Law:

Section:

Section 6 of the Income-tax Act, 1961 - Residential status - firm - Assessment year 1962-63 - Assessee firm was carrying on business in Ceylon - All partners were residing in India - Firm appointed a resident of Ceylon as power of attorney agent to carry on its business in Ceylon - Under terms of deed entire de facto control of business was given to power of attorney agent and deed did not even reserve right to principal to give instructions to agent as to manner or method of conducting business - Whether on facts assessee had proved that entire control and management of affairs of business was wholly outside India and therefore, assessee firm should be assessed as on-resident - Held, yes -Whether fact that in earlier assessment firm was assessed as resident would not preclude assessee from claiming that during relevant year it was not resident - Held, yes FACTS The assessee was a firm of four partners carrying on business in Ceylon in pawn-broking and money-lending. All the four partners were residing in India. The firm appointed a power of attorney agent who was residing in Ceylon. The assessee-firm had all along been assessed as a resident and ordinarily resident, but for the assessment year 1962-63, the assessee claimed that it should be assessed as a non-resident on the ground that the management and control of the business vested in the power of attorney agent the was a permanent resident of Ceylon and that no part of the management and control was exercised from India. The ITO rejected the claim in the view that the power of attorney gave a series of direction to the agent which in itself constituted exercise and control and that what was left to the discretion of the agent was to manage the day to day business of the firm, and further that the assessee had to be assessed as resident as in the earlier assessments, it was assessed as resident. The AAC upheld the view of the ITO. The Tribunal however allowed the assessee's appeal. On reference: HELD It was seen from the deed appointing the power of attorney agent that the entire de facto control of the business was given to the power of attorney agent. It enabled the agent to carry on the entire business…

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