9911796707
TMI Blog1947 (4) TMI 9X X X X Extracts X X X X X X X X Extracts X X X X ..... than two years during the period of seven years preceding the previous year, the applicant, the Hindu joint family, was 'not ordinarily resident' for the assessment year 1940-41 within the meaning of Section 4B(a) of the Indian Income-tax Act?" The assessee is a Hindu undivided family. In the year 1940-41 an assessment was made on the income of the family which had accrued outside British India during the previous year. During the seven years preceding that year the karta of the family was in British India for more than two years and also he was outside India for the same period. Taxation of income accruing within British India does not arise. The sole matter for decision is whether the foreign income of the assessee family, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u undivided family is deemed to be ordinarily resident in British India if its manager is ordinarily resident in British India; (c) a company, firm or other association of persons is ordinarily resident in British India if it is resident in British India." The foreign income of the assessee family was neither derived from a business controlled in India, nor brought into British India; therefore, under the proviso to Section 4(1), it is not chargeable to tax if the family was "not ordinarily resident." By virtue of clause (b) of Section 4B, the status of the manager, who is the "individual" in clause (a), determines the status of the family, which is deemed to be ordinarily resident if that is the manager's st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee family, Mr. T.V. Viswanatha Ayyar contended that under the second part of clause (a) of Section 4B, if an individual is outside British India for an aggregate period of more than two years during the preceding seven years, he is "not ordinarily resident." If that be correct, then presence in British India for not less than five years out of the preceding seven years is required before a person is excluded from the category of "not ordinarily resident." This argument was evolved out of a contention that the words in the second part of clause (a) "he has not..................................been in British India for.............................. more than two years" mean that he has been outside Briti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n British India for......................... more than two years." If he fulfils what those words mean, an individual is "not ordinarily resident." What is the opposite of the words which are quoted above? In my view, the opposite words would be "if he has.........................been in British India for.........................more than two years." That being so, the meaning of the words in question is that a person is "not ordinarily resident" so long as he is not present in India for an aggregate period of more than two years during the preceding seven years. It is immaterial, in my view, to consider the length of time, in the preceding seven years, during which the individual is outside British India ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h India. But, in the course of the judgment of my learned brother, at page 844 it was observed in regard to clause (a) of Section 4A as follows:― "In order to be ordinarily resident in British India, the manager must have been 'resident' in British India, within the meaning of Section 4A(a) in nine out of the ten preceding years and must also have been here for at least two years during the previous seven years." In my view, when the words "more than" replace "at least," that observation correctly expresses the meaning of clause (a) of Section 4A. The foreign income of every resident in British India, even when it is not brought into the country, is chargeable to tax, save when the resident is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t did not actually arise for decision in that case, but I am not sure whether that in itself is not a recommendation of that view, in a matter of interpretation of ambiguous language. However, having now heard full arguments on the point on both sides, I see no reason to depart from that view. The construction contended for by Mr. Viswanatha Ayyar would involve this consequence. A person by adopting the simple expedient of being absent, say, in a neighbouring Indian State for 3? months every year during the seven years period referred to in the section, could relieve himself of his status as an "ordinarily resident," however close in quality and preponderating in duration his connection with British India may be. This, it seems to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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