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CMA Final · Direct Tax Laws and International Taxation · Assessment of Individuals including Non-residents

A Hindu undivided family's manager lives in Dubai, and all decisions of the family business are taken in Mumbai by the karta's brother with the family's approval. Under the Income-tax Act, 2025, what is the residential status of the HUF for the tax year?

The HUF is resident in India. An HUF is resident unless control and management of its affairs is situated wholly outside India, and because the business decisions are taken in Mumbai, the control is not wholly outside India.

  1. ANon-resident, because the manager is outside India
  2. BResident, because control and management is not situated wholly outside IndiaCorrect
  3. CResident but not ordinarily resident, because the manager is abroad
  4. DResident only if the manager stays in India for 182 days

Explanation

Under section 6(9), an HUF is resident in India unless the control and management of its affairs is situated wholly outside India. Here decisions are taken in Mumbai, so control is at least partly in India and the HUF is resident. The manager's own status only matters for ordinary residence under section 6(13).

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