A non-Indian company is said to be resident in India in any previous year if during that year the control and management of its affairs is situated wholly in India.

AJIT R. SENGUPTA, J.

( 1 ) THE question in this reference under Section 256 (1) of the I. T. Act, 1961, is whether the Bank of China (in liquidation) should be assessed to income-tax on the footing that it is a company resident in India.

( 2 ) BY an order of the High Court at Calcutta dated December 10, 1962, in Company Petition No. 229 of 1962 [bank of China, In re [1964] 34 Comp Cas 90 (Cal)], moved by the Reserve Bank of India under Sections 457 and 456 read with Section 491 of the Companies Act, 1956, the assessee-company, Bank of China, went into liquidation. The official liquidatior was appointed as the liquidator of the assessee-bank and the entire assets and liabilities of the assessee-bank came under the control and management of the High Court.

( 3 ) WHILE framing the assessment for the assessment year 1975-76, the ITO treated the assessee as a non-resident company. Sources of income of the assessee were from interest and rent. The said assessment was made on the official liquidator.

( 4 ) BEING aggrieved by the said assessment, the official liquidator preferred an appeal before the AAC. It was submitted on behalf of the assessee that the ITO was wrong and unjustified in taking the status of the assessee as non-resident. The AAC, however, following his appellate order for the earlier year in the assessee's own case, held that the ITO was right and justified in taking the status of the assessee as non-resident company for the year under reference.

( 5 ) THE AAC for the earlier year (1974-75), in disposing of the contention of the assessee, observed as follows :"according to the provisions of the Income-tax Act, a company can be treated as resident if the control and management of its affairs is situated wholly in India in the accounting year. The affairs of this company are carrying on of banking business. The bank went into liquidation in 1962 due to hostilities between India and China. The official liquidator of the Calcutta High Court has been realising the interest on fixed deposits and making payments towards the liabilities. The liquidator has been merely acting as an agent for a limited purpose. He has no authority to carry on banking business which is the main affair of the bank. It may be stated that the banking activities have been suspended temporarily and these activities may be renewed after normal relationship is re-established between the two countries. There is no evidence that the constitution of the board of directors which was formed in China, has been changed or in any way has ceased to exist. It cannot, therefore, be said that the control and management of the affairs of the company were wholly in India during the relevant accounting year. The ITO was, therefore, justified in treating the appellant company as non-resident. "

( 6 ) THE assessee went on appeal before the Tribunal. Before the Tribunal it was submitted that for the assessment year 1974-75, the Tribunal had already held that the status of the assessee should be taken as a resident within the meaning of Section 6 (3) (ii) of the I. T. Act, 1961. It was submitted that the income-tax authority was not justified in taking the status of the assessee as non-resident. Concurring with the order for the assessment year 1974-75, the Tribunal directed the ITO to treat the assessee as a resident within the meaning of Section 6 (3) (ii) of the Act and recompute the tax accordingly.

( 7 ) ON the aforesaid facts, the following question of law has been referred to this court :"whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the control and management of the affairs of the assessee during the relevant previous year corresponding to the assessment year 1975-76, was situated wholly in India and, therefore, the assessee should have been treated as a resident in India within the meaning of Section 6 (3) (ii) of the Income-tax Act, 1961 ?"

( 8 ) UNDER Section 6 (3), a non-Indian company is said to be

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