C.I.T., MADRAS versus K.S. RATHNASWAMY

Citation: [1980] 2 S.C.R. 519 · Decided: 18-12-1979 · Supreme Court of India · Bench: V.D. TULZAPURKAR · Disposal: Dismissed

Judgment (excerpt)

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519 
CIX, MADRAS 
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JCS. RATHNASWAMY 
December 18, 1979 
[ V. D. TULZAPURKAR AND E. S. VENKATARAMIAif, ) LJ 
Inclia:i lncorne 1ax Act, 1922, Section 4A(a)(ii) status of an as!Mssee "Q.J 
,resident in the taxable territories in India" or non-resident-Scope of the ~ection 
-Meaning of the words "rnaintains" 'has maintained for hi1n a dwelling place'. 
The as~i;;s.see one of the sons of Subramania was born and brought up in 
Ceylon and had his own business and properties in Ceylon. After the death 
of his father and his paternal uncle Arurnugha, the assessee's two other brothers 
Ganapathi and V'elayadham and his cousin Ganesa son of Arun1ugha formed a 
Hindu Undivided Family. 
That fa:mily owned an ancestral house at Orthanad 
in Taajore district, which \\'as used as dwelling by the step-mother of assessee, 
his fwll brothers and his cousin Ganesa. The family also owned shops and 
agricultural lands. The family properties were managed by Ganes~ and were 
maintained by him out of the agricultural and rental income. 
The assessee 
never enjoyed any portion of the family incon1e. 
In July 1958 the assessee 
on the one hand and other members of the fa.mily on thf" other executed a 
mutual deed of release relinquishing each party's rights in fe '/Our of the other; 
inter alia the asSf'.ssee released all his rights, title and interest in the family 
properties in favour of his brothers, reciting therein that the fan1ily properties 
were never enjoyed by him bnt only by others. This deed ot release was found 
to be atII instrument bo,na fide entered into by the parties. 
It appears that he started constructing a theatre· in Orthanad in 19 53 which 
-wa.o; completell in 1957· and during the said corntruction he paid occasional visits 
and stayeJ sometime in rhc family hous.e, sometimes in a chatram in Tanjoro 
and at times in a hotel. 
Thus from 1-4-52 to 31-3-53 he stayed for ~ day• 
in India, from 1-4-53 to 31-3-54 he did not come to lridia at all; from 1-4-54 
to 31-3-55 he stayed for 28 days in India; from 1-4-55 to 31-3-56 he stayed 
for 47 days in India and from 1-4-56 to 31-3-57 he stayed for 23 days in 
India. 
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In the above circumstances for the assessment years 
1952-53, 
1953-54 
1956-57 and 1957-58, the assessee filed retunlS, but for the first two years ~fte; 
proceedings were initiated under section 34(i)(a) of the Act and for tne latter 
two years on his own offering his income in Ceylon for assessn1ent. 
The status 
declared in all the returns wrus "he was a resident and ordinarily resident person". 
The Income Tax Officer completed the assessment on the basis of the returns 
filed. 
He also initiated penalty proceedings against the ilssessee under section 
28 (1) (a} for not filing the returns in time and levied penalties against him. 
h the. a~s 
preferre~ by the asses~ee .which were principal1y directed against 
the re1echon of the c1a1m made by him in respect of the double taxation relief 
alt additional ground was taken that the assessee should have been treated as ~ 
'a'."l:'resid~nt' in all the Y~lM'S. Th: Appellate Assistant Commissioner upheld 
tbIS add1t10nal ground talcing the view that since during bis sojourn in India, 
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520 
SUPREME COURT REPORTS 
[1980] 2 S.C.R. 
A 
the assessee \Vas staying in the family house more as a guest, he neither main· 
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tained nor had maintained ::t dwdling place in the taxable territories and, 
therefore, section 4A(a) (ii) of the Act was inappliccible. 
Having lost their 
. appeals before the Tribqnal and on references to the Iligh Court, the Revenue 
came up in 3.ppeal by certiih:ales to this Court. 
Dismissing the a'Ppeals, the Court, 
J:IBLD: 1. Section 4A(a) (ii) of the Incon1e Tax Act, 1922 raises a statu· 
tory fiction since it is prefaced hy the phrase "for the purposes of this Act". 
Further the language of the provision makes it clear that it lays down a technical 
test of territorial connection amounting to residcnCe a•pplicable to all individuals 
-foreigners as v.·ell as Indians, including Hindus, Christians, ?vluslims, Parsis 
and othero irrespective of the personal law governing them. [524 D-E] 
2. Section 4A(a) (ii) makes it clear that before any individual can be said 
to be a residerit in the t<l!Xablei territories in any previous year two conditions 
are required to be fulfilled; (a) there 1nust be a dwelling place maintained in 
the taxable territories either by the assessee hi

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