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TMI Blog1951 (3) TMI 43X X X X Extracts X X X X X X X X Extracts X X X X ..... led The Erin Estate . Tea is grown on this estate and is manufactured into a marketable product and sold in Ceylon through brokers or commission agents. The price is realised in Ceylon. These trading operations are carried on in Ceylon on behalf of the firm by an agent Ponnambalam Pillai who is residing there. It is not correct to state, as has been done in the statement of the case drawn up by the Appellate Tribunal, that Ponnambalam Pillai had a power-of-attorney from the partners empowering him to manage and control the business in Ceylon. Such a statement is opposed to the express sworn statement of the two major partners, Andiappa Pillai and Nagalingam Pillai. The power-of-attorney, to which apparently a reference was meant, has been placed before us and we find it is not a power-of-attorney executed by the firm or by any of the partners of the firm in their capacity as such partners. Though the partnership had been in existence from before 1938, a deed of partnership dated 5th March, 1942, was drawn up setting out the shares of the partners in the Erin Estate and providing for sundry matters connected with the partnership business. Clause 3 of the partnership deed ran thus : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of the firm's business was situated wholly outside British India. In the last sentence of the passage above extracted, the Tribunal seems to assume the very fact that has to be proved, namely, that the control was situated in Ceylon. The letters which have been treated so summarily did require further and more serious consideration at the hands of the Tribunal. It has been contended before us on behalf of the assessee that as the Appellate Tribunal held that no control or management was exercised in British India by the partners, its finding must be accepted by us as a finding of fact binding on this Court and that no question of law arose on such finding. As pointed out in the order under Section 66(2) of the Income-tax Act directing the present reference and in the decision of this Court in Commissioner of Income-tax v. Shanmugam Rubber Estate [1945] 13 ITR 329; [1945] 2 MLJ 93 the question whether the control and management of a firm's business or affairs is situate wholly out of British India is not a mere question of fact. See also the decision in Inland Revenue Commissioners v. Lysaght [1928] AC 234 dealing with a question of residence . Though the Tribunal' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e not been made part of the printed case placed before us. It is regrettable that no attention was paid to the preparation of the records necessary for supporting the case of the Commissioner of Income-tax at the time when the reference was made to this Court. In Commissioner of Income-tax v. Calcutta Agency Ltd. [1951] 19 ITR 191 , the Supreme Court has observed that the jurisdiction of this Court in the matter of income-tax references is advisory and that the decision of the Tribunal on facts is final. Their Lordships observed that the duty of the High Court was to start by looking at the facts found by the Tribunal and answer the question of law on that footing and that any departure from this rule would convert the High Court into a fact finding authority which it is not. Unlike the case before the Supreme Court, the statement of the case in the present case was not prepared with the knowledge or approval of both the parties. They did not peruse the statement of the case and did not make any suggestions which they might have made in respect thereof. To the extent to which the Tribunal has found facts, we have accepted those facts; that is to say, that the Erin Estate belonge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... firm is situate wholly outside British India is on the assessee. The language of Section 4A(b) shows that a firm is normally presumed to be resident in British India but such a presumption can be rebutted by showing that the case comes within the second part of the provision, viz., that the control and management of its affairs is situated wholly without British India. The onus which is cast by the section on the assessee must be discharged by the production of evidence, that is, or must be available with the assessee. The non-production of such material and available evidence is an infirmative circumstance that has to be taked into account against the assessee in arriving at a conclusion on the question whether the control and management of the affairs of the firm was situate wholly outside British India. The meaning and scope of Section 4A(b) was expounded by Patanjali Sastri, J., in Subbiah Cheltiar v. Commissioner of Income-tax [1948] ILR 1948 Mad. 607; 15 ITR 502 in a passage which was cited with approval on appeal by the Supreme Court. The learned Judge said :- 'Control and management' signifies in the present context, the controlling and directive power, the h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate or domestic affairs of the individual partners having no relation to the firm's business. The execution of a power-of-attorney by one of the partners in this case was in respect of his own individual or private affairs. Finally Section 4A(b) itself adopts the principle recognised by Swedish Central Railway Company v. Thompson [1925] 9 Tax Cas. 342; 373; [1925] AC 495-that the control and management of the firm's affairs may be divided and may abide in more than one place. If so, the firm has a dual residence in each of the places where it performs some of the vital or organic functions incidental to its existence as such , to quote the language of Fazl Ali, J., in the Supreme Court. Judged by these tests, which are also the tests formulated by us in Narasimha Rao Bahadur' s case (supra ) how does the present case stand? All the partners were residents of the Trichinopoly District. The majar partners, that is to say, the partners who hold the largest number of shares, Andiappa Pillai and Nagalingam Pillai were attending to the firm's affairs from Trichinopoly. The estate was managed by a superintendent, Ponnambalam Pillai, who was paid a salary of ₹ 300 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reference to labour disputes on the estate, the partner from Trichinopoly directed him to settle such disputes amicably exercising a wise discretion as a man of the spot. Every year at the beginning of the year, a budget estimate was framed for the work to be done on the estate and submitted to the partners and sanctioned by them. Whenever any large expenditure in excess of the budgetted expenditure was incurred without previous sanction, the agent immediately reported it for approval to the partners at Trichinopoly. The partner at Trichinopoly was giving directions to the Superintendent as to what should be done in connection with the management of the estate. The fact that the action of the superintendent has generally been approved by the partners only shows that the superintendent was doing his work properly and without giving occasion for complaint, The cumulative effect of the correspondence above referred to as well as the other circumstances adverted to by us clearly point to the fact that the control and management of the affairs of the assessee firm were not situated wholly out of British India. It is quite clear that some part of the control and management and the super ..... X X X X Extracts X X X X X X X X Extracts X X X X
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