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CMA Intermediate · Direct and Indirect Taxation · Residential Status and Scope of Total Income

Global Trust Association, an association of persons (AOP), has all its members and its managing committee outside India. For the tax year, its entire control and management is situated outside India, but it earned Rs 12 lakh from a business activity carried out in India. Which statement is correct under the Income-tax Act, 2025?

The AOP is non-resident because its control and management is wholly outside India. A non-resident is taxed on income received or deemed received in India and on income accruing or arising in India. The Rs 12 lakh from business carried on in India accrues in India, so it is taxable.

  1. AIt is resident, and the Rs 12 lakh is taxable as total income including foreign income
  2. BIt is non-resident, and the Rs 12 lakh is taxable because it accrues in IndiaCorrect
  3. CIt is not ordinarily resident, and the Rs 12 lakh is taxable only if received abroad
  4. DIt is non-resident, and the Rs 12 lakh is not taxable because control is abroad

Explanation

An AOP is resident unless control and management is wholly outside India. Here it is wholly outside, so it is non-resident. A non-resident's total income includes income received in India or accruing or arising in India. The Rs 12 lakh from Indian business accrues in India, so it is taxable.

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