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Unit 2: Residential Status and Taxation

Thus, every Indian company is resident in India irrespective of the fact whether the control and Notes
management of its affairs is exercised from India or outside. But a company, other than an
Indian company, would become resident in India only if the entire control and management
of its affairs is in India.
The control and management of the affairs of company are said to be exercised from the
place where the director’s meetings (not shareholders’ meetings) are held, decisions taken
and directions issued.
4. Residential status of local authorities and artificial juridical persons: Local authorities

and artificial juridical persons 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, they would become non-residents.

Task

1. X, a foreign citizen comes to India, for the first time in the last 30 years on March 20,

2005. On September 1, 2005, he leaves India for Nepal on a business trip. He comes
back on February 26, 2006. Determine the residential status of X for the assessment
year 2006-07.

2. X, an Italian citizen, comes to India for the first time (after 20 years) on May 28, 2005.
Determine his residential status for the assessment year 2006-07.

Self Assessment

Choose from the following the most appropriate answer:
1. ‘R’, a person of Indian origin visited India on 3.10.2010 and plans to stay here for 185 days.
During 4 years prior to previous year 2011-12, he was in India for 750 days. Earlier to that
he was never in India. For the AY 2012-13, ‘R’ shall be:
(a) resident and ordinarily resident in India
(b) resident but not ordinarily resident in India

(c) non-resident
2. ‘X’, a citizen of India left India for U.S. on 16.8.2010 for booking orders on behalf of an
Indian Company for exporting goods to U.S. He came back to India on 5.5.2012. He had
been resident in India for the past 10 years. For assessment year 2012-13, X shall be:
(a) resident and ordinarily resident in India
(b) resident but not ordinarily resident in India
(c) non-resident in India

3. ‘Z’, a citizen of India is employed on an Indian Ship. During the previous year 2011-12
he leaves India for Germany on 15.09.2011 for holidays and returned on 1.4.2012. He had
been non-resident for the past 3 years. Earlier to that he was permanently in India. For
assessment year 2012-13, Z shall be:
(a) resident and ordinarily resident in India
(b) resident but not ordinarily resident in India

(c) non-resident in India

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