1955 (3) TMI 32 - HC - Income Tax

Summary

Issues:
Determining whether the assessee is 'not ordinarily resident' in the accounting years 1945, 1946, 1947, and 1948 under section 6(a) of the Travancore Income-tax Act.

Analysis:
The reference by the Income-tax Appellate Tribunal questioned the assessee's residency status in the relevant years. The key provision in question was section 6(a) of the Travancore Income-tax Act, which defines 'not ordinarily resident' based on residency criteria in the preceding years. The Tribunal sought clarification on whether the assessee met the residency requirements outlined in the Act.

The definition of 'resident' under section 5(a) of the Act was crucial in determining the assessee's status. The provision detailed various scenarios establishing residency, such as physical presence or maintaining a dwelling place in Travancore for specific periods. It was acknowledged that the assessee did not meet the criteria to be considered a 'resident' in the preceding years leading up to the accounting years in question.

A dispute arose regarding the interpretation of the term 'not ordinarily resident.' The contention put forth by the Department was that the assessee needed to prove non-residency in nine out of ten years preceding the accounting years. However, the Appellate Assistant Commissioner and subsequent analysis disagreed with this interpretation, emphasizing the distinction between 'resident' and 'not resident' individuals.

The judgment highlighted the necessity of first establishing residency before delving into whether an individual is 'ordinarily resident.' The Act differentiated treatment for entities like companies and individuals, with specific criteria for determining ordinary residency. The judgment emphasized that 'not resident' and 'not ordinarily resident' were essentially negations of 'resident' and 'ordinarily resident,' making the latter category impossible to conceive.

Citing previous decisions and legal interpretations, the judgment reinforced the requirement for an individual to meet specific residency conditions to be considered 'ordinarily resident.' The court's decision concluded that the assessee was 'not ordinarily resident' in the accounting years 1945-1948 based on the provisions of the Travancore Income-tax Act. The reference was answered in favor of the assessee, who was awarded costs from the Department, including advocate's fees.