BAVA P B I Vs. COMMISSIONER OF INCOME TAX
HIGH COURT OF KERALA
Bava P B I
COMMISSIONER OF INCOME TAX
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M.S.MENON, J. -
(1.) THIS is a reference by the Tribunal, Madras Bench 'A', the question referred being :
"Whether the assessee is 'not ordinarily resident' in the accounting years 1945, 1946, 1947 and 1948 (relevant assessment years being 1122, 1123, 1124 and 1125 M. E.) within the meaning of s. 6(a) of the Travancore IT Act corresponding to s. 4B(a) of the Indian IT Act".
It was agreed at the Bar that we need concern ourselves only with the first portion of s. 6(a) of the
Travancore IT Act, 1121 [Sec. 4B(a) of the Indian Act], which we have underlined in the extract
given below :
"an individual is 'not ordinarily resident' in Travancore in any year if he has not been resident in Travancore in nine out of the ten years preceding that year or if he has not during the seven years preceding that year been in Travancore for a period of, or for periods amounting in all to, more than two years."
(2.) UNDER s. 5(a) of the Travancore IT Act, 1121, an individual is "resident" in Travancore in any year if he, - -
(i) is in Travancore in that year for a period of or periods amounting in all to one hundred and eighty -two days or more ; or
(ii) maintains or has maintained for him a dwelling place in Travancore for a period or periods amounting in all to one hundred and eighty -two days or more in that year, and is in Travancore for any time in that year ; or
(iii) having within the four years preceding that year been in Travancore for a period of or for periods amounting in all to three hundred and sixty -five days or more, is in Travancore for any time in that year otherwise than on an occasional or casual visit ; or
(iv) is in Travancore for any time in that year and the ITO is satisfied that such individual having arrived in Travancore during that year is likely to remain in Travancore for not less than three years from the date of his arrival, and there is no dispute that on the basis of that provision the assessee has not been "resident" in Travancore in nine out of the ten years preceding the accounting years in question, viz., 1945, 1946, 1947 and 1948. His contention -a contention which was accepted by the AAC of Income -tax, Trivandrum, but was rejected by the Tribunal, Madras Bench 'A', -is that he must hence be considered as "not ordinarily resident" in Travancore during the four accounting years above mentioned. The contention of the learned counsel for the Department is that in order to be considered as "not ordinarily resident" it is not enough if the assessee establishes, as he has done in this case, that he has not been "resident" in Travancore in nine out of the ten years preceding the accounting years concerned. According to him what he should establish is that he was "not resident" in Travancore "in nine out of the ten years" preceding the accounting years 1945, 1946, 1947 and 1948.
(3.) WE cannot agree. The clause no doubt is "a model of ambiguous and obscure drafting" as observed by Sir Jamshedji Kanga in his "Law and Practice of Income -tax" (p. 362) but the basic
outlines are clear enough to support the conclusion reached by the AAC, Trivandrum. His approach
was right when he said :
"In my opinion, the only direct way of deciding whether the appellant was 'not ordinarily resident' in the relevant years is to formulate and answer the direct question, 'Has the appellant been resident in Travancore in 9 out of such 10 years ?' This question permits of only one answer and that answer is an emphatic 'No'. When such is the answer to the question, how can I help treating the appellant as 'not ordinarily resident ?' The answer which the ITO seeks to get can be obtained only if the question could be framed as 'Has the appellant been not resident (or non -resident) in Travancore in 9 out of such 10 years ? ' But this is not the direct question but very indirect and roundabout and is, in my opinion, quite inappropriate".
The broad distinction is between those who are resident and those who are not resident, in other words, between those coming under s. 5 of the Travancore IT Act, 1121 (s. 4A of the Indian Act)
and those who do not. It is only after an assessee has been found to be a resident that the further
question will arise as to whether he was "ordinarily resident". Among those who are resident, a
company, firm or other association of persons will be deemed to be "ordinarily resident" in
Travancore by the mere fact that it was "resident" in Travancore [s. 6(c) corresponding to s. 4B(c)
of the Indian Act]. But such is not the case as far as an individual is concerned. In order to be
"ordinarily resident" an individual has to be "resident" in Travancore in nine out of the ten years
preceding the accounting year in respect of which the assessment is made. "Not resident" and "not
ordinarily resident" are not positive concepts but only the converse of "resident" and "ordinarily
resident" and a category of persons "not resident and not ordinarily resident" is impossible to
imagine and unknown to the Act.;
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