S. Ramachandra iyer, C.J.- The substantial question that now falls for determination on this Reference is whether the assessee, a Ceylon national, was a ‘resident’ in this country in the previous financial year relevant to the assessment year 1942-43. For a due consideration of that question, it is necessary to refer to certain events that took place during that period. The assessee had, from the time of his father, a business as ship-chandlers at Rangoon. Japan declared war against burma on 9th December, 1941. A week later, the assessee remitted a sum of Rs. 15,000 to his brother-in-law in Ceylon to purchase a house for him, evidently with an intention to occupy it in case he were obliged to leave for his home country. But the house was never purchased. the war scare became greater during the month of January, 1942, in Rangoon. the assessee sent his wife and children to ceylon in that month. after arrival at jaffna, the children were admitted in the school there. the assessee sent to his wife during the months of January and February, 1942 a sum of Rs. 61,200. She deposited that sum, together with other sums that she had brought with her, in the chartered bank at Colombo. During the same months, the assessee also remitted a sum of Rs. 36,500 to the chartered bank at calcutta for an account to be opened in his name. Civilian evacuation of Rangoon was ordered by the military authority on 22nd February, 1942, and the assessee left that place on the same day to calcutta. While he left rangoon, his intention was undoubtedly to go to Ceylon, for he had put up a board in front of his house in Rangoon to the effect that he was leaving for his “Sweet Home in Jaffna”. After arriving in Calcutta, he purchased a demand draft payable at the Colombo branch of the bank, for Rs. 20,000. It is clear from the evidence that at that time he was not even aware as to whether the moneys remitted by him to his wife from rangoon had reached her, for he sent a telegram to his brother-in-law asking for information in that behalf. The assessee left calcutta on 15th March, 1942, and arrived at madras on 17th March, 1942. He left madras on the following day, reaching ceylon two days later. The assessee left calcutta on 15th March, 1942, and arrived at madras on 17th March, 1942. He left madras on the following day, reaching ceylon two days later. In the meanwhile his wife appears to have transferred sums totalling Rs. 86,000 to this country for opening accounts in the various Banks situate at Lucknow, Allahabad, Kanpur and Amristar. These remittances by the assessee’s wife were made during the months of March, 1942. Shortly after the assessee’s arrival at Ceylon. Trincomalle was bombed by the Japanese on 5th April, 1942. That event perhaps made the assessee to think about his future residence. On 9th April, 1942, the assessee’s brother-in-law wrote to him a letter from Colombo intimating the fact that he, as per his request, had remitted a sum of Rs. 5,814.95 to the Colombo branch of the Mercantile Bank and added: "I note you propose to leave on Saturday. If you have decided to go to India, I will strongly advise you to leave to-morrow rather than on Saturday, because I have good reasons in asking; you to advance the date of departure by one day. Things are not bright at all." This letter would show that, at any rate, so far as the brother-in-law was concerned, the assessee had not intimated to him that he had finally decided to settle down in India. He left Ceylon with his family on 9th April, 1942 and arrived at Kancheepuram soon thereafter and resided there is a house taken up on lease. The Income-tax Officer, Kancheepuram, commenced proceedings in the year 1958 under section 34 of the Act and called upon the assessee to submit a return for the assessment year 1942-43. The assessee submitted a return claiming that during the relevant year of account he was a non-resident. He further claimed that section 34 as it stood after amendment, which extended the time limit to eight years, could not operate retrospectively, as the time within which proceedings against him could be initiated had expired on 31st March, 1947, before the amended section came into operation. The Income-tax Officer overruled both the contentions and brought to tax a sum of Rs. 1,39,200 as remittances of profit earned in foreign parts. An appeal from that order to the Appellate Assistant Commissioner failed. The assessee then preferred a further appeal to the Appellate Tribunal raising the same contentions. The Income-tax Officer overruled both the contentions and brought to tax a sum of Rs. 1,39,200 as remittances of profit earned in foreign parts. An appeal from that order to the Appellate Assistant Commissioner failed. The assessee then preferred a further appeal to the Appellate Tribunal raising the same contentions. The Tribunal accepted the view that section 4-A (a) (iv) had no application to the assessee, as he arrived in India with the requisite intention of staying here only in April. 1942 and not during the previous year, which alone would entitle the Authorities to bring the amount to tax. The Tribunal also upheld the objection to the validity of the proceedings under section 34. In so holding it followed the decision of this Court in Muhammad Hussain Nachiar v. The Commissioner of Income-tax1. Thereupon the Department obtained the present Reference to this Court under section 66(1) of the Indian Income-tax Act, which raised the following questions: "1. Whether the application of section 34 is valid? 2. If the answer to the above question is in the affirmative (a) whether the satisfaction of the Income-tax Officer referred to in section 4-A (a) (iv) is subjective only and accordingly not open to be challenged in appeal ? (b) Whether the assessee is a ‘resident ‘within the meaning of section 4-A (a) (iv)? The Reference came up before us on 4th October, 1961. By that time the view taken in Muhammad Hussain Nachiar v. The Commissioner of Income-tax1, had been followed in another case, United Niligiris Service Limited v. The Commissioner of Income-tax2. We followed the two decisions referred to above and answered Question No. 1 in favour of the assessee. In view of our answer to the first question it became unnecessary for us to answer the second. The Department feeling dissatisfied with our answer, filed an appeal to the Supreme Court, which was registered as Civil Appeal No. 953 of 1963. While that appeal was pending, the decision in Muhammad Hussain Nachiar v. Commissioner of Income-tax2, was reversed in regard to the first question we have stated above The Supreme Court judgment is reported in Commissioner of Income-tax v. Janaba Mohammad Hussain Nachiar Ammal3. While that appeal was pending, the decision in Muhammad Hussain Nachiar v. Commissioner of Income-tax2, was reversed in regard to the first question we have stated above The Supreme Court judgment is reported in Commissioner of Income-tax v. Janaba Mohammad Hussain Nachiar Ammal3. When C.A. No. 953 of 1963 came up before the Supreme Court, it was pointed out that the first question must be answered in favour of the Department, having regard to the earlier decision of the Supreme Court referred to above. The Supreme Court accepted the appeal. As the second question in the Reference had not been decided by us, the matter has been remitted to this Court for final disposal.We are, therefore, now concerned only with the second question. In the case of a foreigner, like the assessee, residence will be the essential test of the liability to income-tax. To attract liability the assessee must have resided in this country during the year of account. Section 4-A lays down the tests for ascertaining the residence of an assessee. That states: "For the purposes of this Act — (a) any individual is resident in the taxable territories in any year if he — * * * * * (iv) is in the taxable territories for any time in that year and the Income-tax Officer is satisfied that such individual having arrived in the taxable territories during that year is likely to remain in the taxable territories for not less than three years from the date of his arrival." It will be seen from the terms of the section that the ‘residence ‘must be determined with reference to each year. What is important to consider will therefore, be, whether the assessee was a ‘resident’ in the year of account. For that purpose he should have factually come into the taxable territories at any time during "that year, and secondly, the Income-tax Officer must be satisfied that such individual is likely to remain in the taxable territories for not less than three years from the date of his arrival. In other words, it has to be determined by the Income-tax Officer, that when the assessee arrived in India during the year of account he had the intention of continuing to reside here for not less than three years. In other words, it has to be determined by the Income-tax Officer, that when the assessee arrived in India during the year of account he had the intention of continuing to reside here for not less than three years. If he had not that intention then, the mere fact that during the subsequent years he made up his mind to come and remain in this country for the requisite period will not make him a ‘resident ‘during the relevant year of account. Per contra, if the assessee had the intention at the time of his coming here of continuing to remain in this country for more than three years, the fact that he changed his mind in the following year and left this country will not affect his liability to tax as a ‘resident’. Whereas in this case assessment proceedings are commenced more than three years after the date of arrival of the assessee in this country, it is inevitable that the factual position would, to a large extent colour the judgment of the Income-tax Officer as to whether the assessee had the intention when he arrived, of remaining in this country for the prescribed period. But even so the essential thing to be found is the intention of the assessee when he arrived in this country during the year , of account. That question will largely be one of fact to be decided on a consideration of relevant circumstances. Further, as residence determines the liability to tax, the decision of the Income-tax Officer in that regard will be subject to an appeal and a further appeal as provided under the Act. Whether the circumstances warrant an inference that the assessee had the intention when he arrived of living in this country for the next three years will have to be decided objectively. We have, therefore, no hesitation in answering the first part of the second question in the negative and against the Department. What then has to be considered is, whether there are materials on record to justify the conclusion reached by the Appellate Tribunal that the assessee was not a ‘resident ‘. We have already referred to the fact that the assessee arrived in Calcutta some time about 13th March, 1942 and at Madras on 17th March, of the same year. What then has to be considered is, whether there are materials on record to justify the conclusion reached by the Appellate Tribunal that the assessee was not a ‘resident ‘. We have already referred to the fact that the assessee arrived in Calcutta some time about 13th March, 1942 and at Madras on 17th March, of the same year. That he came to these places only on his way to Jaffna, where, according to him was ‘his Sweet Home ‘, is fairly clear on the evidence. There is also the fact that soon after arrival at Jaffna in January, 1942, his wife had admitted her children in the schools at Jaffna, paying the school fees for the entire term. There is further evidence to show that the assessee took a sum as large as sum of Rs. 20,000 from Calcutta to Jaffna. If he had then an idea of coming back to this Country, there would have been no need at all for that amount. As we said, there was bombing by the enemy in Trincomalle on 5th April, 1942. This most probably upset the plans of the assessee. The letter of the assessee’s brother-in-law dated 9th April, 1942 clearly shows that to the knowledge of the writer the assessee had not even then finally made up his mind to come to this country. The Income-tax Officer took the view that inasmuch as sums amounting to Rs. 86,000 had been remitted by the asses-see’s wife for opening accounts at various places in India, the assessee must have had an intention of coming and settling down in this country even by that time. There is, however, no evidence available in this case to indicate that what the wife did was on the advise or with concurrence of the husband. It is seen from the telegram sent by the assessee from the Calcutta on 13th March, 1942, that he was not even sure whether the amounts that he sent from Rangoon had reached his wife. A substantial part of the remittance by the wife to this country had been made even before 13th March, 1942. Therefore, the conduct of the wife in opening up banking accounts in various places in India cannot be taken as decisive of the fact that it was done with the knowledge of the husband. A substantial part of the remittance by the wife to this country had been made even before 13th March, 1942. Therefore, the conduct of the wife in opening up banking accounts in various places in India cannot be taken as decisive of the fact that it was done with the knowledge of the husband. Secondly, the mere fact that investments were made in a foreign country cannot by itself indicate that the remitter had an idea of settling down in that country. We have however sufficient material in the case to show that by 9th April, 1942, the assessee had made up his mind to come and settle down in this country. But that circumstances cannot, in the light of the other events we have narrated above, be taken as evidence of any anterior intention on his part to remain in this country for any length of time. There is every probability of the assessee having decided to take up his residence in this country only in the month of April, 1942, after Trincomalle was bombed by the enemy. We are, therefore, of opinion that the Tribunal had sufficient material before it to sustain its conclusion that during the month of March, 1942 the assessee did not stay in this country with any intention of taking up his residence for the prescribed period of time. Our answer to the second part of the second question will be in the negative and in favour of the assessee. The Department will pay the costs of the assessee. Advocate’s fee Rs. 250. V.S. ------- Answered accordingly.