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CA Intermediate · Taxation · Residential Status and Scope of Total Income

Aarav Pvt Ltd is a company incorporated in India. During tax year 2026-27 its place of effective management (POEM) was in Singapore. Which statement is correct about its residential status for that year?

The company is resident in India. An Indian company is always resident irrespective of where its control and management lies; the place of effective management test applies only to foreign companies. Not ordinarily resident status is not available for companies.

  1. AIt is non-resident, since POEM is outside India
  2. BIt is resident, since it is an Indian companyCorrect
  3. CIt is resident but not ordinarily resident
  4. DIts status depends on where the majority of shareholders live

Explanation

An Indian company is always resident in India for every tax year, irrespective of where its management is located. POEM test applies only to companies that are not Indian companies. The option saying non-resident wrongly applies the POEM test to an Indian company. The concept of not ordinarily resident does not apply to companies.

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