Commissioner General of Income Tax v. Muruddin Hassanali Noorani, Misc. Civ. App. 1,2,3,4 – 68, 1/4/69, - J.

Commissioner General of Income Tax v. Muruddin Hassanali Noorani, Misc. Civ. App. 1,2,3,4 – 68, 1/4/69, - J.

The respondent was employed by a firm as an engineer and lived in Tanga, from 1932 to 1955 continuously, apart from a short absence in 1949. He had by this time founded a flourishing chemical oil refinery amongst other interests, and also a large family. In 1955 his health broke and he visited Europe for treatment, not retuning until 1957. In 1960, he again left for Europe allegedly because of ill health. On this occasion he bought a house in Dulwich, England, and the whole family removed to that country. However, the respondent continued making fairly regular visits to East Africa. During part of respondent’s 1962-1963 visit he stayed in the guesthouse at Tanga, his property, which he had not let with his main house. During his visits to  Mombasa in 1962 – 1963 & 1964, he stayed in a flat belonging to his nephew. He also owned a block of flats in Mombasa one of which became vacant in 1965, which he retained for his own use and in which he has lived ever since. The major portion of his stay in East Africa was spent in Tanga until 1965, when he occupied one of his flats in Mombasa. Apart from this the respondent kept his banking account in East Africa and in 1964 acquired Kenya Citizenship. The Commissioner General argued that the respondent abandoned his residence and therefore his ‘home’ in East Africa, in 1960, when he bought a house in Dulwich and removed the family to England. The respondent argued that for taxation purposes he was a resident of East Africa and therefore entitled to the benefit of tax allowances. The definition of a “Resident” as set out in section 2 of the Act is as follows: “Resident in the Territories” where applied in relation to any year of income:- (1) to individual, means that such individual resides except for such temporary absences as the Commissioner may determine to be reasonable, in any of the Territories; and an individual shall be deemed to reside in the Territories if he:- (a) has a home in any of the Territories and, was present in the Territories for any period in such years of income; (b) has no home in any of the Territories”, (paraphrase) but was present for certain periods of  time as specified in this paragraph.

Held: (1) “A preliminary point as to the proper procedure to be adopted was at first agitated, arising out of the apparent conflict between section 113(c) of the Act and rule 10 of the Income Tax (Appeals to the High Court) Rules 1959. However the procedure laid down by the Court of Appeal in KHAMBAITA & OTHERS V. COMMISSIONER OF INCOME TAX (1954) 21 E.A.C.A. 16 was followed………… I have borne in mind the observations in Khambaita’s case, that I am obliged to approach every issue of fact as res integrum and to make the necessary findings regardless of the views of the local committee.” (2) “It is not necessary in an appeal of this nature to find affirmatively that the facts are as the Commissioner General alleges, but it is only necessary to decide that there was insufficiently good evidence to justify a finding for the tax-payer. If the result should be that there was insufficient evidence, the local committee’s views will not be maintainable.” [Also following Khambaita’s case per Briggs J.A. at p. 18]. (3) The respondent argues that he never intended to leave East Africa without returning. He left his property intact, as he says, without disposing of it at a profitable time. First, there was his house which had been his real home in Tanga, and which he had leased ……. The guest house on the Respondent’s property was excluded from the lease and the Respondent occupied it during part of his 1962 and 1963 visit to East Africa. This guest house had been part of the Respondent’s main house, it was furnished with the Respondent’s own furniture; his married daughter generally supervised it in the Respondent’s absence and while he stayed in it, a servant was engaged and the respondent ate most of his meals there. In 1964 he occupied the whole house. But the duration of the Respondent’s visits were indeed short, and the premises were again relet in December, 1964, after which he never lived in that house again. The Respondent also had valuable property in Mombasa consisting of a block of flats and other premises. One of these flats became vacant in June, 1965. The Respondent retained it for his own use and after renovation; he has lived there ever since. Apart from this, the respondent had his shares in the Refinery which he finally sold in 1965 to repay debts due to his ill-health. It seems clear that the Respondent’s major landed interests still existed in East Africa throughout the years under review. Apart from this, I should perhaps note that the Respondent kept his banking account in East Africa. There is also his passport status. In 1960 the Respondent was a British Protected person. In 1963 he acquired a permanent certificate of residence in Kenya and in 1964 he acquired Kenya Citizenship. One of his daughters is in the same position and the rest of the family are either acquiring a similar status or have acquired citizenship in one of the Territories. In my opinion, taking all these facts together, the Respondent’s evidence sufficiently proved that he never intended to abandon East Africa, and I think that in so far as intention affects the case, everything points to the fact that the Respondent intended to return when he was able as the education of his children or his health permitted. His frequent visits make it clear that he wanted to keep his ties, and in the end he has returned here. (4) It was agreed first to all that the approach to the deeming sections of the definition must follow the observation of the Court of Appeal in Arnantoglu’s case (1967) E.A. 312 at p. 313. As this is a case said to be of novel impression, it is as well that the proper canons of construction are referred to. I think I cannot do better that repeat Rowlatt J. ’s statement in CAPE BRANDY SYNDICATE vs. INLAND REVENUE COMMISSIONERS (1921) I.K.B. 67 at 71, as approved by Viscount Simon L.C. in CANADIAN EAGIE OIL CO. LTD. vs. THE KING (1946) A.C. 140:- “In a taxing act one has to look merely at what is clearly said. There is no room for intendment as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used.” Only in a case of apparent ambiguity can some favour be shown to the tax payer INLAND REVENUE COMMISSIONERS vs. BLANDNOCH DISTILLERY & CO. LTD. (1948) A.E.R. 616. There is no difficulty in knowing what is required by the first deeming provision as such. There must be a home and presence. Once those factors are proved, then whether normally speaking one would consider the Respondent a resident is not to the point. He must be deemed to be resident. Secondly, it is agreed that this Respondent can only be deemed, if at all, to be a resident under section 2(1) (a) of definition. As already noted the respondent is not directly a resident and he does not qualify under the second deeming provision, because he was not present for the requisite periods as laid down in that section the various parts of the section seem to import that under section 2(1) (a) presence in the territories need not be for long. No argument arises on the question of the length of presence necessary. It is agreed that the Respondent was sufficiently present in each of the years in question. The argument centers on the meaning of the word “home”. Thirdly, as to the word “home”, there is no definition in the Act, nor any direct authority upon the meaning of that word that can be discovered. It was noted however, that the Act specified “a home”, which presupposes that the tax payer may have more than one home and yet be deemed a resident. That situation was accepted by the Commissioner. It was further noted that the act contains no qualifying words. The home in East Africa does not have to be the main home, so long as it is a home. Mr. Kuss referred me to BECK v. SCHOLZ (1953) K.B. 575 where Ever shed M.R. remarked that he thought that the Courts ought to regard with reserve the doctrine of he “two home” man in relation to the rent restriction legislation in England. I venture to suggest that there is no such need for reserve in connection with the present legislation. The taxpayers’ presence need not be for long. What may be a sufficient basis for collecting tax is not a all the same thing as a sufficient basis for protecting his tenancy. It was agreed on either side that there would be nothing amiss in principle in the Respondent having a home in Dulwich as well as East Africa; the question was whether he did in fact have a home in East Africa. As to the meaning of the word “home” Mr. Inamdar preferred to rely upon a passage in McNeil and Bechgaard on Income Tax, (page 9) where the learned authors suggest that a home is an abode available and used. He also referred to the meaning ascribed to the word in the Shorter Oxford Dictionary:- “A dwelling place, house abode; the fixed residence of a family or household: one’s own house; the dwelling in which one habitually lives, or which one regards as one’s proper abode.” The dictionary puts forward the general idea of a family residence, but it also links other aspects such as ownership (e.g. one’s own house); as well as length of occupation. The central idea seems to be some tie to something in the nature of continuity of use before a dwelling can be said to be a home. (The judge then referred to the English cases of Herbert v. Byrne (1964) 1 ANER AT 887 and Beck v. Scholz (above) at 575). I think it is clear from those passages that there is a difference in objective between the approach of the English Courts to the Rent Acts and the present legislation. As Mr. Inamdar pointed out the tenant had to be in occupation, and then in such occupation as he could be said to have made a home in the premises, in order to claim protection. It was not.

sufficient if he used the premises as a convenience or a resort. But section 2(1) (a) contemplates a person being deemed a resident and thus liable to pay tax even though he may be largely absent from East Africa as long as he has one of his homes here. I think that the rather strict view which declined protection to person who was fortunate enough to have more than one dwelling is not in keeping with the present definition. (5) “It is not disputed that there must first of all be premises in the nature of a dwelling house, whether the whole or part of the premises concerned, so long as the entity in question provides the normal facilities of life. There must secondly be dome tie or element of continuity. I agree that mere availability alone may not be sufficient, though availability there must also be. It was not suggested that one could claim to have a home during a fortnight’s holiday visit, while staying in the house of somebody else who had made available for that purpose. Nor could one claim to have a home in premises which though previously occupied by one as a house, had then been disposed of by a lease. If no parts of the premises are available, one cannot have a home in those premises despite the ultimate reversion. For these reasons I indicated during argument that I could not see my way to accepting that the Respondent could have made a home in the flat of his nephews in Mombasa. It was clearly a convenience.” (6) “There may be case where the right to occupation is a mater of agreement being largely a matter of grace; where nevertheless long occupation may give rise to the conclusion that the dwelling is the home of the occupier. That is to ay that the element of continuity may reside in settled occupation rather than ownership.” (7) “It follows then that having his own house (in Tanga) as a home from June 1962 onwards until December, 1964, the Respondent’s presence in East Africa in 1962, 1963 and 1964, either at Mombasa or Tanga or both in those years, sufficed to bring into operation the deeming provision of section 2(1) (a) of the Act. Similarly, in the case of the flat held by the Respondent in 1965. Accordingly I hold the local Committee came to a correct view of the case. I am satisfied that the evidence sufficiently proves that the Respondent was properly deemed a resident and his tax should be assessed on that basis.”