Meaning and interpretation of the expressions.

Satyanarayana Rao, J.-The following question was referred to us by the Income-tax Appellate Tribunal, Madras Bench,

“Whether on the facts and circumstances of this case the finding of the Bench that the appellant is a resident within the meaning of section 4-A(A) of the Income-tax Act is tenable in law?”‘

The assessee is a Hindu undivided family whose manager is Rajah Kandimalla Venkatarama Narasimha Rao Bahadur, the Zamindar of Aswaraopet. He is a permanent resident of Aswaraopet in the Nizam’s State. For the accounting year, 1938-39 he was asked to pay income-tax on a total income of Rs.14,630 which consisted of Rs.130 being interest accrued in money-lending business. Out of Rs. 19,000 being the net sale proceeds of paddy, net grazing fees and net sale proceeds of tobacco, allowing the statutory deduction of Rs. 4,500 the balance of Rs. 14,500 was treated as income from sources other than agricultural income from outside British India to which the interest from money-lending business was added thus making a total income of Rs. 14,630. The assessment was made on the basis that the undivided family is resident in British India. This position was contested by the assessee before the Income-tax authorities and the Appellate Tribunal, but he was unsuccessful in his contention.

The present section 4-A of the Income-tax Act was inserted by section 5 of the Indian Income-tax Amendment Act, 1939 and clause (b) of that section, which is the relevant section for the purpose of this case, reads as follows:

“a Hindu undivided family, firm or other association of persons is resident in British India unless the control and management of its affair is situated wholly without British India.”

It is common ground that the control and management of the affairs must be during the accounting period though it is not so expressly stated in the section. The expression “control and management” implies the direction of the affairs of the family or the brain of the management of the family affairs. The use of the word ‘situated’ in the section implies that the location of the control and management must be at a place without British India. From the use of the word “wholly” it must be inferred that if the seat of control and management is in more than one place at least one of which is in British India, then the control and management of the affairs of the undivided family would not be wholly without British India, and the undivided family must be treated as resident in British India within the meaning of the section. This is practically the meaning that was given to the section by Patanjali Sastri, J., in Commissioner of Income-tax, Madras v. V.V.R.N.M. Subbiah Chettiar1. At page 512 the learned Judge observes:

“‘Control and management’ signifies in the present context, the controlling and directive power, ‘the head and brain’ as it is sometimes called, and ‘situated’ implies the functioning of such power at a particular place with some degree of permanence, while ‘wholly’ would seem to recognise the possibility of the seat of such power being divided between two distinct and separated places. Clause (b) accordingly requires that the power of control and direction of the affairs of the family or firm should not have a seat of operation in British India. I find nothing in that clause to support the view that the acts of control and management exercised in British India by the person having the power of control should extend to the whole affairs of the family or firm in order to make it ‘resident’ in British India. On the other hand, the insistence on the situation rather than exercise of the control and management makes it difficult to accept the suggestion that an isolated or casual act of management and control exercised in British India by a karta who lives abroad is sufficient to bring the family within section 4-A(b).”

It is not every casual act of management or looking after in British India of a matter relating to the family that would locate the contro

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