessee is that on the materials on record he should not be declared as a 'resident' within the meaning of section 4A(a) (ii).
The following facts are not in dispute. The assessee is a co-owner of a residential house at No. 16, Jinnah Street, Koothanallur. The house belonged to his deceased father, and during the relevant period, namely, the assessment year 1950-51, himself, his mother and other heirs of his deceased father were co-owners of this house. His mother was living in the house till her death in 1951. The assessee owns another house at Koothanallur, No. 11, Jinnah Street. This house belongs to him exclusively. During the relevant period the house was in the occupation of one Fathima Bibi. The nature of the possession of the house, No. 11 Jinnah Street, Koothanallur, with Fathima Bibi is a matter of controversy between the revenue and the assessee. The assessees case is that Fathima was a monthly tenant of the said premises having agreed to pay a rent of Rs. 5 per month. The assessee has however been unable to produce any rental deed evidencing the lease. He also failed To include the rental receipt which he alleged he received from Fathima in returning the income for the relevant year. It is the absence of such a written instrument and the non-inclusion of the rental income in the assessees return that mainly influenced the department in disbelieving the case of lease put forward by the assessee. Fathima herself filed a statement before the department claiming that she has been residing in the premises as a tenant under the assessee from 1940 onwards on a monthly rent of Rs. 5 but this was rejected as untrue. The Income-tax Officer on this part of the case merely surmised that this Fathima Bibi must have been remaining in possession all these years only as a care-taker of the house. It cannot be said that this is a proper finding by the Income-tax Officer as there is no evidence to warrant that inference. As stated already, we are inclined to treat it as a mere speculation on the part of the Income-tax Officer but unfortunately that speculative opinion has been affirmed both by the Appellate Assistant commissioner and by the Income-tax Appellate Tribunal.
Now on these facts the question arises whether the first limb of section 4A(a)(ii) has been satisfied. It will now be convenient to set out that provision in its entirely :
'Section 4A. - For the purpose of this Act -
(a) any individual is resident in the taxable territories in any year if he -
(i) is in the taxable territories in that year for a 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 the taxable territories for a period or periods amounting in all to one hundred and eighty-two days or more in that year, and is in the taxable territories for any time in that year; or
(iii) having within the four years preceding that year been in the taxable territories for a period of or for periods amounting in all to three territories for a period of or for periods amounting in all to three hundred and sixty-five days or more, is in the taxable territories for any time in that year otherwise than on an occasional or casual visit; or
(iv) is in the taxable territories for any time in that year and the Income-tax Officer is satisfied that such individual having arrived in the taxable territories for not less than three years from the date of his arrival.'
We are concerned in this case with the question whether the assessee can be said to be a resident in the taxable territories by the reason of the operation of section 4A(a)(ii). The requirements of this provision are :
(i) The individual assessee must maintain or have maintained for him a dwelling place in the taxable territories for a period or periods amounting in all to 182 days or more;
(ii) The assessee must have been in the territory for any time in that year. The question of the status of the assessee, whether he is a resident or non-resident, has to be determined in each year as and when the question is raised and the answer would depend upon the facts proved in each year.
Can it be said that the assessee has maintained or caused to be maintained for him a dwelling place in the taxable territories for a period of more than 182 days in respect of the assessment year 1950-51 by reason of his co-ownership of the house, No. 16, Jinnah Street, Koothanallur, and his exclusive ownership of another house, No. 11, Jinnah Street, Koothanallur. We must also mention at this stage that the department has relied not merely on the assessees title to these properties, but also upon other circumstances to bring him within the first part of the section 4A(a)(ii). It is said that whenever the assessee came to Koothanallur he resided only in the premises No. 16 Jinnah Street. In order to establish this, reliance has been placed by the department on two letters written by the assessee on two different dates, the first one to the managing committee, Koothanallur Periapallivasal, is dated January 20, 1949, and the other written to the Income-tax Officer, is dated January 12, 1951. In both these letters, the address of the assessee is given as No. 16, Jinnah Street. It is from this fact, namely, that the assessee wrote from No. 16 Jinnah Street, that the department wants the conclusion to be drawn that the assessee was a resident in that house on the dates when he wrote those letters. It seems to be somewhat unsafe to infer the residence of the assessee as a fact in No. 16, Jinnah Street, from this solitary circumstances of his giving that address in the communications which he addressed to third parties. The address from which a person writes a letter or the address to which a person expects a reply to his letter may not always be the place where he can be said to have been residing. There are instances where persons give their addresses as 'care of the Post Master' of a particular place. It would certainly be grotesque to infer that a person is having the post-office as his residence. This is no doubt an extreme illustration. Of course the fact remains that in this case the assessee was a co-sharer of No. 16, Jinnah Street. The utmost that can be inferred from these letters is that actually staying there. The village munsif of Koothanallur has given what is called a certificate dated January 23, 1956, in these terms : 'The house at No. 16, Jinnah Street, Koothanallur, was occupied by J. M. Abdul Aziz till then. After the demise of his father the house was under control kept for his occupation. I am certifying to this effect as I am also living in Jinnah Street.' It is needless to point out that implicit reliance cannot be placed upon this statement as it has come into existence long after the question of residence was raised by the assessee before the department. At the most it can only be said that this was the opinion of the village munsif. We think that this can be treated as of any evidentiary value at all.
The assessee pleaded before the department that the mother who was in occupation of premises No. 16 was not well disposed towards him, that she had actually filed a suit in the Sub-Court of Tanjore, charging the assessee with having committed a gross fraud in the matter of bringing about a settlement deed alleged to be without her knowledge, that in those circumstances he did not at any time reside with her in that house. A copy of the plaint in the suit referred to above has been placed before us, and we find the allegations of the mother of the assessee, who was the plaintiff in the suit, really make out that her feelings towards the assessee were not all cordial. It is not suggested that the assessee himself put forward his mother to charge him with fraud. We have therefore to proceed on the footing that, on the date of the plaint in the year 1949, the relationship between the mother who was in sole occupation of the house at Koothanallur and the assessee was not of a kind which can said to be congenial for the two to live together. It is however mentioned that the suit itself was compromised within a year of its institution, and that it is not likely that the assessee himself brought about a settlement and pacified his irate mother. The curious thing, however, is that of an application for review a corrigendum was added to the Tribunals order on July 22, 1957, in the following terms :
'Corrigendum :- For during the year in line 12, paragraph 2, read just prior to the beginning of the previous year under appeal,'
The Tribunal committed the mistake of stating that the letter to Periapallivasal was in the year of account but when its attention was drawn to the fact that the letter is dated January, 1949, that the year of account was only April 1, 1949, to March 31, 1950, it unhesitatingly corrected the mistake but left the inference to remain as it was. But apparently the Tribunal did not feel that the mistake originally committed in its previous order treating the letters as having been written during the previous year was in any way responsible for the conclusion reached by it.
The materials on record only establish that the assessee is a co-sharer of a house and the absolute owner of another house at Koothanallur; that the house of which he is a co-owner was in the occupation of his mother, who was also a co-owner; that in January, 1949, and February, 1951, outside the previous year relevant to the present case, the assessee gave that house as his address when he stayed in the taxable territory; that presumably he was living in the occupation of one Fathima Bibi, who has not been proved to be his tenant.
The only question now is whether these facts are sufficient to bring the assessee to bring the assessee within first part of the section 4A(a)(ii). We have already set out the section. The essential requirement is that the assessee 'maintains or has maintained for him a dwelling place'. A bare ownership or legal title in respect of a dwelling place will not be sufficient compliance with the provision. The assessee who is the owner may not be in possession, and if he is out of possession, and if he is out of possession he cannot be said to be maintaining it as a dwelling place. Indeed this was not the contention of the learned counsel for the department. the mere right to be in possession will not do to satisfy the section. There may not be any impediment to the assessee occupying it and using it as a dwelling place. But this does mean that the place is maintained by the assessee or being maintained for him by others as a dwelling place. The word 'maintain' is given the following meaning in the Oxford Concise Dictionary : ' To carry on, keep up, (...condition, possession); cause (person, etc...) to continue in (condition, possession of things, etc.).' The expression connotes a system, or course of conduct on the part of the assessee, by which he either keeps up a dwelling place at his expenses, or has a dwelling place kept up by others. Neither the de jure title, nor the de facto possession of the dwelling, would by itself constitute a setting apart and keeping ready of a dwelling place to be used as a residence or home. To fall within the section, the assessee must be in a position to answer the question : 'Have you residence in the taxable territory ?', inevitably in the affirmative. If his answer is that he is a full owner or part owner of a dwelling, wherein he can take up residence if he so likes he cannot be said to be having a residence in praesenti, but only having a place which can be made into a residence. We note that the word used is 'dwelling place', which means a house, used as a residential place, and that it might be contended that what is required is a residential place, and not the establishment of residence. But this would not be a proper construction of the statute as the word 'maintained' is practically disregarded. To 'maintain' a dwelling place is different from 'having' a dwelling place. The concept of a residence or home ready in hand is implicate in the section. What is referred to as dwelling is not a physical structure, or a brick and a mortar construction but the organisation of a household.
The proper construction of section 4A(a)(ii) has come up for consideration in the court in Zackariah Sahib v. Commissioner of Income-tax. The assessee was a Mohamadan merchant carrying on business in Ceylon. He usually resided in Ceylon. His parents lived in India in a house owned by his mother. His wife also lived in India sometimes with his parents and sometimes with her parents. The assessee was remitting moneys now and then do his parents for their maintenance. He visited British India during the year of account and stayed in the mothers house with his parents. A bench of this court, Satyanarayana Rao and Viswanatha JJ., held that the assessee did not maintain a dwelling place in British India, and that his mothers house was maintained for the parents of the assessee and not for him. At page 362 Viswanatha Sastri J. observed thus :
'The expression maintains a dwelling place connotes the idea that the assessee owns or has taken on rent or on a mortgage with possession a dwelling house which he can legally and as of right occupy, if he is so minded, during his visit to British India... The further question is whether it can be said that the assessee has maintained for him a dwelling place at Sathankulam. In our opinion, the expression has maintained for him would certainly cover a case where the assessee has a right to occupy or live in a dwelling place during his stay in British India though the expenses of maintaining the dwelling place are not met by him in whole or in part. A member of an undivided Hindu family or of a Malabar tarwad or of an Aliyasanthana family, has a right to live in the family house when he goes there, though the house is maintained by the manager of the family and not by the assessee from his own funds.. In such cases it can be said that the assessee has dwelling place maintained for him by the manager of the family, for he has a right to occupy the house during his visits to British India.'
On the facts of that case the conclusion that the assessee did not maintain or had not maintained for him a dwelling place in India is quite correct, if we may say so with respect. But the observation of the learned judge that a karta of a Hindu undivided family or the karnavan of a Malabar tarwad or the ejaman of an Aliyasanthana family can be said to be maintaining a dwelling place for and on behalf of each and every member of the corporate body appears to us to be very wide. We must point out this observation of the learned judge was really in the nature of obiter as the family in that case was governed by the Muslim law. It is one thing to say that a junior member of a coparcenary or a tarwad or an Aliyasanthana family has a right to reside in the family residential abode kept by the head of the family and run by him from and out of the family funds but a different thing to say that any portion of the abode is maintained by him for all or each of the other members of the family.
In Commissioner of Income-tax v. Fulabhai Khodabhai Patel the proper meaning of the section came to be considered by a Division Bench of the Bombay High Court, consisting of Chagla C.J. and Tendolkar J. The assessee therein was a resident in East Africa. The assessees father had four sons including the assessee. The father and three brothers and the assessee were resident 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. As the father had no house to live, and the assessee was in East Africa, the father lived in the house gifted to the assessee, On 17th April, 1946, the assessees wife came to India with her father-in-law up to February 14, 1947. The assessee himself came to India on September 3, 1946, and stayed in this house for about four months. The income-tax authorities held on these facts that for the assessment year 1947-48 the assessee maintained or had maintained for him a dwelling place in India for more than 182 days and was therefore a resident. The Appellate Tribunal, however took the view that the assessee was not a resident. On a reference to the High Court, the view of the Tribunal was affirmed. At page 776, Chagla C.J. observed thus :
'When we look at the language used by the legislature, it is clear that what is sought to emphasized is that there must not be not only a residence or a house for the assessee in the taxable territories, but there must be a home.... 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.'
In Commissioner of Income-tax v. Janab A. P. Mohamed Noohu this court followed the decision of the Bombay High Court cited above. In that case the assessee was a resident of Ceylon. After the death of his father, he became a co-heir along with others of a dwelling house in a taxable territory. But the house was actually occupied by the assessees brother and one of his sisters who were also co-heirs. His wife and children lived with his father-in-law in the house which the latter maintained for himself. During his temporary visits to the taxable territory he stayed in either house as a guest. The question was whether the assessee was a resident within the meaning of section 4A(a)(ii). It was held that he was not. At page 90 Rajagopalan, Offg. C.J., observed thus :
'We do not understand the passage in Zachariahs case taken in its content, as it should be, to lay down as a proposition of law that mere ownership of a fractional share in a house with nothing more is enough to constitute it a dwelling house of such an owner within the meaning of section 4A(a)(ii), and it must be remembered that there is a further statutory requirement; not only must it be a dwelling house, but it must also be maintained, either by the assessee himself or by some one else for his benefit.'
One of us was a party to this judgment. We do not understand that the division Bench in that case meant to lay down the proposition that if a third party keeps and reserves a place for the residence of the assessee without his knowledge or concurrence that would suffice to bring the assessee within the scope of the section.
We understand the decision as meaning that residence may be maintained either by the assessee himself at his expense or he might have a residence so maintained by others for himself at his or even at their expenses. In the light of the principles laid down by the decision of the Bombay High Court in Commissioner of Income-tax v. Fulabhai Khodabhai Patel which has been followed in Commissioner of Income-tax v. Janab A. P. Mohamed Noohu, we have no hesitation in holding that in the present case the assessee neither maintained nor had maintained for him a dwelling place in the taxable territory in the previous year relevant to the assessment year 1950-51.
In the view that we have taken it is really unnecessary to decide the question whether the assessee was in the taxable territory during the year. It is alleged by the department that the assessee was in the taxable territory because on 19th December, 1949, he was at the Dum Dum Airport, Calcutta, for 1 hour 50 minutes on his outward flight from Saigon to Paris. It has also been alleged that on his way back from Paris to Saigon he touched the same airport in January, 1950. It is on this material the department wants to make out that the second limb of section 4A(a)(ii) is fully complied with. The learned Advocate-General appearing for the assessee contended that it is not any occasional or sporadic visit to the taxable territory which would attract that part of the section and that the word 'is' occurring therein should be construed as meaning 'resides'. Mr. Rama Rao Sahib, appearing for the department, however, pointed out that the word 'is' merely denotes the physical presence and should not be construed as 'resides'. He contrasted this provision with the language of section 4A(a)(iii), which specifically mentions that the assessee must have been in the taxable territory for any time in the year otherwise than on casual or occasional visit.
We must have observe that there is much to be said in favour of either view. But, even accepting the argument urged by the learned counsel for the department, we are by no means sure that the assessees halt at Dum Dum Airport can even be said to be an occasional or casual visit. We can only say that the assessee passed through the taxable territory both when he flew to Paris and when he flew back to Saigon. We would be very reluctant to adopt the construction of the word 'is' in section 4A(a)(ii) as meaning passage through the country. Strange and startling results may follow such a construction. Passengers in an aircraft flying low over the taxable territories and on board a ship lying at anchor in a harbour in such territories, can also be said to be in the territories during the flight or the period of anchorage. The section does not require that individual should occupy the dwelling. The dwelling may be in one place and the individual might have been in another place in the taxable territories. While both the conditions prescribed by the section must be present, the word 'is' in the second part of the section does not necessarily refer to the place of dwelling mentioned in the first part. But granting so much, it is very difficult to hold that the send part of the section contemplates only a bare physical presence of the individual. In our opinion a more reasonable interpretation would be that the individual must have maintained or had maintained for him a residence in the taxable territories for 182 days or more and must have resided in the territories at any time in the year of account, however short the duration of the residence might have been. A common thread of animus of residence in the taxable territories holds both the parts of the section together. An expectation to reside is implicate in the act of maintenance of dwelling and it is logical to assume that the statute requires factual residence as well. The section lays down the test as to who is 'a resident'.
To read the section as requiring a dwelling and a physical presence is to view it as a skeleton missing its object and purpose. It is, however, unnecessary for us to express our concluded opinion in the matter.
The reference is answered in favour of the assessee who will get his costs from the department. Counsels fee Rs. 250.
Reference answered accordingly.