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

The manager of Rao HUF has been in India cumulatively for 700 days in the seven tax years preceding the current year, and was resident in India in 6 of the ten preceding tax years. The control and management of the HUF is in Hyderabad throughout the current year. The HUF's status for the current year is:

The HUF is resident but not ordinarily resident. Control is in India, making it resident, and its manager was in India for only 700 days, within the 729-day limit, in the seven preceding years. That satisfies one of the conditions for not ordinarily resident.

  1. ANon-resident
  2. BResident and ordinarily resident
  3. CResident but not ordinarily residentCorrect
  4. DNot ordinarily resident only for foreign income of a business controlled outside India

Explanation

Control is in India, so the HUF is resident under section 6(9). Under section 6(13)(a), an HUF whose manager has been in India cumulatively for 729 days or less in the seven preceding years is not ordinarily resident. The manager has 700 days, which satisfies this, even though he was not a non-resident in nine of ten years. So the HUF is resident but not ordinarily resident.

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