1993 P T D 114

[Supreme Court of Pakistan]

Present: Muhammad Afzal Zullah, CJ., Shafiur Rahman and Muhammad Afzal Lone, JJ

Haji IBRAHIM ISHAQ JOHRI

Versus

THE COMMISSIONER OF INCOME TAX (WEST), KARACHI

Civil Appeals Nos.38-K, 39-K, 40-K and 41-K of 1982 and 874-K of 1990, decided on 01/10/1992.

(On appeal from the judgment, dated 23-12-1981, of the High Court of Sindh, Karachi, passed in I.T.C. No.68/1971, 69/1971, 782/1972 and 162/1974). .

(a) Income-tax Act (XI of 1922)---

----Ss. 3, 4, 4-A (i) (ii) & (iii) & 4-B(a)---Constitution of Pakistan (1962), Arts. 223 & 240---Resident---Ordinary resident---Income from taxable and non taxable territory---Tax liability---Clubbing the two incomes---Total income-- Connotation ---Assessee appellant had been a partner of a firm doing business at Karachi from which he retired and started his own business in Swat State where he was allegedly accepted as State citizen ---Assessee claiming exemption from taxability on his income from Swat State on the pica that it was a part of Tribal Area to which Income Tax Act, 1922 had not been extended by virtue of Art. 223 of the Constitution (1962) and that he was not resident of Pakistan-- Assessing Officer, on the other hand, had found on the evidence that assessee was maintaining a dwelling house in Karachi which he had purchased in the name of his wife and where he had a telephone installed in his own name and that the assessee, during the previous years, had been in taxable territory of Pakistan for more than statutory 182 days and had resided in Pakistan for nine out of ten years preceding the relevant assessment year---Assessing Officer thus treating the assessee as resident under S. 4-A (i) (ii) & (iii) and ordinary resident under S. 4-B(a) of the Income-tax Act 1922, for the relevant assessment years, charged his total rental income to income-tax by clubbing his income from Swat State with his property income---Appeal filed by assessee before Appellate Tribunal being abortive, assessee referred the question of his residential status and clubbing of income to High Court under S.66 of the Act which also confirmed the views expressed by the Tribunal --- Assessee challenging the validity of taxability of his income in Swat State before Supreme Court---Supreme Court agreeing with the views expressed by High Court on the questions referred to it, dismissed the appeal holding that irrespective of the fact that Income Tax Act was not extended to Swat State, the income of the assessee from that area had to be clubbed with his property, income and brought under charge.

(b) Income-tax Act (XI of 1922)---

----Ss. 4-A & 4-B---Residential status---Residence in taxable territories-- Ordinary residence---Finding of fact---Finding of Appellate Tribunal that assessee had maintained for himself a dwelling house in Karachi for a period of more than 182 days in the relevant accounting year and that he had been resident in taxable territory in nine out of ten years preceding the relevant previous years being findings of fact based on evidence, were not open to scrutiny before the High Court---High Court on such findings of fact, held, had rightly concluded that assessee was resident in taxable territory and thus his income from Swat State (part of Tribal Area) was liable to be taxed along with his income accruing from property located in Karachi.

Muhammad Hayat Khan v. Yar Muhammad Khan PLD 1966 SC 612; Gujrat Ginning and Manufacturing Co.'s case AIR 1936 PC 77; Dhanna Mall and others v. Rai Bahadur Lala Moti Sagar AIR 1927 PC 102 and Erin Estate v. Commissioner of Income Tax AIR 1958 SC 779 ref.

(c) Income-tax Act (XI of 1922)---

----S. 3---Charge of income-tax---Taxability---Income-tax is a tax on a person in relation to his income--Tax is not imposed on income generally; it is imposed on the income of a person, natural or artificial---Tax is not made a charge on the income upon which it is levied---Income-tax is a tax imposed upon a person in relation to income.

Gujrat Ginning and Manufacturing Co.'s case AIR 1936 PC 77 ref.

(d) Constitution of Pakistan (1962)---

----Art. 131---Central laws can have an extra-territorial operation.

(e) Income-tax Act (XI of 1922)---

----Ss. 3 & 4---Charge of income-tax---Nexus between territory and person to be charged---In order to tax the income of a person there should be sufficient nexus between the taxing territory and the person whose income is to be charged to tax---Resulting general conception as to the scope of income-tax is that given a sufficient territorial connection between the person sought to be charged and the country seeking to tax him income-tax may properly extend to that person in respect of his foreign income.

Dhanna Mall and others v. Rai Bahadur Lala Moti Sagar AIR 1927 PC 102 ref.

(f) Income-tax Act (XI of 1922)---

----S. 66---Reference---Scope---Jurisdiction---Extent---High Court in exercise of its jurisdiction under S. 66 of the Income-tax Act, 1922 has merely to enunciate the law applicable to the facts found by the Tribunal.

(g) Income-tax ---

----Inference---Inference of fact---Inference of fact drawn from other 'basic facts remains inference of fact.

(h) Income-tax---

----Question of law---Proper legal effect of proved facts or facts admitted is a question of law.

Muhammad Hayat Khan v. Yar Muhammad Khan PLD 1966 SC 612; Gujrat Ginning and Manufacturing Co.'s case AIR 1936 PC 77; Dhanna Mall and others v. Rai Bahadur Lala Moti Sagar AIR 1927 PC 102 and Erin Estate v. Commissioner of Income Tax AIR 1958 SC 779 ref.

(i) Income-tax Act (XI of 1922)---

----S.2(15)---"Total income"---Meaning and import of term "total income".

(j) Income-tax Act (XI of 1922)---

----Ss. 4-A & 4-B---Status of "resident", "non-resident" and "not ordinarily resident" stated.

Khalid Anwar, Advocate Supreme Court instructed by Mrs. Majida Rizvi, Advocate-on-Record for Appellant (in CAs. No. 38-K to 41-K of 1982).

Nasrullah Awan, Advocate Supreme Court, instructed by AA. Siddiqui, Advocate-on-Record for Respondent (in C.As. 38-K to 41-K of 1982). Khalid Anwar,

Advocate Supreme Court instructed by A.Aziz Khan, Advocate-on-Record the Appellant (in CA. 874-K of 1990).

Nasrullah Awan, Advocate-on-Record for Respondent.

Date of hearing: 26th December, 1991.

JUDGMENT

MUHAMMAD AFZAL LONE, J.---In this appeal by leave to appeal directed against the Sindh High Court's judgment dated 23-12-1981, leave was granted to examine:--

"(1) Whether the petitioner is liable to charge under the Income-tax Act, 1922 in respect of his income from business in Swat State for the reason that he is an ordinary resident of Pakistan even though the Income-tax Act, 1922 was not applied to Swat State under Article 223 of the Constitution of 1962?

(2) Whether the inference drawn by the High Court that the petitioner maintained a dwelling place in Pakistan for 182 days in a year merely because his wife has a house in Karachi wherein a telephone in his name is installed are the correct inferences of law?

2. The material facts as borne out from the record before us are that the appellant is an individual and was formerly partner of a firm doing business in jewellery at Karachi. He retired from this firm in June, 1960, and started his own business in emerald mines in Swat State. According to him he was accepted as citizen of the State by its Ruler w.e.f. 17th July 1960. During the assessment proceedings, before the income Tax Officer, for the years 1961-62, 1962-63, 1963-64, the appellant claimed exemption from taxability on his income from Swat State, on the plea that it was part of Tribal area to which Income-tax Act, 1922 had not been extended in contemplation of Article 223 of 1962 Constitution, and that he was not resident of Pakistan. The Income Tax Officer, however came to the conclusion that there was no evidence that the appellant had permanently settled in Swat State. He found that the appellant maintained a dwelling house at Karachi, for his stay, wherein a telephone was also installed in his name. This house was purchased by him in the year 1961 from his funds in the name of his wife. The Assessing Officer further noticed that during the previous years under consideration the appellant had been in that part of Pakistan, to which income-tax is applicable (hereinafter called taxable territory) for more than 182 days. It was not denied that he was in Pakistan for a period of more than 365 days during the preceding years ending 30-6-1962, and has also been visiting Karachi during the subsequent years. According to the findings of the I.T.O. the appellant had resided in Pakistan for nine out of ten years preceding the assessment year 1961-62. Upon these facts the Assessing Officer treated the appellant as resident under section 4-A(i)(ii) & (iii) and ordinary resident under section 4-13(a) of the Income-tax Act, 1922, for the assessment year 1961-62 and assigned to him the same status for the subsequent assessment years as well. As admittedly the appellant had some income from property situate in taxable territory, his status having been determined as "resident and ordinary resident", his total rental income had to be brought under charge. The I.T.O. therefore clubbed his income from Swat State with his property income and subjected the same to income-tax.

3. In appeal the Income Tax Appellate Tribunal did not differ with the residential status accorded to him by the Assessing Officer and took the view that:

"After considering the factual and legal positions we are of the opinion that admittedly the appellant receives rental income in Pakistan and in order to assess this income the provisions of Income Tax Act have to be applied. It cannot therefore be said that the Income Tax Act is being applied in the Swat State. The incidence of tax under the Income Tax Act is on a dual basis, namely, it, is attracted to the incomes as well as to the persons. The income in this case is in Pakistan at least to the admitted extent of property rents and in order to assess this income, the Income Tax Officer has to apply the Income Tax Act and its relevant provisions to gauge the incidence of tax which cannot be quantified without determining the appellant's residential status under the various provisions of sections 4A and 4B. We cannot therefore accept the appellant's contention that merely by virtue of the Swat State domicile or residence, the assessee could in this case claim immunity granted by Articles 223 and 240 of the Constitution of 1962. In our view, therefore, the counsel of the Department has rightly contended that the Constitutional provisions in this case do not come into play at all. This leaves us, therefore, to the correct determination of appellant's residential status by the Income Tax Officer . tests as laid down in section 4A(a)(ii) and 4A(a)(iii) could be applied. The appellant could not deny that at least the wife of the assessee maintains a dwelling house where a telephone is installed in the name of the appellant. The fact by itself shows that a part of the wife's residence is reserved as a dwelling place for the assessee-appellant. Since this definitely gives him a right to live in Pakistan, and therefore, within the meaning of section 4A(a)(ii) a residence is maintained for him in Pakistan for more than 182 days he becomes a resident of Pakistan and as his residence for the nine out of the 10 previous years is not denied he automatically becomes resident and ordinarily resident of Pakistan. In this view of the matter, we would hold that the assessee was liable for all his income in and outside Pakistan."

The Tribunal thus concurred with the Income Tax Officer and upheld the chargeability of income earned by the appellant from Swat State.

4. The appellant then moved the Sindh High Court under section 66(1) of the Act, as amended by the Finance Act 1970 for its opinion on certain questions of law said to have arisen out of the Tribunal's order, including Question No.1, referred to in the leave granting order. Before the High Court, on behalf of the assessee, much emphasis was laid down on Article 223 and definition of Tribal area given in Article 242, which includes Swat State, and it was urged that as the Income Tax Act was not extended to Swat State the income accruing to him from any source in that area was totally exempt from taxability. It was further contended that an assessee who was resident in the taxable territory, would be liable to tax in respect of his income accruing to him in that territory, but his income from Swat State could not be clubbed with such income and subjected to income-tax The learned Judges of the High Court, however, did not accept these arguments and maintained:

"We are not inclined to agree with this contention of learned counsel as we are of the view that an assessee, who was ordinarily resident in a place in Pakistan but outside Swat, would be subject to tax not only in respect of income accruing to him in Pakistan outside Swat but also income accruing to him from sources in Swat. Such an assessee being a resident of an area, to which the Income Tax Act applied would be subject to tax under the Income Tax Act and his income from Swat would also be taxable. However, if the assessee was not ordinarily resident of any area in Pakistan to which Income Tax Act applied; any income accruing to him from sources in Swat would not be taxable as the Income Tax Act at that time was not applicable to Swat. In this connection reference may be made to section 4(1) of the Income Tax Act whereunder the total income of a person ordinarily resident of a place in Pakistan to which the Income Tax Act applies includes not only income accruing to him in Pakistan but also in respect of income accruing to him from outside Pakistan. In the instant case, if instead of the income accruing from Swat, the assessee had derived income from sources outside Pakistan, for instance from. Dubai or U.K., the assessee, if ordinarily resident of Pakistan, would have been taxed in respect of such income derived by him from sources in Dubai or U.K. In such a case, it would not have been open to the assessee to argue that as Income Tax law is not applicable to Dubai or U.K., and admittedly the Pakistan Income Tax law is not applicable to such countries, income accruing from sources in Dubai 'or U.K. would not be liable to tax."

The High Court thus did not differ with the appellant's residential status determined by the Tribunal; agreed with the views expressed by the Tribunal in this behalf and answered the reference accordingly.

5. Before us the appellant's case is that at the relevant time the Income tax Act, 1922 was never made applicable to Swat State in pursuance of Article 223 ibid; resultantly there was a Constitutional command that Income Tax Act would not apply to the Tribal area including Swat State and, therefore, the income earned by him from the State could not be subjected to tax by application of the Act to that income. As regards the determination of the appellant's residential status under sections 4-A & 4-B, the submission is that under section 3 of the Income Tax Act, the charge is on the income, which being abstract in character, for the sake of convenience the person who earn" the taxable income is made responsible to pay the tax. 1n the submissions of the appellant, despite the arrangement that the tax is levied on the income in the hands of a person, in reality it is always the income, which is subject-matter of the charge and if there is any exemption from taxability, it would always be in respect of the income. The gist of his submissions thus, was that in case of Swat State immunity was granted from total application of Income-tax Act, 1922, no charge on the income accruing from any source in that area could be levied.

6. To deal with the questions on which we are called upon to express our opinion, reference shall have to be made to sections 3, 4, 4-A & 4-B of the Act, which in so far as relevant for the purpose of this case are reproduced below:

"3. Charge of Income-tax.--Where any Central Act enacts that income -tax shall be charged for any year at any rate or rates tax at that rate or those rates shall be charged for that year in accordance with, and subject to the provisions of this Act in respect of the total. income of the previous year "or the previous years, as the case may be" of every individual, Hindu undivided family, company, and local authority, and of every firm and other association of persons or the partners of the firm or members of the association individually.

4. Application of Act.--(1) Subject to the provisions of this Act, the total income of any previous year of any person includes all income, profits and gains from whatever source derived which---

(a)...................................................................

(b)if such person is resident in Pakistan during such year, or

(i)accrue or arise or are deemed to accrue or arise to him in Pakistan during such year, or

(ii)accrue or arise to him without Pakistan during such year, or

(c)if such person is not resident in Pakistan during such year, accrue or arise or are deemed to accrue or arise to him in Pakistan.

xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx XXX xxx

xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx

Provided further that, in the case of a person not ordinarily resident in Pakistan, income profits and gains which accrue or arise to him without Pakistan shall not be so included unless they are derived from a business controlled in or a profession or vocation set up in Pakistan or unless they are brought into or received in Pakistan by him during such year.

4-A. Residence in taxable territories.--For the purposes of this Act---

(a)any individual is resident in Pakistan in any year if he--

(i)is in Pakistan in that year for a period amounting in all to one hundred, and eighty-two days or more, or

(ii)maintains or has maintained for him a dwelling place in Pakistan for a period or periods amounting in all to one hundred and eighty-two days or more in that year, and in Pakistan for any time in that year; or

(iii)having within the four years preceding that year been in Pakistan for a period of or for period amounting in all to three hundred and sixty five days or more, is in Pakistan for any time in that year otherwise than on an occasional or causal visit;

(b) xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx xx .

(c) xxx xxx xxx soot xxx xxx xxx xx xxx xxx xxx xxx xxx

4B. Ordinary residence:---For the purposes of this Act--

(a)an individual is "not ordinarily resident" in Pakistan in any year if he has not been resident in Pakistan in nine out of ten years preceding that year or if he has not during the seven years preceding that year been in Pakistan for a period of, or for periods amounting in all to, more than two years.

(b) xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx xx xxx .

7. Section 3 creates a charge on the "total income" of the previous year of an individual and other taxable entities enumerated in this section. The tax is levied at the rates fixed under the Annual Finance Act. The term "total income" is defined in section 2(15) as under:--

`Total income' means total amount of income profits and gains referred to in subsection (1) of section 4 computed in the manner laid down in this Act:'

The interpretation clause professes to define the term "total income" but makes no more contribution than merely to refer to section 4(1), which really gives the connotation of "total income". In terms of this section the "total income" includes income, profits and gains actually or artificially received, accrued or arising to a person in any previous year in the taxable territory or accrues or arises to him outside the taxable territory. This provision further links up such income with his status, as resident, non-resident and "not ordinarily resident" in the taxable territory. The test of "resident" and "not ordinarily resident" is provided by sections 4-A and 4-B. The tax is levied only when one or more of the conditions specified in these two sections are satisfied. It is noteworthy that sections 4, 4-A & 4-B are included in Chapter 1, which opens with the words "charge of income". The Federal Court in Chatturam and others v. Commissioner of Income Tax (1947) 15 ITR 302 expressed the view that "the liability to pay the tax is founded on sections 3 and 4 of the Income Tax Act which are the charging sections. It is idle on the part of the appellant to attempt to create an impression that in the Scheme of the Act, in the matter of taxability, the person whose income is subjected to charge, is not of much significant. We may refer here with advantage to the weighty observations of Beaumont, C.J. in re: Patiala State Bank's case (AIR 1941 Bombay 94) to the effect that:

"I think that, properly considered, income-tax is a tax on a person in relation to his income. The tax is not imposed on income generally; it is imposed on the income of a person, natural or artificial, as defined in section 3. The assessment has to be made against a person, and the tax has to be collected from the assessee. The tax is not made a charge on the income upon which it is levied, and I think, broadly speaking, it is accurate to say that income-tax is a tax imposed upon a person in relation to his income."

Sections 3, 4, 4-A and 4-B are interlinked and have to be read together. The charge created by virtue of section 3, on the total income of an assessee, is notional in character; it materializes when in pursuance of sections 4-A and 4-B his residential status is determined and stands quantified on assessment made under the machinery provisions of the Act.

8. The Tribunal as a fact finding body has specifically head that during the accounting years under consideration the appellant maintained a dwelling house in Karachi in terms of section 4-A(a)(ii) and further in each accounting year he has been in the taxable territory in nine out of ten years, preceding each year, and thus earned the status of "ordinarily resident" envisaged by section 4-B. Admittedly the appellant had some income from the properly located in Karachi. It cannot be disputed and rather it has not been disputed that all income arising to him in Pakistan outside Swat State is liable to tax. The Income Tax Act, does not contemplate imposition of levy on the foreign income, unless nexus is established between the taxable territory and such income or such territory and the person, natural or artificial, as the case may be, in whose hands the income is liable to be taxed. We may quote here, with the approval, the following observations of Lord Herschell in Colquhoun v. Books (1989) 14 AC 493:---

" .the Income Tax Acts however themselves impose a territorial limit, neither that from which the taxable income is derived must be situate in United Kingdom or the person whose income is to be taxed must be resident there."

That the residence of the assessee in a taxing territory and the location therein of the source from which income is derived, are the two connections to bring his income within the ambit of the chargeability. No doubt, Swat State is a part of Pakistan under Article 1 of 1962 Constitution, and as laid down in Article 242 it forms part of Tribal area. But, the question is, when the Income Tax Act has not been applied to Swat State, can the income accruing to the appellant from that area be subjected to tax? We think that character of the income qua its taxability, arising to the appellant from Swat State is no better than the income earned from a foreign country by a person "resident" in taxable territory. Indeed, the income accruing or arising from a foreign country would be an extreme case. Such income in the hands of a "resident" is liable to be taxed under section 4(b) (iii). It may be observed that under Article 131 of 1962 Constitution, the Central laws can have an extra-territorial operation. In Wallace Brothers & Co. v. Commissioner of Income Tax (75 IA 86) the income of a foreign company was sought to be taxed under the provisions of Income-tax Act, 1922. The Privy Council laid down that in order to tax the income of a person there should be sufficient nexus between the taxing territory and the person whose income is to be charged to tax and held: ---

"The resulting general conception as to the scope of income-tax is that given a sufficient territorial connection between the person sought to be charged and the country seeking to tax him income-tax may properly extend to that person in respect of his foreign income."

Further in construing the expression "tax on income" appearing in Entry No.54 of the Seventh Schedule of the Government of India Act, 1935, the Privy Council maintained that "residence -- is implicit in the power conferred by the Government of India Act, 1935". The appellant having been found resident of Karachi; we have no doubt that irrespective of the fact that Income Tax Act was not extended to Swat State, his income from that area had to be clubbed with his property income and brought under charge. We, therefore, uphold the answer rendered by the High Court to Question No.l.

9. As regards the second question, it may be stated at the outset that the I.T.O. came to the definite conclusion that there was no evidence that the appellant had permanently settled in Swat State before the assessment year 1961-62. Before the Department the certificate of residence issued to the appellant by the Swat authorities was the main rather the sole piece of evidence to subtantiate his permanent settlement in Swat State, and that he ceased to be the resident of Karachi or for that matter the taxable territory. It is in the assessment order that this certificate was issued by the Chief Secretary, Swat State, on 11-5-1966, wherein it was stated that the appellant had become citizen of Swat State before 1960-61. But the certificate stood belied as the I.T.O. noticed that the appellant was partner of the Firm -- Messrs Hakim Jewellers Mart, Karachi, up to 30-6-1960 and also appeared before the Assessing Officer on 17-10-1960. In this view of the matter, the Assessing Officer ignored the certificate. These are all findings of fact with which the Tribunal did not differ. Before the Tribunal, on behalf of the appellant, it was not disputed that in the year 1961, he purchased the house at Karachi out of his funds in the name of his wife and telephone was also installed therein in his name. While discussing the issue, the Tribunal observed:

"This clearly establishes that the appellant had facilities of boarding and lodging at Karachi where he was maintaining a dwelling place for himself. Even, therefore, if it be held that this house was being maintained by his wife, the appellant had a right to live in the house and his action in keeping a telephone in his name hereby clearly shows his dominant intention to maintain a part of this house as his own residence. Therefore, the appellant was resident in Pakistan within the meaning of sections 4A(a)(i), 4A(a)(ii) and 4A(a)(iii). The residence in 9 out of 10 previous years was not denied. Therefore, he was properly treated as resident and ordinarily resident of Pakistan."

From the order of the Tribunal it is amply discernible that in respect of the dwelling place it rendered a clear-cut finding of fact that the appellant maintained a dwelling house for himself and even if it was maintained by his wife, he had the dominant intention to maintain a part thereof for his personal residence. Evidently, this is a finding of fact. It hardly needs any emphasis that as a final fact finding body the Tribunal's finding of fact is conclusive, and the High Court cannot go behind it, unless it is shown that there was no evidence on which the Tribunal could properly arrive at its conclusions or the Tribunal misdirected itself in law. Even in the case of no evidence the High Court cannot disturb the finding recorded by the Tribunal, unless it is assailed through a question of law expressly raised in the reference application. It is to be noticed that the appellant did not pose any such question in the reference application. In exercise of its jurisdiction under section 66 of the Act, the High Court has merely to enunciate the law applicable to the facts found by the Tribunal.

10. We may observe that question No.2 formulated, as it is, gives the impression as if the High Court itself drew certain inferences regarding maintenance of dwelling house, by the appellant in taxable territory for more than 182 days. This, however, is not correct. We find, that what the High Court has done is, that it simply followed the inferences drawn by the Tribunal which are inferences of fact. It will be seen that the inferences of fact drawn from other basic facts remain inferences of facts. In the application of taxing statute, to certain given facts, not unoften, it is difficult to differentiate between a question of fact and question of law, but as laid down by the Privy Council in Commissioner of Income Tax v. Laxminarin Badridass 5 ITR 170 (179) that it is not possible to turn a mere question of fact into a question of law by asking whether as a matter of law the officer came to a correct conclusion upon a matter of fact. There should, however, be no doubt that the proper legal effect of proved facts or facts admitted is a, question of law. Reference in this connection may be made to Muhammad Hayat Khan v. Yar Muhammad Khan PLD 1966 SC 612. Gujrat Ginning and Manufacturing Co. AIR 1936 PC 77 and Dhanna Mal and others v. Rai Bahadur Lala Mod Sagar AIR 1927 PC 102. In the last-mentioned case on facts, the tenancy was established and the question was whether the proved facts indicated a precarious or permanent tenancy. In other words the issue was as to what was the legal effect of the proved facts which was treated as a question of law. In Erin Estate v. Commissioner of Income Tax AIR 1958 SC 779 (V. 45 C.105) the Supreme Court of India had to determine the status of a firm within the meaning of section 4-A(b), which owned a Tea Estate in Ceylon, but all of its partners were permanent residents of India. The Court took the view that: ---

"There is no doubt that the question raised for our decision is a question of law. Whether or not the appellant is a resident firm under section 4A(b) would depend upon the legal effect of the facts proved in the case. The status of the appellant which has to be determined by reference to the relevant section of the Act is a mixed question of fact and law and in determining this question the principles of law deducible from the provisions of the said section will have to be applied."

On proper analysis of the case before us, we however, find that the findings of the Tribunal that the appellant maintained for himself a dwelling house in Karachi for a period of more than 182 days in the relevant accounting year, and that he has been resident in taxable territory in nine out of ten years preceding the relevant previous years are findings of fact which are not open to scrutiny before the High Court. It was not the appellant's case before the High Court that the Tribunal's finding was not based on any evidence. On the other hand, the residential status of the appellant has to be determined in the light of the facts proved on the record on the footing of the tests laid down in sections 4-A and 4-B. This would give rise to a question of law. In our opinion, the High Court's approach is correct in law, and it rightly held that the appellant was resident in taxable territory and thus, his income from Swat State was liable to be taxed alongwith his income accruing from property located in Karachi. The second question is disposed of accordingly.

Resultantly, these appeals are dismissed, leaving the parties to bear their own costs.

M.BA./I-163/S Appeals dismissed.