Page 34 - DCOM508_CORPORATE_TAX_PLANNING

Unit 2: Residential Status and Taxation

If the individual satisfies both the conditions mentioned above, he is a resident and ordinarily Notes

resident but if only one or none of the conditions are satisfied, the individual is a resident but not
ordinarily resident.

Example 1: Steve Waugh, the Australian cricketer comes to India for 100 days every year.
Find out his residential status for the A.Y. 2013-14.
Solution: For the purpose of his residential status in India for A.Y. 2013-14, the relevant previous
year is 2012-13.
Step 1: The total stay of Steve Waugh in the last 4 years preceding the previous year is 400 days
(i.e.100 X 4) and his stay in the previous year is 100 days. Therefore, since he has satisfi ed the
second condition in section 6(1), he is a resident.
Step 2: Since his total stay in India in the last 7 years preceding the previous year is 700 days
(i.e. 100 X 7), he does not satisfy the minimum requirement of 730 days in 7 years. Any one of the
conditions not being satisfied, the individual is resident but not ordinarily resident.

Therefore, the residential status of Steve Waugh for the assessment year 2013-14 is resident but
not ordinarily resident.

Example 2: Mr. B, a Canadian citizen, comes to India for the first time during the P.
Y.2008-09. During the financial years 2008-09, 2009-10, 2010-11, 2011-12 and 2012-13 he was in

India for 55 days, 60 days, 90 days, 150 days and 70 days respectively. Determine his residential
status for the A.Y.2013-14.
Solution: During the previous year 2012-13, Mr. B was in India for 70 days and during the 4
years preceding the previous year 2012-13, he was in India for 355 days (i.e. 55+ 60+ 90+ 150
days). Thus, he does not satisfy section 6(1). Therefore, he is a non-resident for the previous year
2012-13.

Example 3: Mr. C, a Japanese citizen left India after a stay of 10 years on 1.06.2010. During

the financial year 2011-12, he comes to India for 46 days. Later, he returns to India for 1 year on
10.10.2012. Determine his residential status for the A. Y. 2013-14.
Solution: During the previous year 2012-13, Mr. C was in India for 173 days (i.e. 22 + 30 + 31+ 31+
28 + 31 days). His stay in the last 4 years is:
2011-12 - 46
2010-11 - 62 (i.e. 30 + 31 + 1)
2009-10 - 365 (since he left India on 1.6.2010 after 10 years)

2008-09 - 365 (since he left India on 1.6.2010 after 10 years)
The total number of days comes as 838. Thus Mr. C is a resident since his stay in the previous
year 2012-13 is 173 days and in the last 4 years is more than 365 days. For the purpose of being
ordinarily resident, it is evident from the above calculations, that his stay in the last 7 years is
more than 730 days and since he was in India for 10 years prior to 1.6.2010, he was a resident in
at least 2 out of the last 10 years preceding the relevant previous year.
Therefore, Mr. C is a resident and ordinarily resident for the A.Y.2013-14.

Example 4: Mr. D, an Indian citizen, leaves India on 22.9.2012 for the first time, to work

as an officer of a company in France. Determine his residential status for the A. Y. 2013-14.
Solution: During the previous year 2012-13, Mr. D, an Indian citizen, was in India for 175 days
(i.e. 30+ 31+30+31+31+22 days). He does not satisfy the minimum criteria of 182 days. Also, since

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