COMMISSIONER OF INCOME TAX Vs. SHANMUGAM RUBBER ESTATE

JUDGEMENT

(1.) THE question in this reference is whether the respondent firm was resident in British India within the meaning of Section 4A (b) of the Indian Income-tax Act. That section says that for the purposes of the Act a Hindu undivided family, firm or other association of persons is resident in British India unless the control and management of its affairs is situated wholly without British India. In other words, if the control and management of its affairs is partly within British India, the family, firm or association of persons as the case may be, is deemed to be resident in British India for the purposes of the Act.

(2.) THE partners in the assessee firm are six Nattukottai Chettiars. THE partnership was formed on the 19th December 1935 for the purpose of acquiring and working a rubber plantation in Malacca known as the Shanmugham Rubber Estate. THE partnership deed provided that two of the partners should in rotation have control of the partnership business.

(3.) THE Appellate Tribunal accepted the Appellate Assistant Commissioners inference from the proved facts as being corrected and in upholding his order went on to state that inasmuch as the partnership deed provided for the exercise of control by two partners, one partner acting alone could not manage. This statement is obviously erroneous. THE partnership deed not provide that in acts of control both partners should signify their agreement. THEre would be control within the meaning of Section 4A (b) if one partner took part in the direction or management of the estate.