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

Gamma Traders, a partnership firm, has two partners. For tax year 2026-27, the control and management of its affairs was situated partly in India and partly outside India. Which statement is correct about the firm's residential status?

The firm is resident in India. A firm is non-resident only when control and management of its affairs is wholly outside India; here it is partly in India, so it is resident. Citizenship of the partners does not matter, and the not ordinarily resident category does not apply to firms.

  1. AResident in India, because control and management were partly in IndiaCorrect
  2. BNon-resident, because control was partly outside India
  3. CResident only if the majority of partners are Indian citizens
  4. DNot ordinarily resident, since control is split

Explanation

A firm, LLP or association of persons is resident in India in every case except where the control and management of its affairs is situated wholly outside India. Partial control in India makes it resident. The category 'not ordinarily resident' applies only to individuals and HUFs, so that option is wrong, and partners' citizenship is irrelevant.

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