The document discusses the rules for determining the residential status of different entities under the Indian Income Tax Act: - A Hindu Undivided Family (HUF) is resident if control and management is wholly or partly in India. It is non-resident if control is wholly outside India. - An Association of Persons (AOP) is resident if control is wholly or partly in India, and non-resident if control is wholly outside India. - A company is always resident if it is an Indian company. A foreign company is resident only if control is wholly in India, and non-resident if control is partly or wholly outside India.

1. Problems on Residential status of HUF [sec 6(2)]:
Conditions:
Resident: If the ‘control and management of an affair’s are situated wholly or partly in India
during the relevant previous, the HUF is a resident in India during that period.
Ordinary resident: A HUF is ordinary resident in India if the ‘Karta’ satisfies both the
additional conditions of ordinarily resident as an individual.
Resident but not ordinarily resident: A HUF ‘Not ordinarily resident’ in India, if its karta or
manager satisfies one or none of the additional conditions of ordinarily resident as an
individual.
Non Resident: A HUF is ‘Non- resident’ when the ‘control and management of its affairs’ is
situated wholly outside India.
1. Head office of ABC, a Hindu undivided family, is situated in Hong Kong. The family is
managed by Krishna who is resident in India in 1 year out of 10 years preceding the previous
year 2020-2021. Determine the residential status of the HUF for the assessment year 2021-2022
if the affairs of the family business are
(a) Wholly controlled from Hong Kong : and
(b) Partly controlled from India
Solution:
Determination of residential status of ABC, For
PY 1.4.2020- 31.3.2021
AY : 1.4.2021 to 31.3.2022
(a) Wholly controlled from Hong Kong
A HUF is ‘Non- resident’ when the ‘control and management of its affairs’ is situated wholly
outside India. (hongkong)
(b) Partly controlled from India
If the ‘control and management of an affair’s are situated wholly or partly in India during the
relevant previous, the HUF is a resident in India during that period.
He is a resident and not ordinary resident because affairs ispartly in India and he does not satisfy
the any one or none of the additional condition.

2. Residential status of firm, AOP (Association of persons) and every other person(local
authority,artificial juridical person like idols etc.,) other than company:
Resident: A firm, AOP or every other person is resident in India if the ‘control and
management of its affairs’ is situated wholly or partly in India during the relevant previous
year.
Non resident: All the three types of assesses are non-resident when the ‘control and
management of its affairs’ is situated wholly outside India during the relevant previous year
2. An AOP carries on business from Chennai. Its president, the chief executive, resides in
Chennai and controls its operations. Most of its members are foreign citizens and Non
residents
(a) Determine the Residential status of the AOP.
(b) Does it make any difference if tis principal officer resides in Bangladesh and
controls its affairs?
Solution :
(a) Determination of residential status of An AOP PY : 1.4.2020 to 31.3.2021
A.year : 1.4.21 to 31.3.22
An AOP is resident in India the ‘control and management of its affairs’ is situated wholly in
India during the relevant previous year.
(b) Determination of residential status of An AOP P.year: 1.4.2020 to 31.3.2021
A.year : 1.4.21 to 31.3.22
An AOP is Non - resident the ‘control and management of its affairs’ is situated wholly outside
India (Bangladesh) during the relevant previous year.
Residential status of company:
Resident: A company is resident in India in a previous year, if it is an Indian company. An
Indian company always a resident
Foreign Company:
A foreign company is resident in India only if during the previous year control and
management of its affairs is situated wholly in India.
However, a foreign company is treated as non – resident if, during the previous year, control
and management of its affairs is either wholly or partly situated out of India

3. 3. Determine the Residential status of a company on following situation.
a) ABC is an Indian Company. During the previous year the shareholders of ABC
company is controlling more than 51 per cent voting power from Russia, Bangladesh and
Belgium. Determine the residential status of ABC company.
Answer : ABC is an INDIAN Company An Indian company is always a resident even though
management is outside India.
b) XYZ is a foreign originated company which is having its control and management partly
in India and partly in Germany. Determine its residential status.
Answer : Non-Resident as its control is partly inside India and partly outside India.
c) RS Company is a foreign company which is having its control and management
completely in India. Determine its residential status.
Answer : Resident because its control and management is fully Inside India