COMMISSIONER OF INCOME TAX Vs. MEHTA D N

JUDGEMENT

(1.) IN this case, at the instance of the Revenue, the following questions have been referred to us for our opinion :

(2.) THE facts leading to this reference are as follows : We are concerned with the asst. year 1964 65. On 16th Feb., 1953, the assessee wrote to the ITO, Porbandar, that he was settled permanently in Uganda since 1950. Under S. 17(1) of the Indian IT Act, 1922, he being a non resident, has exercised the option of being assessed in respect of his total income on the basis of total world income. Upto the asst. year 1958 59, the assessee was assessed in the status of non resident and tax was charged on his total income with reference to the rates applicable to his total world income in pursuance of this option. For 1959 60 the status of the assessee was accepted as "resident but not ordinarily resident" and the same status continued upto the asst. year 1964 65, which is the year under reference. According to the ITO, the option, once exercised by the assessee on 16th Feb., 1953, under S. 17(1) of the Act of 1922, was still binding on the assessee for all the years including the year 1964 65 and he sought to assess the assessee in respect of his total income at the rate applicable to the total world income. For the years 1962 63 and 1963 64 the matter went upto the Tribunal and the Tribunal held that the declaration made by the assessee on 16th Feb., 1953, was not operative for the years 1962 63 and 1963 64. The Tribunal observed that for the years 1959 60, 1960 61 and 1961 62 the assessee was not resident but he was "not ordinarily resident" and the declaration made by the assessee in his capacity as non resident was not operative when he was being assessed in the status of "resident but not ordinarily resident". The Tribunal, therefore, held that the declaration made by the assessee was not in force for the years 1962 63 and 1963 64. Again w.e.f. 1st April, 1962, the IT Act, 1961, had come into force superseding the Indian IT Act of 1922. The Tribunal noted that the declaration made under S. 17(1) of the old Act could not be operative under the new Act as the corresponding provisions of S. 113(3) were not identical with the provisions of S. 17(1) of the old Act. In that view of the Tribunal on this ground the assessee's declaration did not survive. For the year 1964 65 the ITO held that the declaration was made under S. 113 of the IT Act, 1961, by virtue of the provisions of S. 292(2)(h) of the Act of 1961 and according to the ITO the assessee was bound by the said declaration. The AAC, relying upon the Tribunal's decision for the years 1962 63 and 1963 64, allowed the assessee's appeal for the year 1964 65 so far as this point was concerned. The Revenue went in appeal against the decision of the AAC and the Tribunal held that there was no reason to differ from the earlier decision of the Tribunal and relying on that earlier decision, the Revenue's appeal was dismissed by the Tribunal. Thereafter, at the instance of the Revenue, the three questions hereinabove set out have been referred to us for our opinion.

(3.) IN the 1922 Act, S. 4A dealt with "residence in taxable territories and there was. it may be noted, no definition of "non resident" in the 1922 Act. Under S. 4A which was on the statute book from 1939 onwards any individual was resident in the taxable territories in any year if he was in the taxable territories in the year for a period amounting in all to one hundred and eighty two days or more; or maintained or had 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 was in the taxable territories for any time in that year; or having within the four years preceding that year been in the taxable territories for a period or for periods amounting in all to three hundred and sixty five days or more, was in the taxable territories for any time in that years otherwise than on an occasional or casual visit; or is in the taxable territories for any time in that year and the ITO is satisfied that such individual having arrived in the taxable territories during that year was likely to remain in the taxable territories for not less than three years from the date of his arrival. Sec. 4B of the 1922 Act defined a person "not ordinarily resident" and under S. 4B; For the purposes of this Act (a) an individual is 'not ordinarily resident ' in the taxable territories in any year if he has not been resident in the taxable territories in nine out of the ten years preceding that year or if he has not during the seven years preceding that year been in the taxable territories for a period of, or for periods amounting in all to, more than two years;....." We are not concerned with the rest of the provisions of S. 4B. Under S. 17 of the 1922 Act provision was made for a determination of the tax payable in certain special cases. Under Sub S. (1) :