TMI Blog1953 (3) TMI 31X X X X Extracts X X X X X X X X Extracts X X X X ..... 8377; 3,791 whereas its total world income was ₹ 3,28,108, the bulk of which was earned in Ceylon by the business which it did. In order to construe Section 4A(c) of the Income-tax Act, it is important to bear in mind that this section deals with residence and it deals with residence of individuals, Hindu undivided family, firms and other association of persons and of a company, and therefore the central idea underlying this section is the idea of residence, and what has got to be determined is where a particular company is resident. Sub-clause (c) tells us what in the eye of the law is residence with regard to a company, and as far as the first part is concerned, in order that a company's income should be subjected to tax as a resident, it has got to be established that the control and management of its affairs is situated wholly in the taxable territories. As we shall presently point out, control and management is a compendious expression which has acquired a definite significance and connotation. It is also necessary that the control and management of the affairs of the company should be situated wholly in the taxable territories. Therefore if any part of the control ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity which controls and manages them, which is the central authority, and it is at the place where the central authority functions that the company resides. It may be in some cases that like an individual a company may have residence in more than one place. It may exercise control and management not only from one fixed abode, but it may have different places. That would again be a question dependent upon the circumstances of each case. But the contention which Mr. Kolah has most strongly pressed before us is entirely unacceptable that a company controls or manages at a particular place because its affairs are carried on at a particular place and they are carried on by people living there appointed by the company with large powers of management. A company may have a dozen local branches at different places outside India, it may send out agents fully armed with authority to deal with and carry on business at these branches, and yet it may retain the central management and control in Bombay and manage and control all the affairs of these branches from Bombay and at Bombay. It would be impossible to contend that because there are authorised agents doing the business of the company at si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it must be established that the company de facto controlled and managed its affairs in Bombay. Mr. Kolah says that the two powers-of-attorney go to show that whatever legal or juridical control and management the company might have had, in fact the actual management was exercised by the two managers in Ceylon. In our opinion this is not a case where the company did nothing with regard to the actual management and control of its affairs and left it to some other agency. As we said before, the two managers were the employees of the company acting throughout the relevant period under the control and management of the company, and therefore in the case we are considering there was not only a de jure control and management, but also a de facto control and management. Turning to the authorities on which Mr. Kolah has relied, first, there is a judgment of this Court in B.R. Naik v. Commissioner of Income-tax, Bombay [1945] 13 I.T.R. 124. In that case Sir Leonard Stone, Chief Justice, and Mr. Justice Kania were really dealing with a question of construction of Section 4A(b) and the question that presented itself for decision before that Bench was whether the control and management cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax, Madras [1950] 18 I.T.R. 320. There the question that arose was whether the assessee firm had any part of the control and management within British India. There a rubber estate in Ceylon was managed by the assessee firm consisting of two partners, one of whom was resident in British India, and the estate was managed by an agent holding a powerof-attorney from the partners, and the Court held that not only the right to exercise control and management over the firm's affairs in Ceylon rested with the partner resident in British India but some amount of control and management of the firm's affairs was actually exercised in British India and the assessee firm was therefore resident in British India within the meaning of Section 4A. The court was concerned to determine whether any part of the control and management was within British India, and notwithstanding the fact that the rubber estate was managed by an agent holding a power-of-attorney, it was found that there was the exercise of control and management by the partners from British India. The third decision relied on is a decision of the Supreme Court in Subbayya Chettiar v. Commissioner of Income-tax, Madras. [1951 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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