LORD-WILLIAMS, J. - This is a case stated by the Commissioner of Income Tax at the instance of the Calcutta Stock-Exchange Association Limited under Section 66(2) of the Income Tax Act (XI of 1922).
The assessees are a mutual benefit liability company, their main objects being to support and protect the character, status and interest of brokers and dealers in stocks and shares on the stock exchange, to give facilities to its members to carry on business, to make rules and bye-laws to regulate business, to settle disputes amongst themselves and to maintain a stock exchange.
The Company owns a four storeyed building at 7, Lyons Range Calcutta, on the ground floor of which there is a large hall used as the meeting place of the Stock Exchange, two tiffin rooms a telephone room and a quotation room. On the mezzanine floor are situated the offices and meeting place of the association, while the first, second and third floors are occupied by members. The rooms on these floors are let our by the Company to the members of the Stock Exchange. They are not used by them for the purpose of residence.
The Company owns, in addition to this building certain securities, and derives an income from other sources, such as the publication of the Stock Exchange quotation lists which are sold both to members and to non-members of the Association.
In the assessment for 1933-34, the Income Tax Officer computed the total income at Rs. 59,798, which included a sum of Rs. 24,117 in respect of income from the house property at 7, Lyons Range. That sum is the bona fide annual value of the building and was taxed under Section 9 of the Act.
The assessees objected to the assessment on various grounds. The only one which we need consider is their contention that they are entitled to the benefit of the proviso to Section 9, Sub-Section (2).
The assessees were not taxed on any income under the head 'business' because they contended, and their contention was accepted, that they did not carry on any business within the meaning of the Act.
The question formulated by the Commissioner is as follows :-
'In the circumstances set out above, can the property in question or any portion thereof be said to be in the occupation of the owner for the purpose of his own residence within the meaning of proviso to Section 9, sub-section (2) of the Indian Income Tax Act (XI of 1922) ?'
The Commissioner decided that the answer to that question must be in the negative, and the assessees having complained about that decision, he agreed to state a case for the opinion of this court. The Commissioners contention was, that though a company is a 'person' and must be deemed for certain purposes of the Income Tax Act., e.g., Section 4 and Section 42 to have a 'place of residence' and that though for certain purposes, the 'place of residence' of the assessees in this case is the building at 7, Lyons Range, yet the word 'Residence' as used in proviso to Section 9, Sub-section (2) does not refer to such a 'person' or such 'residence' and the expression 'property in the occupation of the owner for the purpose of his own residence' means and connotes an owners dwelling house.
In my opinion, the word 'residence' in its simple and ordinary meaning signifies the place where a human being eats, drinks and sleeps or where his family and servants eat, drink and sleep, and where there is some permanence or continuance of such eating, drinking and sleeping, and the statement of BAYLEY, J. in the case of The King v. The Inhabitants of North Curry is, in my opinion, and authority for that proposition. In that case, the learned Judge said that 'where there is nothing to show that it is used in a more extensive sense, the word 'residence' denotes the place where an individual eats, drinks and sleeps, or where his family or his servants eat, drink and sleep'. It is true that in certain circumstances and in certain statutes, a more extended meaning has been given to the word; for example, it has been held that a limited liability company can 'reside' for the purpose of income tax legislation. That was decided by LORD LOREBURN in the case of De Beers Consolidated Mines, Ltd. v. Howe, wherein it is stated that 'A company cannot eat or sleep, but it can keep house and do business. We ought, therefore, to see where it really keeps house and does business. The decisions of CHIEF BARON KELLY and BARON HUDDLESTON in The Calcutta Jute Mills v. Nicholson and Cesena Sulphur Company v. Nicholson, now 30 years ago, involved the principle that a company resides for purposes of income tax where its real business is carried on.' Moreover, it has been decided, that a company is a person who can reside within the meaning of the word 'reside' as used in the Income Tax Act and other statutes. But, in my opinion, a Company can only 'reside' within that extended meaning of the term, when it resides for the purpose of carrying on business and it cannot reside apart from carrying on business. Thus in both Sections 4 and 42 of the Indian Income Tax Act, it is clear that the word 'reside' is only used in connection with the carrying on a business and not otherwise.
Now, it is true that the assessee comes within the terms of the proviso to Section 9(2) if the extended meaning of the word 'residence' to which I have referred is given to that word in this particular section. In my opinion, there is no justification for giving to the word in this particular section that extended meaning, nor do I think the legislature intended that such an extended meaning should be given to it.
In this connection, it is to be noticed that the word 'own' has been inserted between the words 'his' and 'residence.' I think that the object of inserting that word was to indicate that the phrase applied only to a human person or persons and not to a fictional person, such as a limited liability company. Little help can be derived from other decisions either in England or in India on other sections of the Income Tax Act, because this seems to be a peculiar section, the reason for the insertion of which is not apparent. One can imagine various reasons and some of them are indicated in SUNDARAMS book on the 'Law of Income Tax,' at p. 494 in his note upon this proviso.
The result is that the answer which we give to the question which has been stated by the Commissioner is in the negative
Costs of the Advocates appearing in this Reference will be settled by the Taxing Master.
Solicitors. - Messrs. Khaitan and Co., for the assessees; Dr. R. B. Pal, for the Commissioner of Income Tax.