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

Surya Traders is a partnership firm with two partners, Anil and Sunil, both residents. During tax year 2026-27 the firm's business is controlled from Mumbai in the first half of the year, and from Singapore for the rest of the year by partners during their stay there. Which statement about the firm's residential status is correct?

The firm is resident in India. A partnership firm is non-resident only if the control and management of its affairs is situated wholly outside India. Here part of the control is exercised from Mumbai, so the condition fails and the firm is resident. Not ordinarily resident status does not apply to firms.

  1. AResident, because control and management is partly situated in IndiaCorrect
  2. BNon-resident, because control is not wholly in India
  3. CNot ordinarily resident, because control is partly outside India
  4. DResident only for income received in India

Explanation

A firm is resident in India unless the control and management of its affairs is wholly situated outside India. Since part of control is exercised from Mumbai, it is not wholly outside India, so the firm is resident. The 'not ordinarily resident' status is not available to firms.

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