1980 PLP 205 (PTD)

In the instant case, there is no dispute that the assessee is resident in the taxable territories since 1948 but the only dispute is whether the assessee is "ordinarily resident" in taxable territories. The Appellate Tribunal has found against the assessee. If the assessee is found "not ordinarily resident" in taxable territories, the assessee gets a relief under the second proviso to section 4 of the Act. The said proviso runs: "Provided further that, in the case of a person not ordinarily resident in taxable territories, income, profits and gains which accrue or arise to him without the taxable territories shall not be so included unless they are derived from a business controlled in or a profession or vocation set up in the taxable territories or unless they are brought into or received in the taxable territories by him during such year." Mr. Asrarul Hussain, Advocate for the applicant, has argued on behalf of his client that the Tribunal has misconstrued the meaning of "ordinarily resident." He submits that an individual is ordinarily resident in taxable territories in any area within the meaning of the Act if he has not been resi dent in the taxable territories in one out of 10 years preceding that year. He has also placed reliance on the cases of the Imperial Tabacco Ca. of India Ltd. v. The Commissioner of Income tax, South Zone, Karachi and another 1959 P T D 21, Saeed-ur-Rahman v. Commissioner of Income‑tax, Dacca 1963 PTD 280 and In re: Union Jute Company Ltd. In developing it has been contended that there is no definition of "ordina rily resident" but there is a definition of "not ordinarily resident" in section 4‑B, clause (a) of the Act. If all the "nots" in the definition of "not ordinarily resident" in the said section 4‑B, clause (a) are dropped, then the definition of "ordinarily resident" is available; that is if an individual is a resident in the taxable territories in nine out of ten years preceding that year, he is an 'ordinarily' resident' in taxable territories. It is further contended that this definition is also supported by the departmental instructions to the Taxing Officer and as in the present case, the assessee cold not he a resident in Pakistan for 9 years continuously as the member of years of residence of the assessee can be counted from 1941 only due to Partition in 1947 and after excluding the assessee's residence in India after Partition and absence from Pakistan up to the date of migration by the assessee to Pakistan in 1948; the assessee necessarily is "not ordinarily" resident in the taxable territories. Now let us see how far the above contention is correct. The definition of "not ordinarily resident" in section 4‑B, clause (a) of the Act is: For the purpose of this Act‑ (a) an individual is not ordinarily resident' in the taxable territories in any year if he has not been resident in the taxable territories in nine out of the ten years preceding that year or if he has not during the sevens years proceeding that year been in the taxable territories for a period of, or for periods amounting in all to, more than two years. If all the "nots" in the above definition are dropped it comes to: ‑ (a) "an individual is 'ordinarily resident' in the taxable territories in any year if the has been resident in the taxable territories in nine out of the ten years preceding that year or if he has during the seven years preceding that year been in the taxable territories for a period of, or for periods amounting in all to, more than two years. So it appears that if this procedure is adopted, the contention of the learned Advocate for the applicant seems to be well founded but this is falla cious. There is no definition of "ordinarily resident" in the Act. We are first to see what is the definition of "not ordinarily resident" in the Act; and if that is available, we can deduce safely the definition or meaning of "ordina rily resident" but not in the way Mr. Asrar wants us to have the definition or meaning of "ordinarily resident". According to the definition of section 4‑B, clause (a), an individual i "not ordinarily resident" if he is not resident in nine out of ten years or i more than two years out of seven years in the taxable territories; in other words he must be absent for at least 9 years out of ten or for a period of 5 years or snore or for period amounting in all to more than two years from the taxable territories. This is clear from the above definition. Conversely an individual is "ordinarily resident" under the Act if he is resident for more than one year out of 10 years or 2 years or more out of seven year in the taxable territories. It may be pointed out that we are not concerned in The instant case with the second pay of the definition in section 4‑B, clause (a) of the Act as admittedly the assessee resident in the taxable territories for more than 8 years since I

948. As such the assessee cannot claim relief under the second part of the definition but an attempt has been made t get it under the first of the definition of clause (a) of section 4‑B of the Act. In this connection it may be pointed out that in order to get relief under the second proviso to section 4 of the Act, one is to be "not ordinarily resi dent" as defined in clause (a) of section 4‑B and not "ordinarily resident? In order to be so namely "not ordinarily resident", one is to be resident in the taxable territories for a certain period. So the test to decide the question whether an individual is "not ordinarily resident" in the taxable territories within the meaning of first part of clause (a) of section 4‑B of the Act, is one of presence in and not absence from the taxable territories and length of presence will determine whether an individual is "not ordinarily resident" in the taxable territories. We have already found that in order to be "not ordinarily resident" as defined in the first part of clause (a) of section 4‑B, one shall have to prove that one has not been resident for 9 years out of 10 years preceding that year or in other words one has not been resident in the taxable territories for more than one year. In the instant case, the assessee admittedly has been in Pakistan since 1948 which is more than the statutory period. Now coming to the authorities cited by Mr. Asrar, we find in the case The Imperial Tobacco Co. of India Ltd. v. The Commissioner of Income‑tax, South Zone, Karachi and another P L D 1959 5 C (Pak.) 21, the question was whether a foreign Company haying registered Office throughout previous year (1947‑48) in Calcutta was resident within the meaning of section 4‑A, clause (cl of the Act. It was held that it was not so. So this decision does not throw any light on the meaning of "not ordinarily resident" as defined in clause (a) of section 4‑B of the Act. In the instant case, it is admitted that the assessee is a resident in Pakistan since 1948. Similarly two other cases relied on by Mr. Asrar are not also useful for the purpose. Admittedly Mr. Asrar has relied on the two other cases only to throw side light. As to the contention about the departmental direction, we may observe that departmental direction has nothing to do with the interpretation of the B provisions of the Statute and we are not to take cognizance of the Depart mental direction. On the consideration of the provision of the Act we have already expressed our view who is "not ordinarily resident". Mr. Afzalul Huq has relied on the cases of K. M. N. N. Swaminathan Chettiar v. Commissioner of Income‑tax, Madras 1947 ITR 27, Manibhai S. Patel v. Commissioner of Income‑tax, Bombay North (1953) 23 ITR 27, Wallace Brothers & Co. Ltd. v. The Commissioner of Income‑tax, Bombay City and Bombay Suburban Dist rict P L D 1948 PC 67 and In re: Income‑tax Assessment of Mr. A. C. Macnab, retired Financial Commissioner, Punjab (now in Scotland) P L D 1961 Lab.

651. The first two cases relied on by Mr. Afzalul Huq relate to second part of the definition in clause (a) of section 4‑B but still they throw light on what is meant by the definition. We also find that our above view is supported by those two decisions. We need not refer to other cases relied on by Mr. Afzalul Haq. We accordingly answer the question in the affirmative and direct the peti tioner to bear the costs of the respondent of this Court. A. S. CHOWDHURY, J.‑-I agree. Question answered in affirmative.