TMI Blog1949 (12) TMI 41X X X X Extracts X X X X X X X X Extracts X X X X ..... narily resident in British India under Section 4A, Indian Income Tax Act? (2) Whether the proceedings under Section 34 could be initiated against a firm which was not assessed previously when one of the partners of the firm had been individually assessed on his share in the firm? In R. C. No. 59 of 1946 it is first of the two questions above stated that has been referred to us for our opinion. 2. The facts common to both these references are these. Talipatigala, a rubber Estate in Ceylon, was purchased by three persons some years ago and during the relevant period was owned by two of the original purchasers, the third having conveyed his interest to the others on 10th May 1941. At one stage of the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a commodity which in fit for sale in the market. Under Section 4-A(b), Income Tax Act, a firm is resident in British India unless the control and management of its affairs is situated wholly without British India. It is true that the residence of the individual partners of the firm in British India does not determine the residence of the firm for purposes of Income Tax if the control and management of the firm's business is wholly situate outside. It has been held in out Court, as pointed out by the learned advocate for the assessee, that the mere receipt of copies of accounts from agents abroad, which is a common enough practice among Nattukottai Chettiars, does not amount to the exercise of control by the principal who lives in Briti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of a foreign money lending business of a Nattukottai Chetty banker residing in British India accrued or arose outside British India and was not taxable in British India unless received here. The Court held that though the proprietor or the principal acquainted himself with the state of his business abroad and issued occasional instructions to the agent regarding the conduct of the business, it could not be said that the business was carried on in British India or that the profits accrued or arose here. The profits were held to have accrued or arisen at the place where the moneys were lent and interest was earned and realised, in other words, at the place where the business was actually carried on. This decision does not help to solve the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the business. 5. On these facts we hold 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. If any part of the control and management is in British India, then the firm is a resident within the meaning of Section 4-A (b). The acts and instructions of the partner in British India were done and given in the exercise of his right as a partner and were acts of control and management of the firm's affairs in Ceylon. See Commissioner of Income Tax v. Subbiah Chettiar, I. L. R. (1948) Mad. 607 : A. I. R. 1948 Mad. 307, Commissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in every respect and that there are a few exceptions recognised in the Act itself. But it cannot be said that the assessment of an individual partner in a particular year is a bar to the assessment of the firm for that year. Even granting that when the partner was assessed in 1941-42 on an income which included his share of the profits of the partnership, the Income Tax Officer must have had definite information that there was a partnership which was resident in British India and that its income was liable to assessment in British India, still the Income Tax Officer having taken action within the period of four years of the end of that year, the assessment on the firm was justified under Section 34, Income Tax Act. We do not think there is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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