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CA Final · Direct Tax Laws & International Taxation · Non Resident Taxation

Under section 174 of the Income-tax Act, 2025, a person is deemed to have power to enjoy the income of a non-resident in certain situations. In which of the following situations is he deemed to have such power?

A person is deemed to have power to enjoy a non-resident's income where he is able, directly or indirectly, to control the application of that income. This is one of the listed situations in section 174(6)(c); having no rights, benefits or control does not qualify.

  1. AHe is able, directly or indirectly, to control the application of the incomeCorrect
  2. BHe has merely been named as an auditor of the non-resident body
  3. CHe holds no rights and receives no benefit connected with the income
  4. DThe non-resident has earned income that is wholly reinvested abroad with no benefit to him

Explanation

Section 174(6)(c)(v) deems power to enjoy where the person is able in any manner, directly or indirectly, to control the application of the income. The other situations show no benefit, increase in asset value, power of appointment or control, so they do not fit any listed limb. Being an auditor gives no control over the income's application.

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