Law:

Section:

JUDGMENT Chagla, CJ.- A rather interesting and important question arises on this reference, and the question is whether under the circumstances of the case a Hindu undivided family was resident in the taxable territories within the meaning of the Income-tax Act. Now, one or two facts only need be stated in order to decide the question that has been submitted to us. A Hindu undivided family was carrying on business in cloth at Wadhwan in Kathiawar which was at the relevant date outside the taxable territories. Two coparceners of this family, Gandalal and Nandlal, became partners in the business of Atnulakh Amichand & Co. which was carried on in the taxable territories. The question that falls to be considered and decided is whether the fact that the two coparceners of a Hindu undivided family carried on business in partnership within the taxable territories renders the Hindu undivided family a resident within the meaning of the Income-tax Act. Turning to the definition of a resident, when it applies to a Hindu undivided family, we find the definition in section 4A(b). "A Hindu undivided family, firm or other association of persons is resident in the taxable territories unless the control and management of its affairs is situated wholly without the taxable territories." Therefore, the presumption that arises is that a Hindu undivided family is resident in the, taxable territories, but it is open to the Hindu undivided family to rebut that presumption by establishing that the control and management of its affairs are situated wholly without the taxable territories; and the interesting question that we have to decide in this reference is what is the exact significance to be attached to the expression "the affairs of the Hindu undivided family." It is clear that the affairs contemplated by this definition are not the private or domestic affairs of the family. They must be affairs which have some reference to the Income-tax Act itself. The Income-tax Act is concerned with taxation and it is in relation to taxation that we must construe the expression "affairs". What is suggested by the Advocate-General is that inasmuch as two coparceners of the family looked…

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