TMI Blog1946 (3) TMI 21X X X X Extracts X X X X X X X X Extracts X X X X ..... -tax Act provides:- For the purposes of this Act- (b) A Hindu undivided family, firm or other associations of persons is resident in British India unless the control and management of its affairs is situated wholly without British India. Sub-section (c) deals with the case of a company and provides:- A company is resident in British India in any year if the control and management of its affairs is situated wholly in British India in that year, or. There follows another proviso which is not material. Control and management of the affairs of a business must be effected through the media of human minds, and in dealing with a plurality of persons who either jointly or severally exercise powers of control and management over a particular business, and who may be either generally or from time to time in different places and in communication by letter, telephone or telegram, it may be difficult to ascertain where the control and management is situated. Especially is this so, when, as in this case, the section refers to the control and management being situated wholly without British India. In one sense an American businessman, who pays a short visit to this cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t he had purchased their goods for the last 20 years:- My firm has never and does not refer to Sardar Rao Bahadur Bhimbhai R. Naik about any matters of Messrs. Bhimji R. Naik in general and for the execution of the orders and for the payments received from Messrs. Bhimji R. Naik in particular. He also never interfered in any matters of the firm. The total purchases of Messrs. Bhimji R. Naik for the year ended 31st March 1939 done through my firm amount to about ₹ 29,900. These affidavits remain unchallenged and no request was made or direction given to cross-examine the deponents upon them. Mr. Setalvad on behalf of the Commissioner has pointed out that by the effect of Section 106 of the Evidence Act when any fact is especially within the knowledge of any person, the burden of proving that fact is upon him. Unchallenged by any cross-examination, I think that affidavits to which I have referred to discharge the initial burden of proof. The difficulty, however, arises because at the end of their further statement of the case the Tribunal has said this:- Taking into account all the evidence produced before us we are of the opinion that Rao Bahadur B.R. Naik di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to South Africa. If so, the only way in which the control or management could in fact be exercised by him would be either by letters, telegrams or telephones. The affidavits filed by two partners living in Africa and Rao Bahadur Naik negative the suggestion of any such directions being sent after the partnership was formed. The correspondence file was produced before the examiner, Income-tax Office. It appears that after the preliminary inquiry and assessment order was made, no importance was attached to this file. Rao Bahadur Naik died pending these proceedings and five years have elapsed since then. The nonproduction of the file by the legal representatives of Rao Bahadur Naik, when the matter was reconsidered on remand, under the circumstances, can be easily understood and no adverse inference could be drawn from that fact. The matter, however, does not leave room for much doubt. A summary of the correspondence made by the examiner of the Income-tax Department was produced before the Tribunal and it contained the following statement:- After going through some of the letters it is seen that the assessee (Rao Bahadur Naik) has left the management and control of the business a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect of the note of the examiner, in relation to Rao Bahadur Naik's letter advising the South African partners to act with caution. Those words are treated as words of instructions. In my opinion, that is not the correct interpretation of the note made by the examiner. As regards the affidavits of the two partners in South Africa, the Tribunal put a meaning on the words different from what they plainly bear. The Tribunal thought that when the partners used the words control and management, they probably meant sales and purchases. The affidavits show that the partners, apart from sales and purchases, have separately stated that they received no instructions for anything else from Mr. Naik. Paragraphs 5, 6 and 7 deal with the affidavits and do not contain any further finding. Paragraph 8 deals with the clauses of the partnership agreement in the first instance. The next statement is as follows:- In our opinion, it is likely that Rao Bahadur B.R. Naik left definite instructions in detail with the managers. In my opinion that inference is drawn without any materials or evidence before the Tribunal. They have not recorded any fact from which such inference c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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