Page 35 - DCOM508_CORPORATE_TAX_PLANNING

Corporate Tax Planning

Notes he is an Indian citizen leaving India for the purposes of employment, the second condition under
section 6(1) is not applicable to him.
Therefore, Mr. D is a non-resident for the A.Y.2013-14.

Non-resident

1. Residential status of HUF: A HUF would be resident in India if the control and management
of its affairs is situated wholly or partly in India.
If the control and management of the affairs is situated wholly outside India it would
become a non-resident. The expression ‘control and management’ referred to under section
6 refers to the central control and management and not to the carrying on of day-to-day
business by servants, employees or agents. The business may be done from outside India
and yet its control and management may be wholly within India. Therefore, control and
management of a business is said to be situated at a place where the head and brain of the
adventure is situated. The place of control may be different from the usual place of running
the business and sometimes even the registered offi ce of the assessee. This is because the
control and management of a business need not necessarily be done from the place of
business or from the registered office of the assessee. But control and management do

imply the functioning of the controlling and directing power at a particular place with
some degree of permanence.
If the HUF is resident, then the status of the Karta determines whether it is resident and
ordinarily resident or resident but not ordinarily resident. If the karta is resident and
ordinarily resident, then the HUF is resident and ordinarily resident and if the karta is
resident but not ordinarily resident, then HUF is resident but not ordinarily resident.

Caselet Residential Status of Mr. E (Karta of the HUF)

he business of an HUF is transacted from Australia and all the policy decisions are
taken there. Mr.. E, the karta of the HUF, who was born in Kolkata, visits India
Tduring the P.Y.2012-13 after 15 years. He comes to India on 1.4.2012 and leaves for
Australia on 1.12.2012. Determine the residential status of Mr. E and the HUF for A.Y.
2013-14.
Solution: During the P.Y.2012-13, Mr. E has stayed in India for 245 days (i.e. 30+31+30+31+31+
30+31+30+1 days). Therefore, he is a resident. However, since he has come to India after 15
years, he cannot satisfy any of the conditions for being ordinarily resident.
Therefore, the residential status of Mr. E for the P.Y.2012-13 is resident but not ordinarily
resident. Since the business of the HUF is transacted from Australia and nothing is mentioned
regarding its control and management, it is assumed that the control and management is
also wholly outside India. Therefore, the HUF is a non-resident for the P.Y. 2012-13.

Source: http://www.safeecollege.com/ankit/fi nal2/dt%201.pdf
2. Residential status of firms and association of persons: A firm and an AOP would be

resident in India if the control and management of its affairs is situated wholly or partly in
India. Where the control and management of the affairs is situated wholly outside India,

the firm would become a non-resident.
3. Residential status of companies: A company is said to be resident in India if:

(a) It is an Indian company as defined under section 2(26), or
(b) Its control and management is situated wholly in India during the accounting year.

30 LOVELY PROFESSIONAL UNIVERSITY