TMI Blog1950 (12) TMI 2X X X X Extracts X X X X X X X X Extracts X X X X ..... ike to observe that as this case has to be decided mainly with reference to the question of onus of proof, the decision in this appeal must be confined to the year of assessment to which this case relates, and it would be open to the appellant to show in future years by proper evidence that the seat of control and management of the affairs of the family is wholly outside British India. Appeal dismissed. - - - - - Dated:- 21-12-1950 - Judge(s) : MUKHERJEE., FAZL ALI., CHANDRASEKHARA AIYAR JUDGMENT. FAZL ALI, J.---This is an appeal from a judgment of the High Court of Judicature at Madras on a reference made to it under Section 66(1) of the Indian Income-tax Act by the Income-tax Appellate Tribunal in connection with the assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me for payment of the tax after interviewing the authority concerned ... ......" The other facts relied upon by the Income-tax authorities were that he did not produce the file of correspondence with the business in Colombo so as to help them in determining whether the management and control of the business was situated in Colombo and he had started two partnership businesses in India on 25th February, 1942, and remained in India for some time after the commencement of those businesses. Upon the facts so stated, the Income-tax Officer and the Assistant Commissioner of Income-tax held that the appellant was a resident within the meaning of Section 4A(b) of the Income-tax Act, and was therefore liable to be assessed in respect of his fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he test with which we are concerned is that laid down in Section 4A(b). This provision appears to be based very largely on the rule which has been applied in England to cases of corporations, in regard to which the law was stated thus by Lord Loreburn in De Beers v. Howe :---- " A company cannot eat or sleep, but it can keep house and do business. We ought, therefore, to see where it really keeps house and does business ... .... The decision of Chief Baron Kelly and Baron Huddleston in The Calcutta Jute Mills v. Nicholson and The Cesna Sulphur Company v. Nicholson, now thirty years ago, involved the principle that a company resides, for purposes of income-tax, where its real business is carried on. Those decisions have been acted upon ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... remains in the hand of a person or a group of persons, and the question to be asked is wherefrom the person or group of persons controls or directs the business. (2) Mere activity by the company in a place does not create residence, with the result that a company may be "residing" in one place and doing a great deal of business in another. (3) The central management and control of a company may be divided, and it may keep house and do business in more than one place, and, if so, it may have more than one residence. (4) In case of dual residence, it is necessary to show that the company performs some of the vital organic functions incidental to its existence as such in both the places, so that in fact there are two centres of manage ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year. He was undoubtedly interested in the litigation with regard to his family property as well as in the income-tax proceedings, and by merely coming out to India to take part in them, he cannot be said to have shifted the seat of management and control of the affairs of his family, or to have started a second centre for such control and management. The same remark must apply to the starting of two partnership businesses, as mere "activity" cannot be the test of residence. It seems to us that the learned Judges of the High Court have taken rather a narrow view of the meaning of Section 4A(b), because they seem to have proceeded on the assumption that merely because the assessee attended to some of the affairs of his family during his visi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the control and management of the affairs of the family was situated wholly outside the taxable territories, but the correspondence to which the Assistant Commissioner of Income-tax refers and other material evidence which might have shown that normally and as a matter of course the affairs in India were also being controlled from Colombo were not produced. The position therefore is this. On the one hand, we have the fact that the head and karta of the assessee's family who controls and manages its affairs permanently lives in Colombo and the family is domiciled in Ceylon. On the other hand, we have certain acts done by the karta himself in British India, which, though not conclusive by themselves to establish the existence of more than ..... X X X X Extracts X X X X X X X X Extracts X X X X
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