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

Tanvi Pvt Ltd is an Indian company whose place of effective management (POEM) in tax year 2026-27 is in Mumbai for only part of the year; board meetings were held in Dubai for the year, but key commercial decisions were made in India. Another company, Orchid Ltd, is incorporated in Singapore, with all key decisions taken in Singapore. Which statement is correct for tax year 2026-27?

Tanvi, being an Indian company, is always resident in India irrespective of where its board meets, while Orchid, a foreign company with its place of effective management in Singapore, is non-resident.

  1. ATanvi is resident in India only because of POEM; Orchid is non-resident
  2. BTanvi is resident in India because it is an Indian company; Orchid is non-resident as its POEM is outside IndiaCorrect
  3. CBoth are non-resident since board meetings were held abroad
  4. DBoth are resident as the Act treats all companies with Indian income as resident

Explanation

An Indian company is always resident in India, whatever its POEM. A foreign company is resident only if its POEM in the year is in India. Orchid's POEM is in Singapore, so it is non-resident.

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