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Petitioner: J. M. ABDUL AZIZ VS Respondent: COMMISSIONER OF INCOME-TAX, MADRASHonorable Justice JAGADISANAdvocate-General and S. Padmanathan,C. S. Rama Rao Sahib
1969 P T D 268
1969 P T D 268
[Madras (India)]
Before Jagadisan and Srinivasan, JJ
J. M. ABDUL AZIZ
versus
COMMISSIONER OF INCOME‑TAX, MADRAS
Tax Case No. 40 of 1959, decided on 13th August 1962.
Residence---
---‑Maintaining a dwelling place and presence in India for sometime‑Meanings of "maintain", "dwelling place", "is"‑Indian Income‑tax Act, 1922, S. 4‑A(a)(ii).
The expression "maintains a dwelling place" in sec tion 4‑A(a)(if) of the Income‑tax Act, 1922, connotes a system, or course of conduct on the part of the assessee, by which he either keeps up a dwelling place at his expense, or has a dwelling place kept up for him by others. Neither the de jure title, nor the de facto possession of the dwelling would by itself constitute a setting apart and keeping ready of a dwelling place to be used as a residence or home.
To "maintain" a dwelling place is different from "having" a dwelling place. The concept of a residence or home ready in hand is implicit in the section. What is referred to as "dwelling" is not a physical structure, or a brick and mortar construction but the organisation of a household.
The word "is" in the second part of section 4‑A(a)(ii) does not necessarily refer to the place of dwelling mentioned in the first part, nor does it merely contemplate a bare physical presence of the individual. The real meaning of the section is that the individual must have maintained or had maintained for him a residence in the taxable territories for 182 days or more and must have resided in the territories at any time in the year of account, however short the duration of the residence might have been. A common thread of animus of residence in the taxable territories holds both the parts of the section together.
The observation of Viswanatha Sastri, J. in Zackariah Sahab v. Commissioner of Income‑tax, Madras (1952) 22 I T R 359 that a karta of a Hindu undivided family or the karnavan of a Malabar tarwad or the ejaman of an Aliyasanthana family can be said to be maintaining a dwelling place for and on behalf of each and every member of the corporate body is very wide.
The assessee was a native of a village in the Tanjore District and had business interest in a firm carrying on business in Saigon, in Indo‑China. The materials on record established that the assessee was a co-sharer of a house and the absolute owner of another house, at Koothanallur in India ; that the house of which he was a co‑owner was in the occupation of his mother, who was also a co‑owner ; that in January 1949, and February 1951, outside the relevant previous year, the assessee gave that house as his address when he stayed in India and presumably he was living there on these dates ; the other house was in the occupa tion of a person, who has not been proved to be his tenant. There was also evidence which showed that he stayed at the airport of Dum Dum at Calcutta for more than one hour on his flight from Saigon to Paris, and on his return flight :
Held, that these facts were not sufficient to establish that the assessee maintained or had maintained for him a dwelling place in India and that he "was in India" for sometime in the year within the meaning of section 4‑A(a)(ii) of the Income‑tax Act, and these facts were, therefore, not sufficient to justify the income‑tax authorities in assessing him as a "resident".
Commissioner of Income‑tax v. Fulabhai Khodabhai Patel (1957) 31 I T R 771; Commissioner of Income‑tax v. Janab A. P. Mohamad Noohu (1961) 43 I T R 88 and Zackariah Sahib v. Commissioner of Income‑tax (1952) 22 I T R 359 ref.
STATEMENT OF CASE
By this application under section 66(1) the assessee requires the Appellate Tribunal to refer certain questions of law said to arise out of the Tribunal's Order in I. T. A. No. 2357 of 1956‑57, dated 3rd July 1956, to the High Court of Judicature at Madras. Inasmuch as, in our opinion, a question of law does arise out of the Tribunal's order, we accordingly state a case, agreed to by both the parties and refer it to the High Court of Judicature at Madras.
2. The assessee is a native of Koothanallur in the Tanjore District. Besides properties in India he had a share in a partner ship business carried on ex‑India in Saigon.
3. The assessee is a co‑owner of house No. 16, Jinnah Street, Koothanallur, along with his mother and the other heirs of his deceased father's estate. His mother was living in the house till her death in 1951.
4. In the assessee's note‑heads used by him for his corres pondence while in India he had printed his address as at the above premises. One of the letters he wrote on such a note‑head was to the managing committee of the Periapalivasal of Koothan allur on 20th January 1949, seeking permission to solemnise the marriage of his son on that day and another to the Income‑tax Officer himself on 12th January 1951. Copies of these letters are annexed hereunto as Annexures "A" and "A‑1" and form part of the case.
5. In a report by the village munsif of Koothanallur, dated 23rd January 1956, copy whereof is annexed hereunto as Annexure "B" and forms part of the case, he stated that the above premises was the assessee's dwelling place during his stay in India.
6. There was a suit filed in or about 10th January 19.49, by the mother against one of her sons other than the assessee. This suit was compromised within a year. Extracts from the plaint are annexed hereunto as Annexure "C" and form part of the case.
7. The assessee purchased for cash another house at No. 11, Jinnah Street, in the same village. There was one Fatima Bibi in occupation of this house. The water tax was paid by her but in the assessee's name. Copies of the affidavit of‑Fatima Bibi, dated 25th March 1954, and the receipt granted by the Koothan allur Panchayat Board for the tax paid are annexed hereunto as Annexures "D" and "D‑1" and form part of the case.
8. On the 19th December 1949, in the year ended 31st March 1950, the "previous year" for assessment year 1950‑51, the assessee was at Dum Dum Airport, Calcutta, for I hour 50 minutes on his outward flight to Paris from Saigon. On his way back too, he touched the same airport in January 1950.
9. There are air routes from Saigon to Paris without having to touch any airports in India though they may not be direct.
10. For the aforesaid assessment year 1950‑51, the assessee returned his income as a non‑resident. In this return he did not include any rental income from property No. 11, Jinnah Street, aforesaid. He nevertheless contended before the Income‑tax Officer that the house was leased to Fatima Bibi aforesaid at Rs. 5 per mensem, and he had no dwelling house in India nor did he reside in India at any time during the aforesaid previous year.
11. The Income‑tax Officer disbelieved the lease to Fatima Bibi of No. 11, Jinnah Street, and held that he was a "resident" under section 4‑A(a)(ii). His full reasons are to be found in the extracts from his assessment order annexed hereunto as Annexure "E" and form part of the case.
12. The assessee thereupon appealed to the Appellate Assistant Commissioner contending that he did not come within the mischief of either or both of two conditions envisaged in section 4‑A(a)(ii). A copy of his grounds Nos. 2 to 10 relating. to this contention is annexed hereunto as Annexure "F" and forms part of the case.
13. The Appellate Assistant Commissioner dismissed, the contention holding as follows :
(a) the assessee maintained or had maintained for him actually two dwelling houses, where he could stay in his own right Fatima Bibi resided at No. 11, Jinnah Street, only as a care-taker ;
(b) the assessee was actually in India twice during the previous years albeit for a couple of hours ; the quality of the assessee's presence in India which may not be out of his own volition, was not material for applying section 4‑A (a)(ii).
14. Thereupon the assessee appealed to, the Tribunal contending, inter alia, that no reliance could be placed on the report of the village, headman made after the hearing of the appeal by the Appellate Assistant Commissioner and which was not put to the appellant and opportunity given to him to show that the report could not be true. A copy of the grounds of appeals Nos. 1 to 15 is annexed hereunto as Annexure "G"and forms part of the case.
15. In the above appeal the Tribunal held that the lease of No. 11 was only an after‑thought and that, on the above facts, the assessee was a "resident" within the meaning of section 4‑A(a)(ii). Its full reasoning and conclusions are reproduced below from paragraphs 2, 3 and 4 of its order :
"2. The ancestral house in which the assessee had a substantial share has been adopted by him as his 4ndiah address in all his private letter‑heads. No doubt the mother could'‑ have been living therein ; the enmity between her and the assessee has been over‑stressed. It seems to be imaginary, more a myth than real. Advantage is being taken of certain pleadings and averments in the suit launched by the mother against one of her sons. Compromise has been effected in the suit perhaps by the intervention of the assessee, within a year thereof and long before the assessment year presently under appeal. In view of the local address given by the assessee in his invitation and notice in connection with the marriage of his son, issued during the year under appeal, it must be clear that whatever quarrel there could have been between the mother and the son, if it were true, should have been long ago patched up ; 'such quarrels between mother and son cannot be in the nature of thing permanent ; mother's feelings are too divine to last. The evidence, the assessee tried to produce regarding the 'tenancy of the smaller property in the same street in favour of a lady, is just and afterthought and cannot be believed. It 'is not unlikely, as pointed out by the Appellate Assistant Commissioner, that the lady was no more than a care‑taker in the employ of the assessee keeping the house clean and tidy for the assessee's occupation whenever necessary.
3. It is common ground that the assessee was in India during the relevant previous year on his flights to and fro from Saigon to Paris when the planes he was travelling by grounded at Dum Dum Airport. The section is very clear. So long as the assessee 'at any time' during the previous year is in India, the requisite is fulfilled.
4. For the foregoing reasons we hold that the assessee is a `resident' within the meaning of section 4‑A(a)(ii) of the Indian Income‑tax Act. He is also 'not ordinarily resident' as held by the Income tax authorities so that the assessment of the assessee requires to be based on his remittances alone. This disposes of the first contention above."
16. From out of the aforesaid facts, the only question of law that arises is :
"Whether the assessee is a 'resident' for the assessment year 1950‑51 within the meaning of section 4‑4 (a)(ii)?"
Advocate‑General and S. Padmanathan for the Assessee.
C. S. Rama Rao Sahib and S. Ranganathan for the Com missioner.
JUDGMENT
JAGADISAN, J.‑The question that has been referred to us under section 66(1) of the Indian Income‑tax Act is :
"Whether the assessee is a resident for the assessment year 1950‑51 within the meaning of section 4‑A (a)(ii) of the Act ?"
The assessee is a native of Koothanallur in Tanjore district, owning properties in India, and also having a business interest in a foreign firm called J. M. Mohammad Ismail Fils Aziz & Co., carrying on business at Saigon, Indo‑China. His main source of income is from his foreign assets. For the assessment year 1950‑51 in respect of the previous year 1949‑50, he declared his status as that of a non‑resident. The Department as well as the Income‑tax Appellate Tribunal have now declared him as "a resident but not ordinarily resident". The contention of the assessee is that on the materials on record he should not be declared as "a resident" within the meaning of sec tion 4‑A(a)(ii).
The following facts are not in dispute. The assessee is a co‑owner of a residential house at No. 16, Jinnah Street, Koothanallur. The house belonged to his deceased father, and during the relevant period, namely, the assessment year 1950‑51, himself, his mother and other heirs of his deceased father were co- owners of this house. His mother was living in the house till her death in 1951. The assessee owns another house at Koothanallur, No. 11, Jinnah Street. This house belongs to him exclusively. During the relevant period the house was in the occupation of one Fathima Bibi. The nature of the possession of the house, No. 11, Jinnah Street, Koothanallur, with Fathima Bibi is a matter of controversy between the revenue and the assessee. The assessee's case is that Fathima was a monthly tenant of the said premises having agreed to pay a rent of Rs. 5 per month. The assessee has however been unable to produce any rental deed evidencing the lease. He also failed to include the rental receipt which he alleged he received from Fathima in returning the income for the relevant year. It is the absence of such a written instrument and the non‑inclusion of the rental income in the assessee's return that mainly influenced the Department in disbelieving the case of the lease put forward by the assessee. Fathima herself filed a statement before the Department claiming that she has been residing in the premises as a tenant under the assessee from 1940 onwards on a monthly rent of Rs. 5 but this was rejected as untrue. The Income‑tax Officer on this part of the case merely surmised that this Fathima Bibi must have been remaining in possession all these years only as a care‑taker of the house. It cannot be said that this is a proper finding by the Income‑tax Officer as there is no evidence to warrant that inference. As stated already, we are inclined to treat it as a mere speculation on the part of the Income‑tax Officer but unfortunately that speculative opinion has been affirmed both by the Appellate Assistant Commissioner and by the Income‑tax Appellate Tribunal.
Now on these facts the question arises whether the first limb of section 4‑A (a)(ii) has been satisfied. It will now be convenient to set out that provision in its entirety :
"Section 4‑A.‑For the purposes of this Act‑‑
(a) any individual is resident in the taxable territories in any year if he.‑‑
(i) is in the taxable territories in that year for a period amounting in all to one hundred and eighty‑two days or more ; or
(ii) maintains or has maintained for him a dwelling place in the taxable territories for a period or periods amounting in all to one hundred and eighty‑two days or more in that year, and is in the taxable territories for any time in that year ; or
(iii) having within the four years preceding that year been in the taxable territories for a period of or for periods amounting in all to three hundred and sixty‑five days or more, is in the taxable territories for any time in that year otherwise than on an occasional or casual visit ; or
(iv) is in the taxable territories for any time in that year and the Income‑tax Officer is satisfied that such individual having arrived in the taxable territories during that year is likely to remain in the taxable territories for not less than three years from the date of his arrival."
We are concerned in this case with the question whether the assessee can be said to be a resident in the taxable territories by reason of the operation of section 4‑A (a)(ii). The requirements of this provision are :
(i) The individual assessee must maintain or have maintained for him a dwelling place in the taxable territories for a period or periods amounting in all to 182 days or more ;
(ii) The assessee must have been in the territory for any time in that year. The question of the status of the assessee, whether he is a resident or non‑resident, has to be determined in each year as and when the question is raised and the answer would depend upon the facts proved in each year.
Can it be said that the assessee has maintained or caused to be maintained for him a dwelling place in the taxable territories for a period of more than 182 days in respect of the assessment year 1950‑51 by reason of his co‑ownership of the house No. 16, Jinnah Street, Koothanallur, and his exclusive ownership of another house, No. 11, Jinnah Street, Koothanallur? We must also mention at this stage that the Department has relied not merely on the assessee's title to these properties, but also upon other circumstances to bring him within the first part of section 4‑A (a)(ii). It is said that whenever the assessee came to Koothanallur he resided only in premises No. 16, Jinnah Street. In order to establish this, reliance has been placed by the department on two letters written by the assessee on two different dates, the first one to the managing committee, Koothanallur Periapallivasal, is dated January 20, 1949, and the other written to the Income‑tax Officer, is dated January 12, 1951. In both these letters, the address of the assessee is given as No. 16, Jinnah Street. It is from this fact, namely, that the assessee wrote from No. 16, Jinnah Street, that the Department wants the conclusion to be drawn that the assessee was a resident in that house on the dates when he wrote those letters. It seems to be somewhat unsafe to infer the residence of the assessee as a fact in No. 16, Jinnah Street, from this solitary circumstance of his giving that address in the communications, which he addressed to third parties. The address from which a person writes a letter or the address to which a person expects a reply to his letter may not always be the place where he can be said to have been residing. There are instances where persons give their addresses as "care of Post Master" of a particular place. It would certainly be grotesque to infer that a person is having the post‑office as his residence. This is no doubt an extreme illustration. Of course the fact remains that in this case the assessee was a co‑sharer of No. 16, Jinnah Street. The utmost that can be inferred from these letters is that on the dates when he wrote these letters he was actually staying there. The village munsif of Kootha nallur has given what is called a certificate dated January 23, 1956, in these terms : "The house at No. 16, Jinnah Street, Koothanallur, was occupied by J. M. Abdul Aziz till 1949‑50. The house was not occupied for rent by any others till then. After the demise of his father the house was under his control kept for his occupation. I am certifying to this effect as I am also living in Jinnah Street". It is needless to point out that implicit reliance cannot be placed upon this statement as it has come into existence long after the question of residence was raised by the assessee before the Department. At the most it can only be said that this was the opinion of the village munsif. We do not think that this can be treated as of any evidentiary value at all.
The assessee pleaded before the Department that the mother who was in occupation of premises No. 16 was not well disposed towards him, that she had actually filed a suit in the Sub‑Court of Tanjore, charging the assessee with having committed a gross fraud in the matter of bringing about a settlement deed alleged to be without her knowledge, that in those circumstances he did not at any time reside with her in that house. A copy of the plaint in the suit referred to above has been placed before us, and we find that the allegations of the mother of the assessee, who was the plaintiff in the suit, really make out that her feelings towards the assessee were not at all cordial. It is not suggested that the assessee himself put forward his mother to charge him with fraud. We have therefore to proceed on the footing that, on the date of the plaint in the year 1949, the relation ship between the mother who was in sole occupation of the house at Koothanallur and the assessee was not of a kind which can be said to be congenial for the two to live together. It is however mentioned that the suit itself was compromised within a year of its institution, and that it is not unlikely that the assessee himself brought about a settle ment and pacified his irate mother. The curious thing, however, is that as a result of an application for review a corrigendum was added to the Tribunal's order on July 22, 1957, in the following terms :
"Corrigendum. ‑For during the year' in line 12, paragraph 2, read `just prior to the beginning of the previous year under appeal."
The Tribunal committed the mistake of stating that the letter to Periapallivasal was in the year of account but when its attention was drawn to the fact that the letter is dated January 1949, that the year of account was only April 1, 1949, to March 31, 1950, it unhesitatingly corrected the mistake but left the inference to remain as it was. But apparently the Tribunal did not feel that the mistake originally com mitted in its previous order treating the letters as having been written during the previous year was in any way responsible for the conclusion reached by it.
The materials on record only establish that the assessee is a co‑sharer of a house and the absolute owner of another house at Koothanullar ; that the house of which he is a co‑owner was in the occupation of his mother, who was also a co‑owner ; that in January 1949, and February 1951, outside the previous year relevant to the present case, the assessee gave that house as his address when he stayed in the taxable territory ; that presumably he was living thereon these dates, and that the other house was in the occupation of one Fathima Bibi, who has not been proved to be his tenant.
The only question now is whether these facts are sufficient to bring the assessee within the first part of section 4‑A(a)(ii). We have already set out the section. The essential requirement is that the assessee, "maintains or has maintained for him a dwell ing place". A bare ownership or legal title in respect of a dwelling place will not be sufficient compliance with the provision. The assessee who is the owner may not be in possession, and if he is out of possession he cannot be said to be maintaining it as a dwelling place. Indeed this was not the contention of the learned counsel for the Department. The mere right to be in possession will not do to satisfy the section. There may not be any impediment to the assessee occupying it and using as a dwelling place. But this does not mean that the place is maintained by the assessee or being maintained for him by others as a dwelling place. The word "maintain" is given the following meaning in the Oxford Concise Dictionary "To carry on, keep up, (...condition, possession) ; cause (person, etc ...) to continue in (condition, possession of things, etc.)". The expression econnotes a system, or course of conduct on the part of the assessee, by which he either keeps up a dwelling place at his expenses, or has a dwelling place kept up by others. Neither the de jure title, nor the de facto possession of the dwelling, would by itself constitute a setting apart and keeping ready of a dwelling place to be used as a residence or home. To fall within the section, the assessee must be in a position to answer the question : "Have you any residence in the taxable territory?", inevitably in the affirmative. If his answer is that he is a full owner or part owner of a dwel ling, wherein he can take up residence if he so likes he cannot be said to be having a residence in praesenti, but only having a place which can be made into a residence. We note that the word used is "dwelling place", which means a house, used as residence, and that it might be contended that what is required is a residential place, and not the establishment of residence. But this would not be a proper construction of the statute as the word "maintained" is practically dis regarded. To "maintain" a dwelling place is different from "having" a dwelling place. The concept of a residence or home ready in hand is implicit in the section. What is refer red to as dwelling is not a physical structure, or a brick and mortar construction but the organisation of a household.
The proper construction of section 4‑A(a)(ii) has come up for consideration in this court in Zackariah Sahib v. Com missioner of Income‑tax ((1952) 22 I T R 359). The assessee was a Mohamadan merchant carrying on business in Ceylon. He usually resided in Ceylon. His parents lived in India in a house owned by his mother. His wife also lived in India sometimes with his parents and some time with her parents. The assessee was remitting moneys now and then to his parents for their maintenance. He visited British India during the year of account and stayed in the mother's house with his parents. A Bench of this Court, Satyanarayana Rao and Viswanatha Sastri, JJ., held the assessee did not maintain a dwelling…
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