TOWNSEND C N Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) AT the instance of the assessee this reference under Section 256(1) of the Income-tax Act, 1961, has been made by the Income-tax Appellate Tribunal, Patna Bench, Patna, for decision of the following questions of law :

(2.) THE assessment year under reference is 1965-66 and the previous year is the financial year 1964-65. THE assessee was in India from January 1961, till December, 1963. After that period he went abroad and came back to India some time in the month of April, 1964. THEreafter, he continued to stay in India till the end of March, 1965, For the assessment year 1965-66 the assessee's status was taken as "non-resident" by the Income-tax Officer. On appeal filed by the assessee, the Appellate Assistant Commissioner rectified the mistake and held that the status of the assessee was that of a "resident" but "not ordinarily resident". THE assessee preferred an appeal before the Income-tax Appellate Tribunal and it was urged on his behalf that he was not only "resident" but also "ordinarily resident". Reliance was placed on behalf of the assessee on the fact that he was in India for a period of more than three years from January, 1961, to March, 1965. THE Tribunal rejected the contention raised on behalf of the assessee and held that:

(3.) SUB-section (6)(a) of Section 6 lays down broadly two conditions (not three conditions as stated by the Tribunal) under which a person is to be treated as "not ordinarily resident" in India in any previous year. The first condition is that if an individual, who has not been resident in India in nine out of the ten previous years preceding the previous year for which he is to be assessed, he will be treated as "not ordinarily resident". The second condition is that if an individual has not during the seven previous years preceding the previous year for which he is to be assessed been in India for a period of or periods amounting in all to seven hundred and thirty days or more, he will be treated as "not ordinarily resident". On a plain reading of the sub-section it is clear that if an individual comes within the mischief of either of the two conditions he will be treated as "not ordinarily resident". In other words, in order that an individual may be treated as "ordinarily resident" in India in any previous year, he must not come within the mischief of cither of the two conditions.