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Judgment
The Income Tax Appellate tribunal has referred the following question to this Court :-
Whether on the facts and in the circumstances of this case, the applicant firm was resident in British India u/s 4-A (b) of the Income Tax Act.
The Tribunal has expressed the opinion that the applicant firm was resident in British India and we have no hesitation in concurring in that opinion.
The firm commenced carrying on business in Colombo in 1932. In the year 1937 it opened a branch at Kilakarai in British India. Business was
carried on there and it was managed by the partner of the firm, who was resident at Kilakarai. there were four partners, all of whom belonged to
Kilakarai.
Section 4-A (b) says that a firm is resident in British India unless the control and management of its affair is situated wholly without British India. It
has been found as a fact-and the finding is conclusive-that the business in Kilakarai was managed by a partner there. Therefore the control and
management of the firm was not wholly without British India. That being the case the firm is liable to be taxed under the Indian Income Tax Act.
Section 4-A is a new section and is governed here by its terms. Before the Tribunal there was apparently much discussion of clause 7 of the
partnership deed which provides for the management of the firm in Colombo. We do not considered that this clause has any bearing on the
question. What the court has to considered is the question whether the firm was controlled and managed wholly outside British India, and it is
obvious that it was not. The question referred will be answered in the affirmative and as the assessee has failed he must pay the costs, Rs. 250.
Reference answered in the affirmative.