Law: Income Tax Act, 1961

Section: 2(42),4

Section 4, read with section 2(42), of the Income-tax Act, 1961 [Corresponding to section 3, read with section 4A, of the Indian Income-tax Act, 1922] - Association of persons - Assessable as - Assessment years 1946-47 to 1949-50 - 'M' was carrying on business in Penang - He had two Indian wives and had nine children from them - He also married a Malayan wife and had a son by her - 'M' died in 1943 and his estate devolved upon his wives and children - Executors obtained probate of will before Japanese Court - After British re-occupation sometime in 1945, this probate was confirmed by British Court - Indian heirs jointly permitted and desired continuance of business in hands of one of executors, 'A' at Malaya till 1946 - Thereafter it was taken by 'D' and 'H', power of attorney agents of Indian heirs of deceased - Whether on facts Tribunal was justified in holding that Indian heirs formed themselves into association of persons in running business at Penang through agency of executors and, therefore, they were liable to be treated as unit of assessment - Held, yes - Whether since for assessment years 1946-47 and 1947-48, business was under management and control of 'A' with plenary powers to conduct it in light of his own wisdom and 'A' was certainly a non-resident, he having resided at Penang during relevant period, there was no justification for treating association of persons as resident for said years in respect of foreign business income - Held, yes - Whether for assessment years 1948-49 and 1949-50 association of persons could not be treated as non-resident but must be deemed to be resident and an ordinarily resident as defined under Act - Held, yes FACTS One 'M' migrated to Penang in 1938 and carried on a lighterage business in the Penang Harbour. He married two wives in India by whom he had nine children. He also married a Malayan wife and had a son by her. 'M' had a successful business career, and, besides the lucrative business at Penang, he came to own large extent of house properties and agricultural lands in India. During his absence in Malaya, his son-in-law, one 'D', was managing the properties in India under a power of attorney. 'M' died in August…

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