Skip to content

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

Alpha Traders Pvt Ltd is an Indian-incorporated company. In tax year 2026-27 its place of effective management (POEM) was in Colombo, Sri Lanka. All its board meetings were held in Colombo and key decisions were taken there. Which statement is correct?

Alpha Traders is resident in India because every Indian company is resident irrespective of where it is controlled. The place of effective management test applies only to a foreign company. Also, not ordinarily resident status applies only to individuals and Hindu undivided families.

  1. AIt is a non-resident because POEM is outside India
  2. BIt is resident in India because it is an Indian companyCorrect
  3. CIt is resident only if its turnover exceeds a prescribed limit
  4. DIt is not ordinarily resident in India

Explanation

An Indian company is always resident in India regardless of where it is managed. POEM is the test only for foreign companies. The Sri Lankan POEM therefore does not make it non-resident, and the concept of 'not ordinarily resident' does not apply to companies.

Did you get it right without looking?

One question tells you little. A timed set on Residential Status and Scope of Total Income shows your real accuracy, how long you take and where you lose marks.

Practise Residential Status and Scope of Total IncomeFree diagnostic mock

More Residential Status and Scope of Total Income questions