Residential Status & Scope of Total Income

CA SHREY RATHI RESIDENTIAL STATUS & SCOPE OF TOTAL INCOME 2.
MUHAMMAD ALI
CHAPTER 2
RESIDENTIAL STATUS & SCOPE OF
TOTAL INCOME
“I don’t count my sit-ups. I only count

when it starts hurting because they’re
the only ones that counts”
PRACTICAL QUESTIONS
Q 1: Mr. Lee, a foreign national (not being a person of Indian origin), came to India for the first time from China on 11th July,
2016. He stayed here for a stretch of 3 years and left for Japan on 11th July, 2019. He returned to India on 30th April, 2020
and went back to China on 17th August, 2020. He again came back to India on 30th January, 2023 & continued to stay in India
thereafter. Determine his residential status for the A/Y 2023-24. [IMP QUES]
Sol 1: Computation of residential status of Mr Lee for the A/Y 2023-24:

An individual shall be resident in India if he satisfies any one of the two conditions enlisted u/s 6(1), which are as under:
(a) 182 days or more during the previous year or
(b) 60 days or more in the previous year and 365 days or more in the 4 years immediately preceding the relevant previous
year.
His stay in India during the P/Y 2022-23 is of 61 days (i.e. January – 2; February – 28; March – 31). His stay during 4 years
immediately preceding the relevant P/Y:
2021-22: Nil
2020-21: April – 1; May – 31; June – 30; July – 31; August – 17 = 110 days
2019-20: April – 30; May – 31; June – 30; July – 11 = 102 days
2018-19: 365 days
Total stay in 4 years = 577 days. He has satisfied basic condition no. (b), therefore he shall be resident in India for the A/Y
2023-24.
Further, a resident shall become resident and ordinary resident if he satisfies both the additional conditions as mentioned
u/s 6(6), otherwise he shall be resident but not ordinary resident. Conditions u/s 6(6) are as under:
i. He has been resident in India in atleast 2 out of 10 previous years immediately preceding the relevant previous year
and
ii. He has been present in India for 730 days or more during 7 years immediately preceding the relevant previous year.
Lee was resident in India in the P/Y 2017-18 & P/Y 2018-19 as he was in India for the entire year. Secondly his stay in India
during 7 years immediately preceding the relevant P/Y is of 1207 days (i.e. 2021-22 – Nil; 2020-21 – 110; 2019-20 - 102;
2018-19 – 365; 2017-18 – 365; 2016-17 – 265; 2015-16 – Nil). Mr. Lee has satisfied both the additional conditions; therefore,
he shall be resident and ordinary resident in India during the A/Y 2023-24.
CA SHREY RATHI RESIDENTIAL STATUS & SCOPE OF TOTAL INCOME 2.2
Q 2: Mr. Sameer, a citizen of India, left for USA for employment on 20.09.2022. He has not visited India thereafter. He
borrowed ₹ 20,00,000 from his friend, Mr. Kunal who also left India three weeks after Sameer’s departure for the first time.
Sameer bought bonds in ABC Ltd., an Indian company from such borrowed money. Interest received by Sameer on such
bonds is ₹ 1,25,000 & interest received by Kunal on his advance to Sameer came out to be ₹ 1,60,000.
Discuss the residential status & taxability of interest in the hands of Sameer as well as Kunal where such interest is received
by both in San Francisco (USA).
Sol 2: Computation of residential status & taxability of interest for Sameer & Kunal:
year.
Sameer, an Indian citizen left India for employment purpose on 20.09.2022. His stay in India during the P/Y 2022-23 is for
173 days (i.e. 1st April 2022 – 20th September 2022). He does not satisfy basic condition (a) and basic condition (b) does not
apply to him. Therefore, he shall be non-resident in India. Interest received by him from ABC Ltd., an Indian company is
income earned in India and therefore shall be taxable.
Kunal left India after 3 weeks of Sameer’s departure. His stay in India during the P/Y 2022-23 is of 194 days (i.e. 173 days +
21 days). He has satisfied basic condition (a), therefore he shall be resident in India. As he is leaving India for the first time,
he must have satisfied both the conditions u/s 6(6) to become resident and ordinary resident which are as under:
(a) He has been resident in India in atleast 2 out of 10 previous years immediately preceding the relevant previous year
and
(b) He has been present in India for 730 days or more during 7 years immediately preceding the relevant previous year.
Any income in India or outside India shall be taxable for Resident and ordinary resident, therefore interest received from
Sameer shall be taxable for Kunal.
Q 3: Mr. Abhimanyu was born in 1978 in India. His parents were also born in India in 1949. His grand-parents were however
born in Hong Kong in 1911. Abhimanyu was residing in India till 25.02.2020. Thereafter he migrated to England and took the
citizenship of that country on 31.01.2022. He visits India during 2022-23 for 120 days. Determine his residential status.
Sol 3: Computation of residential status of Mr. Abhimanyu for the P/Y 2022-23:
year.
Abhimanyu stayed in India for 120 days in the P/Y 2022-23. His stay in India during 4 years immediately preceding the
relevant P/Y is as under:
P/Y 2021-22: Nil
P/Y 2020-21: Nil
P/Y 2019-20: 1st April 2019 – 25th February 2020 = 331 days
P/Y 2018-19: 365 days
Total stay in previous 4 years = 696 days. Abhimanyu has satisfied basic condition (b), therefore he shall be resident in India.
Further, a resident shall become resident and ordinary resident if he satisfies both the additional conditions u/s 6(6),
otherwise he shall be resident but not ordinary resident. Additional conditions are as under:
and
Abhimanyu was residing in India till 25.02.2020. As he was in India before this date, he will be resident in India for atleast 2
years out of 10 previous years and must have stayed for 730 days or more in 7 years immediately preceding the relevant
P/Y. Therefore Mr. Abhimanyu is resident and ordinary resident in India for the P/Y 2022-23.
Q 4: Karta of a HUF comes to India every year for 90 days and takes couple of decisions in India. Determine the residential
status of the HUF and that of Karta for the A/Y 2023-24.
Sol 4: Computation of residential status of HUF and Karta for the A/Y 2023-24:
Residential status of HUF: A HUF shall be resident in India if control and management of its affairs are wholly or partly
situated in India. As Karta of the HUF comes to India for 90 days every year and takes couple of decisions in India, it shall be
deemed that control and management was partly in India. Therefore, the HUF shall be resident in India. The resident HUF
shall become Resident and ordinary resident depending upon the additional conditions satisfied by the Karta. As the Karta
comes to India for 90 days every year, his stay in India in the previous 7 years will be 630 days (i.e. less than 730 days),
therefore the HUF shall be resident but not ordinary resident.
Residential status of Karta: An individual shall be resident in India if he satisfies any one of the two conditions enlisted u/s
6(1), which are as under:
year.
Karta comes to India for 90 days every year. His stay in preceding 4 years shall be 360 days. The Karta did not satisfy any of
the conditions u/s 6(1) and therefore he shall be non-resident in India for the A/Y 2023-24.
Q 5: Mr. Ram, an Indian citizen left India on 22nd September, 2022 for the first time to work as an officer of a company on
Germany. Determine the residential status of Ram for the P/Y 2022-23. [ICAI Module]
Sol 5: Computation of residential status of Ram for the P/Y 2022-23:

year.
During the previous year 2022-23, Mr. Ram, an Indian citizen, was in India for 150 days (i.e. 30 + 31 + 30 + 31 + 28 days). He
does not satisfy the minimum criteria of 182 days. Also, since he is an Indian citizen leaving India for employment, the second
basic condition u/s 6(1) is not applicable to him. Therefore, Mr. Ram is a non-resident for the P/Y 2022-23.
Q 6: Mr. Krunal, a citizen of India, in employed with Reliance Industries, an Indian company. His employer transferred him
to his branch in Canada. Mr. Krunal left India on 29.09.2022 for his new posting. Determine the residential status for the
A/Y 2023-24. Prior to this, Mr. Krunal was posted outside India for 10 months in 2018-19 and for 11 months in 2015-16.
Sol 6: Computation of residential status of Mr. Krunal for the A/Y 2023-24:
year.
Krunal stayed in India during the P/Y 2022-23 for 182 days (i.e. April – 30; May – 31; June – 30; July – 31; August – 31;
September – 29). He is resident in India as he satisfies basic condition no (a).
and
Krunal was posted outside India for 10 months in 2018-19 & for 11 months in 2015-16, otherwise he was in India only. He
is resident in 2021-22 & 2020-21 as he was present in India during these years. His stay in 7 previous years is also more than
730 days. He is satisfying both the additional conditions; therefore, he shall be resident and ordinary resident in India during
the A/Y 2023-24.
Q 7: From the following particulars furnished by Ms. Neha pertaining to the year ended 31.03.2023, Compute the gross total
income for the A/Y 2023-24 assuming she is Resident but not ordinary resident.
(i) Dividend from an Indian company – ₹ 80,000.
(ii) Agricultural income from land in Maharashtra – ₹ 70,000.
(iii) Interest on saving bank account in HDFC, Indore – ₹ 28,000.
(iv) Profit from a business in Surat, but controlled from outside India – ₹ 1,98,000.
(v) Capital gains on transfer of shares of Indian companies, sold in England and gains were received there only – ₹ 45,000.
(vi) Interest on U.K. Bonds – ₹ 30,000. 50% of profits are received in India.
Sol 7: Computation of gross total income of Ms. Neha for the P/Y 2022-23 if she is a RNOR:
S. No. Particulars (₹)
(i) Dividend from an Indian company 80,000
(ii) Agricultural income from land in Maharashtra – Exempt u/s 10(1) -
(iii) Interest on saving bank account in HDFC, Indore – Earned in India 28,000
(iv) Profit from a business in Surat, but controlled from outside India – Earned in India 1,98,000
(v) Capital gains on transfer of shares of Indian companies, sold in England and gains were
received there only – Earned in India 45,000
(vi) Interest on U.K. Bonds (50% of profits are received in India) – Taxable to the extent it is
received in India 15,000
Gross Total Income of Ms. Neha 3,66,000
Q 8: Mr. Luthra, an Indian citizen & a Government employee serving in the Ministry of External Affairs left India for the first
time on 31.08.2022 due to his transfer in High Commission of Singapore. He has received the following income for the P/Y
2022-23.
(₹)
(i) Salary (computed) 12,00,000
(ii) Interest on FD from bank in India 3,00,000
(iii) Income from agriculture in Nepal 4,00,000
(iv) Income from house property in Srilanka 1,00,000
Compute his residential status and his GTI for the A/Y 2023-24.
Sol 8: Computation of residential status and GTI of Mr. Luthra for the A/Y 2023-24:
year.
Mr. Luthra, an Indian citizen left India for employment outside India, therefore basic condition (b) shall not apply to him.
His stay in India during the P/Y 2022-23 is of 153 days (i.e. 1st April, 2022 to 31st August, 2022). Since he does not comply
with basic condition no (a) also, he shall be non-resident in India for the P/Y 2022-23.
A non-resident shall be liable to tax on income received and earned in India.
(i) Salary from the Government of India (earned in India) 12,00,000
(ii) Interest on FD from bank in India (earned in India) 3,00,000
(iii) Income from agriculture in Nepal (neither earned nor received in India) -
(iv) Income from house property in Srilanka (neither earned nor received in India) -
Gross Total Income 15,00,000
Q 9: Mr. Khatri, a citizen of India left India on 19.07.2006 for employment abroad. He uses to come to India for 55 days every
year to meet his family starting 2006-07. Due to medical emergency in his family, he stayed in India for 145 days in 2020-21
and 195 days in 2021-22. In the P/Y 2022-23, he came to India on 27.04.2022 and left on 12.11.2022. Determine his
residential status for the P/Y 2022-23. [PYQ]
Sol 9: Computation of residential status of Mr. Khatri for the P/Y 2022-23:
year.
His stay in India during the P/Y 2022-23 is of 200 days (i.e. April – 4; May – 31; June – 30; July – 31; August – 31; September
– 30; October – 31; November – 12). He is resident in India by virtue of basic condition no (a).
and
His stay during 7 years immediately preceding the relevant P/Y is of 615 days (i.e. 2015-16 to 2019-20 – 55 days each; 2020-
21 – 145 days; 2021-22 – 195 days). He does not satisfy the second additional condition; therefore, he shall be resident but
not ordinary resident for the P/Y 2022-23.
Q 10: Mr. Dido, a foreign citizen, came to India on 02.03.2021 and left India on 30.05.2022. Determine his residential status
for the A/Y 2022-23 & 2023-24.
Sol 10: Computation of residential status of Mr. Dido for the A/Y 2022-23 & A/Y 2023-24:
year.
A/Y 2022-23: Mr Dido stayed in India for the whole P/Y 2021-22. He has satisfied basic condition (a), therefore he shall be
resident in India. Further, a resident shall become resident and ordinary resident if he satisfies both the additional conditions
u/s 6(6), otherwise he shall be resident but not ordinary resident. Additional conditions are as under:
and
His stay during 7 years immediately preceding the relevant P/Y is of 30 days only, he does not satisfy additional condition
(ii), therefore he shall be resident but not ordinary resident.
A/Y 2023-24: Mr Dido stayed in India for 60 days (i.e. April – 30 days + May – 30 days) in the P/Y 2022-23 and for 395 days
in 4 years immediately preceding the relevant P/Y. He has satisfied basic condition (b), therefore he shall be resident in
India. Further he shall become resident and ordinary resident in India if he satisfies both the additional conditions.
His stay during 7 years immediately preceding the relevant P/Y is of 395 days only, he does not satisfy additional condition
(ii), therefore he shall be resident but not ordinary resident.
Q 11: State with reasons, whether the following statements are True or False:
(a) Mr. X, Karta of HUF claims that the HUF is non –resident as the business of HUF is transacted from UK and all the policy
decisions are taken there.
(b) An Indian company whose place of effective management is in India shall only become resident in India. [PYQ]
Sol 11:
(a) True: A HUF is considered to be a non–resident where the control and management of its affairs are situated wholly
outside India. In the given case, since all the policy decisions of HUF are taken from UK, the HUF is a non-resident.
(b) False: An Indian company is always resident irrespective of the fact whether the place of effective management is
situated in India or not.
Q 12: Mr. C, a Japanese citizen left India after a stay of 10 years on 1.06.2020. During the financial year 2021-22, he comes
to India for 46 days. Later, he returns to India for 1 year on 10.10.2022. Determine his residential status for the A/Y 2023-
24. [PYQ]
Sol 12: Computation of residential status of Mr. C for A/Y 2023-24:

year.
During the previous year 2022-23, Mr. C was in India for 173 days (i.e. 22 + 30 + 31 + 31 + 28 +31 days). His stay in the last 4
years is:
2021-22 - 46 days
2020-21 - 62 days (i.e. 30+31+1)
2019-20 - 365 days (since he left India on 01.06.2020 after 10 years)
2018-19 - 365 days (since he left India on 01.06.2020 after 10 years)
839 days
Mr. C is a resident since his stay in the precious year 2022-23 is 173 days and in the last 4 years is more than 365 days.
and
It is evident from the above calculations, that his stay in the last 7 years is 730 days or more and since he was in India for 10
years prior to 01.06.2020, he was a resident in at least 2 out of the last 10 years preceding the relevant previous year.
Therefore, Mr. C is a resident and ordinarily resident for the A/Y 2023-24.
Q 13: From the following information of Mr. Ashish (Person of Indian Origin & An Australian Citizen), Compute his gross total
income for the A/Y 2023-24 assuming he is a non-resident.
(a) Consultancy services provided in Thailand for ₹ 2,50,000 but received in India.
(b) Fees for services rendered in Jaipur but received in UAE – ₹ 75,000.
(c) Income of ₹ 5,80,000 from a business in UK received in Switzerland. The business is controlled from India.
(d) Income from a business confined to shooting of a cinema film in India – ₹ 55,000.
(e) Fees for technical services received from a non-resident, the payment relates to a business carried on in India – ₹
90,000.
(f) Income from property in USA received there only - ₹ 2,00,000 (₹ 1,30,000 is applied for meeting hospital expenses
of his son and rest is remitted to India).
(g) Honorarium received from Government of India – ₹ 32,000.
(h) Speculation profit earned and received outside India – ₹ 34,000.
(i) Dividend from a USA company but received in India – ₹ 18,000.
(j) Income from property in Srilanka deposited in an Indian Bank at Colombo, brought to India – ₹ 80,000.
(k) Past untaxed profit for the year 2015-16 of a business in Canada remitted to India during the P/Y 2022-23 – ₹ 80,000.
[IMP QUES]
Sol 13: Computation of gross total income of Mr. Ashish for the A/Y 2023-24 assuming he a non-resident:
A non-resident shall be liable to tax on income received and earned in India.
(a) Consultancy services provided in Thailand but received in India 2,50,000
(b) Fees for services rendered in Jaipur but received in UAE 75,000
(c) Income from a business in UK received in Switzerland. The business is controlled from India. -
(taxable for ROR & RNOR only)
(d) Income from a business confined to shooting of a cinema film in India (exempt for a non- -
resident)
(e) Fees for technical services received from a non-resident, the payment relates to a business 90,000
carried on in India (earned in India)
(f) Income from property in USA received there only (This income is applied for meeting hospital -
expenses of his son and rest is remitted to India) (global income, taxable for Resident and
ordinary resident only)
(g) Honorarium received from Government of India (earned in India) 32,000
(h) Speculation profit earned and received outside India (global income, not taxable) -
(i) Dividend from a USA company but received in India 18,000
(j) Income from property in Srilanka deposited in an Indian Bank at Colombo, brought to India -
(remittance is treated as income received from outside India, taxable only for Resident and
ordinary resident)
(k) Past untaxed profit for the year 2015-16 of a business in Canada remitted to India during the -
P/Y 2022-23 (exempt)
Gross Total income of Mr. Ashish for the P/Y 2022-23 4,65,000
Q 14: PQR Ltd. & MNO Ltd. companies are registered in Bhutan and India respectively. All meetings of Board of Directors of
PQR Ltd. were held in India, whereas all board meetings of MNO Ltd. were held in Nepal during the P/Y 2022-23. Determine
the residential status of both the companies for the A/Y 2023-24. Assume POEM according to the question.
Sol 14: An Indian company is always resident whereas a foreign company whose place of effective management is situated
in India shall be resident in India.
PQR Ltd., a company registered in Bhutan (i.e. foreign company) whose all meetings were held in India shall be deemed to
have its place of effective management in India. Therefore PQR Ltd. shall be resident in India for the A/Y 2023-24.
MNO Ltd., a company registered in India (i.e. Indian company) shall always be resident irrespective of its place of effective
management.
Q 15: In the P/Y 2022-23, a sailor remained on a ship of a private company owning ocean going ships as follows:
Case I – Outside the territorial waters of India for 183 days.
Case II - Inside the territorial waters of India for 183 days.
Determine his residential status for the A/Y 2023-24 for the above two cases. Do not check additional conditions.
Sol 15: An individual shall be resident in India if he satisfies any one of the two conditions enlisted u/s 6(1), which are as
under:
year.
Case I: If the sailor is staying outside the territorial waters of India for 183 days, then he shall be in India for 182 days (i.e.
365 – 183 days). The sailor is satisfying basic condition no. (a), therefore he shall be resident in India for the P/Y 2022-23.
Case II: If the sailor is staying in the territorial waters of India for 183 days, he is satisfying basic condition no. (a), therefore
he shall be resident in India for the P/Y 2022-23.
Q 16: Mr. Raj Chopra, an American Citizen has come to India for the first time 01.07.2019 as an executive of a multinational
company. His employer has allowed him to visit USA every year for this purpose for which he leaves India every year on 1 st
November and shall come back on 31st December. Besides this, he has visited Switzerland on several occasions in connection
with the official work as he is looking after the employer’s operations in Switzerland also. His details for Switzerland tours
are as under:
Date of leaving India Date of arriving in India
10.09.2019 30.09.2019
07.02.2020 08.05.2020
11.07.2020 21.10.2020
10.02.2021 23.07.2021
11.02.2022 12.06.2022
01.02.2023 10.04.2023
Determine his residential status for the P/Y 2022-23. [HOTS QUESTION]
Sol 16: Computation of residential status of Mr. Raj Chopra for the P/Y 2022-23:
year.
His stay in the P/Y 2022-23: June – 19; July – 31; August – 31; September – 30; October – 31; November – 1; December – 1;
January – 31; February – 1 = 176 days.
His stay in 4 years immediately preceding the relevant P/Y shall be:
P/Y 2021-22: July – 9; August – 31; September – 30; October – 31; November – 1; December – 1; January – 31; February –
11 = 145 days
P/Y 2020-21: May – 24; June – 30; July – 11; October – 11; November – 1; December – 1; January – 31; February – 10 = 119
days
P/Y 2019-20: July – 31; August – 31; September – 11; October – 31; November – 1; December – 1; January – 31; February –
7 = 144 days
P/Y 2018-19: Nil, as he came to India on 01.07.2019 for the first time.
Total stay in the previous 4 years = 145 days + 119 days + 144 days + Nil = 408 days.
Raj shall be resident in India for the P/Y 2022-23 as he has satisfied basic condition (b).
and
As Mr. Raj stayed in India for 408 days only during 7 years immediately preceding the relevant P/Y, he does not satisfy the
second additional condition and therefore shall be Resident but not ordinary resident.
Q 17: Examine the correctness of the statement: Income deemed to accrue or arise in India to a non-resident by way of
interest, royalty and fees for technical services is to be taxed irrespective of territorial nexus.
[ICAI Module]
Sol 17: This statement is correct. As per Section 9, income by way of interest, royalty or fee for technical services would be
deemed to accrue or arise in India in case of a non-resident and be included in his total income, whether or not such services
were rendered in India and irrespective of whether the non-resident has a residence or place of business or business
connection in India.
Q 18: Mr. Dey, a foreign citizen, residing in US since 1990, came back to India on 1.04.2021 for permanent settlement. What
will be his residential status for assessment year 2023-24? [ICAI Module]
Sol 18: Computation of residential status of Mr. Dey for the A/Y 2023-24:
year.
Mr. Dey is a resident in A/Y 2023-24 since he has stayed in India for a period of 365 days (more than 182 days) during the
P/Y 2022-23.
and
Mr. Dey stayed in India for 365 days (2021-22) only during 7 years immediately preceding the relevant P/Y as he was in USA
since 1990, he does not satisfy the second additional condition and therefore shall be Resident but not ordinary resident
for the P/Y 2022-23.
Q 19: Determine the taxability of income of US based company ABC Ltd., having place of effective management outside
India, on entering following transactions during the financial year 2022-23:
(a) ₹ 4,80,000 received from an Indian company for providing technical know-how in India.
(b) ₹ 3,30,000 from an Indian firm for conducting the feasibility study for the new project in Finland.
(c) ₹ 2,30,000 from a non-resident for use of patent for a business in India.
(d) ₹ 9,00,000 for supply of manuals and designs for the business to be established in Singapore.
(e) ₹ 5,00,000 received from a trust as rent for a property situated in USA received in Chennai.
Sol 19: A company based in US with no place for effective management in India shall be non-resident in India. Therefore
ABC Ltd. Shall be non-resident in India. A non-resident company is chargeable to tax in India in respect of the following
situations:
(i) Income received or deemed to be received in India or;
(ii) Income accruing or arising or deemed to accrue or arise in India (i.e. income earned in India).
In view of the above provisions, taxability of different transactions is determined in the following manner:
(a) Amount received from an Indian company for providing technical know-how in India is 4,80,000
an income earned in India, therefore taxable.
(b) Conducting the feasibility study for the new project in Finland shall not be taxable in India -
as it is for the business outside India.
(c) Money received from a non-resident for use of patent for a business in India shall be 2,30,000
taxable as such patent is applied in India, therefore earned in India.
(d) Payment received for supply of manuals and designs for the business to be established -
in Singapore shall not be taxable in India as it is neither received or earned in India.
(e) Amount received from a trust as rent for a property situated in USA received in Chennai 3,50,000
shall be taxable in India as it is received in India. However standard deduction @ 30%
shall be allowed from the rent. (₹ 5,00,000 – 30%) (refer chapter house property)
Total income of ABC Ltd. In India 10,60,000
Q 20: An individual, who is an Indian resident, is allowed to hold two different citizenships simultaneously. Is the citizenship
a determining factor for residential status of an individual? [ICAI Module]
Sol 20: Citizenship of a country and residential status of that country are separate concepts. A person may be an Indian
citizen, but may not be a resident in India. On the other hand, a person may be a foreign citizen, but may be a resident in
India. The citizenship of an individual has no role in determining the residential status of an individual. The residential status
is determined on the basis of number of days an individual actually stays in India during the previous year.
Q 21: From the following information furnished by Mr. Anjan, compute his total income for the P/Y 2022-23 assuming that
he is a (i) ROR; (ii) RNOR & (iii) NR.
(a) Profit on sale of shares of Indian company received in Sweden 30,000
(b) Dividend from a Chinese company received in China 12,000
(c) Rent from a property in USA deposited in a bank there and later on remitted to India 1,00,000
through approved banking channels
(d) Agricultural income from land in Punjab 40,000
(e) Technical fees received from Mr. Kumar (a non-resident in India) - (This fees is paid to him 50,000
outside India for providing technical service outside India, however the benefit of
technical service is utilised by Mr. Kumar for carrying on a business in India)
(f) Past foreign untaxed income brought to India during the previous year 34,000
(g) Technical fees received from Mr. Sharma (a non-resident in India) - (This fees is paid to 90,000
him outside India for providing technical service outside India, however the benefit of
technical service is utilised by Mr. Kumar for carrying on a business in Japan)
(i) Dividend from an Indian company received in Hong Kong 11,000
(j) Gifts received from his parents on his birthday 51,000
Sol 21: The income of Mr. Anjan for the P/Y 2022-23 for various status is as under:
S. No. Particulars ROR (₹) RNOR (₹) NR (₹)
(a) Profit on sale of shares of Indian company received in Sweden
(earned in India) 30,000 30,000 30,000
(b) Dividend from a Chinese company received in China (global
income) 12,000 - -
(c) Rent from a property in USA deposited in a bank there and later
on remitted to India through approved banking channels (global 1,00,000 - -
income)
(d) Agricultural income from land in Punjab (exempt u/s 10(1)) - - -
(e) Technical fees received from Mr. Kumar (a non-resident in India)
(This fees is paid to him outside India for providing technical
service outside India, however the benefit of technical service is 50,000 50,000 50,000
utilised by Mr. Kumar for carrying on a business in India) (earned
in India)
(f) Past foreign untaxed income brought to India during the previous - - -
year (exempt)
(g) Technical fees received from Mr. Sharma (a non-resident in India)
(This fees is paid to him outside India for providing technical 90,000 - -
service outside India, however the benefit of technical service is
utilised by Mr. Sharma for carrying on a business in Japan) (global
income)
(h) Dividend from an Indian company received in Hong Kong 11,000 11,000 11,000
(i) Gifts received from his parents on his birthday (gift from parents - - -
is fully exempt) [detailed discussion to happen in IFOS chapter]
Total income of Mr. Anjan 2,63,000 91,000 91,000
Q 22: Mr. Seth, a Korean citizen left India after a continuous stay of 2 years on 01.06.2020. During the financial year 2021-
22, he comes to India for 21 days. Later, he returns to India for 1 year on 10.12.2022. Determine his residential status for
the A/Y 2023-24.
Sol 22: Computation of residential status of Mr. Seth for the A/Y 2023-24:
year.
Stay in India during the P/Y 2022-23: December – 22; January – 31; February – 28; March - 31 = 112 days
His stay in India during 4 years immediately preceding the relevant P/Y is as under:
P/Y 2021-22: 21 days
P/Y 2020-21: April – 30; May – 31; June – 1 = 62 days
P/Y 2019-20: 366 days
P/Y 2018-19: 1st June 2017 – 31st March 2018 = 305 days
Total stay in India during 4 years = 21 days + 62 days + 366 days + 305 days = 754 days.
As Mr. Seth satisfied the second basic condition, he shall be resident in India for the P/Y 2022-23.
and
Mr. Seth also satisfies both the additional conditions as he is resident in India in the P/Y 2019-20 & P/Y 2018-19 and his stay
in the previous 7 years is 753 days (i.e. more than 730 days). Therefore, he shall be resident and ordinary resident in India
for the P/Y 2022-23.
Q 23: Determine the taxability of the following incomes in the hand of Mr. Shivansh for the A/Y 2023-24 assuming that he
is a (a) ROR; (b) RNOR; (c) NR.
(i) Fees income received in India for services rendered in Hong Kong. (₹ 3,90,000)
(ii) Income from profession in India but received in Germany. (₹ 3,60,000)
(iii) Profits from business carried on at Nepal but controlled from India. (₹ 2,20,000)
(iv) Income from house property in Srilanka deposited in Bank there. (₹ 1,80,000)
(v) Income from agriculture in England. It is all spent on the education of children in London. (₹ 2,70,000)
(vi) Dividend paid by a foreign company but received in India. (₹ 60,000)
(vii) Pension from a former employer in India received in Uganda. (₹ 50,000) (ignore standard deduction u/s 16(ia) for
this question)
(viii) Royalty received in India from a non-resident in respect of technology used by such person outside India. (₹ 20,000)
(ix) Dividend received from an Indian company. (₹ 15,000)
(x) Gift in foreign currency from a friend received in India. (₹ 90,000)
(xi) Agricultural income in India. (₹ 55,000)
(xii) Profit from a business in Mumbai but managed from outside India. (₹ 8,00,000)
(xiii) Profit on sale of a building in India but received in Sweden. (₹ 4,00,000)
(xiv) Profit of past years (untaxed) brought in this year to India. (₹ 80,000)
(xv) Income from a profession in India and received in India only. (₹ 20,000)
(xvi) Interest on German bonds. [1/5th received in India] (₹ 1,50,000)
(xvii) Income from a business situated in China but controlled from India. [40% received in India and 60% outside India]
(₹ 1,00,000) [IMP. QUES]
Sol 23: The taxable income of Mr. Shivansh for the A/Y 2023-24 for various status is as under:
(i) Fees received in India for services rendered in Hong Kong. 3,90,000 3,90,000 3,90,000
(ii) Income from profession in India but received in Germany. 3,60,000 3,60,000 3,60,000
(iii) Profit from business carried on at Nepal but controlled from 2,20,000 2,20,000 -
India.
(iv) Income from property in Srilanka, deposited in bank there. 1,80,000 - -
(v) Income from agriculture in England. It is all spent on the 2,70,000 - -
education of children in London.
(vi) Dividend paid by a foreign company but received in India. 60,000 60,000 60,000
(vii) Pension from a former employer in India received in Uganda. 50,000 50,000 50,000
(viii) Royalty received in India from a non-resident in respect of 20,000 20,000 20,000
technology used by such person outside India.
(ix) Dividend received from an Indian company. 15,000 15,000 15,000
(x) Gift in foreign currency from a friend received in India. 90,000 90,000 90,000
(xi) Agricultural income in India. - - -
(xii) Profit from a business in Mumbai but managed from outside 8,00,000 8,00,000 8,00,000
India.
(xiii) Profit on sale of a building in India but received in Sweden. 4,00,000 4,00,000 4,00,000
(xiv) Profit of past years (untaxed) brought in this year to India. - - -
(xv) Income from a profession in India and received in India only. 20,000 20,000 20,000
(xvi) Interest on German bonds. [1/5th received in India] 1,50,000 30,000 30,000
(xvii) Income from a business situated in China but controlled from 1,00,000 1,00,000 40,000
India. [40% received in India and 60% outside India]
Total income of Mr. Shivansh 31,25,000 25,55,000 22,75,000
Q 24: Examine with reasons whether the following transactions attract income-tax in India in the hands of recipients:
(i) Salary paid by Central Government to Mr. John, a citizen of India ₹ 7,00,000 for the services rendered outside India.
(ii) Interest on moneys borrowed from outside India ₹ 5,00,000 by a non-resident for the purpose of business within India
say, at Mumbai.
(iii) Post office savings bank Interest of ₹ 19,000 received by a resident assessee, Mr. Ram, aged 46 years.
(iv) Royalty paid by a resident to a non-resident in respect of a business carried on outside India.
(v) Legal charges of ₹ 5,00,000 paid in Delhi to a lawyer of United Kingdom who visited India to represent a case at the
Delhi High Court. [ICAI Module]
Ans:
S. Taxable / Not Amount liable Reason
No. Taxable to tax (₹)
(i) Taxable 6,50,000 As per Section 9(1)(iii), salaries payable by the Government to a citizen of India
for service rendered outside. India shall be deemed to accrue or arise in India.
Therefore, salary paid by central Government to Mr. john for services rendered
outside India would be deemed to accrue or arise in India since he is a citizen of
India. He would be entitled to standard deduction of ₹ 50,000 under Section
16(ia)
(ii) Taxable 5,00,000 As per Section 9(1)(v)(c), Interest payable by a non-resident on moneys
borrowed and used for the purposes of business carried on by such person in
India shall be deemed to accrue or arise in India in the hands of the recipient.
(iii) Partly Taxable 5,500 The Interest on Post Office Savings Bank A/c, would be exempt u/s 10(15(i), only
to the extent of ₹ 3,500 in case of an individual a/c. further, Interest upto ₹
10,000, would be allowed as deduction u/s 80TTA from Gross Total Income.
Balance Rs.5,500 i.e. ₹ 19,000 - ₹ 3,500 - ₹ 10,000 would be taxable in the hands
of Mr. Ram, a resident. [Detailed discussion in income from other sources & deductions
from GTI chapter]
(iv) Not Taxable - Royalty paid by a resident to a non-resident in respect of a business carried
outside India would not be taxable in the hands of the non-resident provided
the same is not received in India. This has been provided as an exception to
deemed accrual mentioned in Section 9(1)(vi)(b).
(v) Taxable 5,00,000 In case of a non-resident, any income which accrues or arises in India or which
is deemed to accrue or arise in India or which is received in India or is deemed
to be received in India is taxable in India.
Therefore, legal charges paid in India to a non-resident lawyer of UK, who visited
India to represent a case at the Delhi High Court would be taxable in India.
Q 25: Mr. Ramesh & Mr. Suresh are brothers and they earned the following incomes during the F.Y. 2022-23. Mr. Ramesh
settled in Canada in the year 1996 and Mr. Suresh settled in Delhi. Compute the total income for the A.Y. 2023-24.
S. No. Particulars Mr. Ramesh Mr. Suresh
(₹) (₹)
1. Interest on Canada Development Bonds (only 50% of Interest received in India) 35,000 40,000
2. Dividend from British company received in London 28,000 20,000
3. Profits from a business in Nagpur, but managed directly from London 1,00,000 1,40,000
4. Short term capital gain on sale of shares of an Indian company received in India 60,000 90,000
5. Income from a business in Chennai 80,000 70,000
6. Fees for technical services rendered in India, but received in Canada 1,00,000 ---
7. Interest on savings bank deposit in UCO Bank, Delhi 7,000 12,000
8. Agricultural income from a land situated in Andhra Pradesh 55,000 45,000
9. Rent received in respect of house property at Bhopal 1,00,000 60,000
10. Life insurance premium paid --- 30,000
[ICAI Module]
Ans: Computation of total income of Mr. Ramesh & Mr. Suresh for the A.Y. 2023-24:
S. No. Particulars Mr. Ramesh Mr. Suresh
(Rs.) (Rs.)
1. Interest on Canada Development Bonds (Note 2) 17,500 40,000
2. Dividend from British company received in London (Note 3) - 20,000
3. Profits from a business in Nagpur, but managed directly from London (Note 2) 1,00,000 1,40,000
4. Short term capital gain on sale of shares of an Indian company received in India 60,000 90,000
(Note 2)
5. Income from a business in Chennai ((Note 2) 80,000 70,000
6. Fees for technical services rendered in India, but received in Canada (Note 2) 1,00,000 -
7. Interest on savings bank deposit in UCO Bank, Delhi (Note 2) 7,000 12,000
8. Agricultural income from a land situated in Andhra Pradesh (Note 4) - -
9. Income from house property at Bhopal (Note 5) 70,000 42,000
Gross Total Income 4,34,500 4,14,000
Less: Deduction under Chapter VI-A (detailed discussion in deductions from GTI
chapter)
• Section 80C – Life insurance premium - 30,000
• Section 80TTA (See Note 6) 7,000 10,000
Total Income 4,27,5000 3,74,000
Notes:
1. Mr. Ramesh is a non-resident since he has been living in Canada since 1996. Mr. Suresh, is settled in Delhi, and thus,
assumed as a resident and ordinarily resident.
2. In case of a resident and ordinarily resident, his global income is taxable as per Section 5(1). However, as per Section
5(2), in case of a non-resident, only the following incomes are chargeable to tax:
(i) Income received or deemed to be received in India; and
(ii) Income accruing or arising or deemed to accrue or arise in India.
Therefore, fees for technical services rendered in India would be taxable in the hands of Mr. Ramesh, even though he
is a non-resident.
The income referred to in S. No. 3, 4, 5 and 7 are taxable in the hands of both Mr. Ramesh and Mr. Suresh since they accrue
or arise/deemed to accrue or arise in India.
Interest on Canada Development Bond would be fully taxable in the hands of Mr. Suresh, whereas only 50%, which is
received in India, is taxable in the hands of Mr. Ramesh.
3. Dividend received from British company in London by Mr. Ramesh, a non-resident, is not taxable since it accrued and is
received outside India. However, such dividend received by Mr. Suresh is taxable, since he is a resident and ordinarily
resident.
4. Agricultural income from a land situated in India is exempt under Section 10(1) in the case of both non-residents and
residents.
5. Income from house property-
Particulars Mr. Ramesh (₹) Mr. Suresh (₹)
Rent received 1,00,000 60,000
Less: Deduction under Section 24(a) @ 30% 30,0000 18,000
Net income from house property 70,000 42,000
The net income from house property in India would be taxable in the hands of both Mr. Ramesh and Mr. Suresh, since the
accrual and receipt of the same are in India.
6. In case of an individual, Interest upto ₹ 10,000 from savings account with, inter alia, a bank is allowable as deduction
under Section 80TTA.
Q 26: Mr. Sushant furnished the following particulars of his income for the year ended 31-03-2023.
(a) Income earned from business in Dubai which is controlled from Delhi (₹ 65,000 is received 80,000
in India)
(b) Pension for services rendered in India but received in Dubai (computed) 24,000
(c) Dividend from an Oil Company, a Dubai based company, received in Dubai 15,000
(d) Rent from property in Dubai, deposited in a bank in Dubai and later on, remitted to India 70,000
through approved banking channels
(e) Dividend from Sunset Ltd., an Indian company, received in Dubai 78,000
(f) Interest on money borrowed by Mr. Dipish, a non-resident, for the purpose of investment 55,000
in shares of ABC Ltd., an Indian company
(g) Agricultural income from a land in Bhutan, received in India 25,000
Compute his gross total income for the A.Y. 2023-24, if he is:
(a) Resident and ordinarily resident;
(b) Resident but not ordinarily resident;
(c) Non-resident [MTP May 2022]
Sol 26: Computation of Gross Total Income for the A/Y 2023-24
(a) Income earned from business in Dubai which is controlled from 80,000 80,000 65,000
Delhi, out of which ₹ 65,000 is received in India
(b) Pension for services rendered in India but received in Dubai 24,000 24,000 24,000
(computed)
(c) Dividend received in Dubai from an Oil company, a Dubai based 15,000 - -
company
(d) Rent from property in Dubai, deposited in a bank in Dubai 49,000 - -
(e) Dividend from Sunset Ltd., an India Company 78,000 78,000 78,000
(f) Interest on money borrowed by Mr. Dipish, a non-resident, for 55,000 - -
the purpose of investment in shares of ABC Ltd., an Indian
company
(g) Agricultural income from a land in Bhutan, received in India 25,000 25,000 25,000
(Taxable)
Gross Total Income 3,26,000 2,07,000 1,92,000
Notes:
1. As per section 5(1), global income is taxable in case of a resident. However, as per section 5(2), in case of a non-
resident, only the following incomes are chargeable to tax in India:
(a) Income received or deemed to be received in India; and
(b) Income accruing or arising or deemed to accrue or arise in India.
Further, the income which accrues or arise outside India would be chargeable to tax in case of resident but not
ordinarily resident in India, only if such income is derived from a business controlled in India.
Accordingly, the entire income earned from business in Dubai which is controlled from Delhi would be chargeable to
tax in the hands of Mr. Sushant if he is a resident in India or resident but not ordinarily resident. However, if he is non-
resident then only that part of income which is received in India would be taxable in his hands.
2. Agricultural income from a land in Bhutan, received in India is taxable in all cases.
3. Pension for services rendered in India but received in Dubai and dividend from Sunset Ltd., and Indian company
would be taxable in all cases, since it has accrued or arisen in India.
4. Dividend from a Dubai based company, received in Dubai and interest on money borrowed by Mr. Dipish, a non-
resident, for the purpose of investment in shares of ABC Ltd., an Indian company, would be taxable in the hands
of Mr. Sushant, only if he is resident and ordinarily resident in India. If he is a resident but not ordinarily resident
or a non-resident, the same would not be taxable in his hands in India since it has neither accrued nor arisen in
India nor is it received in India.
5. Likewise, rental income from property in Dubai would also be taxable only if he is resident in India. It has been
assumed that the rental income is the gross annual value of the property. Therefore, deduction @ 30% under
section 24, has been provided and the net income so computed is taken into account for determining the gross
total income of a resident and ordinarily resident.
Rent received (assumed as gross annual value) ₹ 70,000
Less: Deduction under section 24 (30% of ₹ 70,000) ₹ 21,000
Income from house property ₹ 49,000
Q 27: Mr. Thomas, a citizen of Japan, comes to India for the first time during the P.Y. 2018-19. During the financial year
2018-19, 2019-20, 2020-21, 2021-22 and 2022-23, he was in India for 50 days, 65 days, 95 days, 150 days and 75 days
respectively. Determine his residential status for the A.Y. 2023-24. Examine the tax implications in the hands of Mr.
Thomas for the Assessment Year 2023-24 of the following transactions entered by him.
(a) Interest received from Mr. Michel, a non-resident outside India (The borrowed fund is used by Mr. Michel for
investing in Indian company’s debt fund for earning interest).
(b) He is also engaged in the business of running news agency and earned income of ₹ 5 lakhs from collection of news
and views in India for transmission outside India.
(c) He entered into an agreement with ABC & Co., a partnership firm for transfer of technical documents and design
and for providing services relating thereto, to set up a Steel manufacturing plant, in India. He charged ₹ 15 lakhs
for these services from ABC & Co. [MTP Nov. 2021]
Sol 27: Under section 6(1), an individual is said to be resident in India in any previous year, if he satisfies any one of
the following conditions:
(i) He has been in India during the previous year for a total period of 182 days or more, or
(ii) He has been in India during the 4 years immediately preceding the previous year for a total period of 365 days or
more and has been in India for at least 60 days in the previous year.
If an individual satisfies any one of the conditions mentioned above, he is a resident. If both the above conditions are
not satisfied the individual is a non-resident.
During the previous year 2022-23, Mr. Thomas was in India for 75 days and during the 4 years preceding the previous
year 2022-23, he was in India for 360 days (i.e. 50 + 65 + 95 + 150 days).
The total stay of the Mr. Thomas during the previous year in India was less than 182 days and during the four years
preceding this year was for 360 days. Therefore, due to non-fulfillment of any of the two conditions for a resident, he
would be treated as non-resident for the Assessment Year 2023-24.
(1) Not taxable, since interest payable by a non-resident to another non-resident would be deemed to accrue or arise
in India only if the borrowed fund is used for the purposes of business or profession carried on by him in India. In
this case, it is used for investing in Indian company’s debt fund for earning interest and not for the purposes of
business or profession. Hence, it is not taxable in India.
(2) No income shall be deemed to accrue or arise to Mr. Thomas through or from activities which are confined to the
collection of news and views in India for transmission outside India. Hence, ₹ 10 lakh is not taxable in India in the
hands of Mr. Thomas.
(3) ₹ 15 lakh is deemed to accrue or arise in India to Mr. Thomas, a non-resident, since it represents royalty/fees for
technical services paid for services utilized in India, in this case, for setting up a Steel manufacturing plant in India.
Hence, the same would be taxable in India in the hands of Mr. Thomas.
MULTIPLE CHOICE QUESTIONS

1. The term ‘stay in India’ includes stay in the territorial waters of India. What does the term “territorial waters of India”
mean?
(a) 24 nautical miles into the sea from the Indian coastline.
(b) 36 nautical miles into the sea from the Indian coastline.
(c) 12 nautical miles into the sea from the Indian coastline.
(d) 15 nautical miles into the sea from the Indian coastline.
2. An individual can be resident in more than one country.

(a) True
(b) False
3. A person is deemed to be of ____________ if he or either of his parents or grandparents were born in Undivided India
(i.e. before 15th August 1947 in India, Pakistan or Bangladesh).
(a) Non – resident (c) Indian origin
(b) Resident (d) Resident but not ordinarily resident
4. Pawan is the karta of the HUF. He has been residing in Dubai since 2006 and takes all decisions regarding the HUF from
Dubai. He came to India for 190 days during the PY 2022-23. Determine the residential status of the Pawan and HUF.
(a) ROR & RNOR (c) RNOR & RNOR
(b) ROR & NR (d) RNOR & NR
5. It is the duty of………………. to place all material facts to determine his correct residential status in front of Assessing
Officer:
(a) Assessee (c) Income tax officer
(b) CBDT (d) All the above
6. Manan, a person of Indian origin stays in India for 110 days every year. But in FY 2022-23, he came to India for 130 days
for visit. His income from Indian sources is ₹ 16 lakhs. His residential status for PY 2022-23 shall be:
(a) ROR (c) Non-resident
(b) RNOR (d) Deemed resident
7. Aman, an Indian citizen, left India for the first time on 23.10.2022 to work as a crew member of a foreign citizen. His
residential status for the PY 2022-23 shall be:
(a) ROR (c) NR
(b) RNOR (d) Depends on signing in & signing off the CDC
8. Justin Beiber, a Canadian singer visits India for 100 days in every financial year. This has been his practice for the past 9
financial years. The residential status for the assessment year 2023–2024 is:
(a) Non – resident (c) Resident and ordinary resident
(b) Resident but not ordinarily resident (d) None of the above
9. Mr. Brett Lee, an Australian citizen, comes to India for the first time during the P.Y. 2018–19. During the financial years
2018–19, 2019-20, 2020-21, 2021-22 & 2022-23, he was in India for 55 days, 60 days, 90 days, 150 days and 70 days,
respectively. The residential status for the assessment year 2022–2023 is:
(a) Resident (c) Resident but not ordinarily resident
(b) Resident and ordinarily resident (d) Non – resident
10. Which of the following shall be taxable for a Non-resident in India?

(a) Sale of property in Switzerland, received in Switzerland
(b) Royalty received from a resident in India outside India for use of technical know-how for a business in India
(c) Interest on bonds of a US company received in Nepal
(d) Income from collection of news for transmission outside India
11. Dolby Technology, a foreign company’s place of effective management is in India in the P.Y. 2022–23. The residential
status of Dolby Technology in A.Y. 2022-23 is _______.
(a) Non-resident (c) Resident but not ordinarily resident
(b) Resident and ordinarily resident (d) None of the above
12. A Partnership firm would be non-resident in India, if the control and management of the affairs is situated wholly outside
India.
(a) True
(b) False
13. Dev is a foreign citizen. His grandfather was born in India in 1945. He left India for the first time on 24.07.22 for the
purpose of employment. His residential status shall be:
(a) ROR (c) NR
(b) RNOR (d) Can’t be determined due to insufficient information
14. Every year, the residential status of an assessee:

(a) May change (c) Will not change
(b) Will certainly change (d) None of the above
15. Mr. Nishant Khurana earns the following income during the financial year 2022-23:
Particulars (₹)
1. Past untaxed profits of UK business of 2019-20 brought into India in 2022-23 90,000
2. Interest on Government securities accrued in India but received in Paris 80,000
3. Interest on USA Government securities, received in India 20,000
Compute his income presuming that he is ROR, RNOR and NR.
(a) ₹ 1,00,000 each (c) ₹ 80,000 each
(b) ₹ 1,90,000 each (d) ₹ 1,10,000 each
16. Miss Priyanka Chopra, an actor is a resident of U.S. She visited India in P.Y. 2022-23 for 10 days. She received her fees
of “advertisements” in U.S. The shooting of advertisement was done in Delhi. The income is _________ in A.Y. 2023–
24.
(a) Taxable (c) 50% taxable, 50% exempt
(b) Exempt (d) Depends upon the assessing officer
17. Miss Shruti, is a resident but not ordinarily resident of India. In P.Y. 2022–23, she received rent from one of a property
in London which is deposited in a bank in London, which is later on remitted to India through approved banking
channels. The income is ____________ in A.Y. 2023–24.
(a) Non-taxable (c) Taxable
(b) Partial taxable (d) None of the above
18. Where a non-resident has a business connection in India but its operations are confined to purchase of goods in India
for the purpose of export, such income shall:
(a) be taxable in India as it is deemed to accrue or arise in India
(b) not be taxable in India as it shall not be deemed to accrue or arise in India
(c) be partial taxable as it is accrues or arises in India
(d) none of the above
19. Mr. Anirudh Verma earns the following income during the financial year 2022-23:
Particulars (₹)
1. Income from house property in London, received in India 60,000
2. Profits from business in Japan and managed from there (received in Japan) 9,00,000
3. Dividend from foreign company, received in India 30,000
4. Dividend from Indian company, received in England 50,000
Compute his income presuming that he is ROR, RNOR and NR.
(a) 9,90,000 / 90,000 / 90,000 (c) 10,40,000 / 1,40,000 / 1,40,000
(b) 10,40,000 / 90,000 / 90,000 (d) 10,40,000 / 10,40,000 / 1,40,000
20. Atul is a foreign citizen. His father was born in Delhi in 1951 and mother was born in England in 1950. His grandfather
was born in Delhi in 1922. Atul visited India to see Taj mahal and visit other historical places. He came to India on 1 st
November, 2022 for 200 days. He has never come to India before. His residential status for assessment year 2023-24
will be-
(a) Non-resident India (c) Resident in India
(b) Not ordinarily resident in India (d) None of the above.
21. Paresh, a software engineer at ABC Ltd. left India on 10th August, 2022 for the treatment of his wife. For income–tax
purpose, his residential status for the assessment year 2023-24 will be:
(a) Resident (c) Non-resident
(b) Not ordinarily resident (d) Cannot be determined from the given information.
22. HUF of Ashwin consisting of himself, his wife and 2 sons is assessed to income- tax. The residential status of HUF would
be non-resident, when:
(a) The management and control of its affairs are wholly situated in India.
(b) The management and control of its affairs is wholly situated outside India.
(c) The status of karta is non-resident for that year.
(d) When majority of the members are non- residents.
23. Alpha Ltd. is an Indian company. It carries its business in Delhi and London. The place of effective management of the
company is situated in London. More than 85% of its business income is from the business in England. If so, its residential
status will be:
(a) Resident (c) Not ordinarily resident
(b) Non- resident (d) foreign company.
24. Thomas Inc. of Australia borrowed money from various companies in Australia for doing business in India by Name ANS
Co. Ltd., Mumbai. Thomas Inc. paid interest of ₹ 500 lakhs (converted) to various lenders. The amount of interest paid:
(a) Has accrued in India (c) Is exempt from tax
(b) Does not accrue in India (d) Is taxable in Australia
25. John is a foreign citizen born in USA. His father was born in Delhi in 1960 and his grand-father was born in Lahore in
1935 but his mother was born in UK in 1963. John came to India for the first time on 1st December, 2022 and stayed in
India for 183 days and then left for USA. His residential status for the A.Y. 2023-24 shall be:
(a) Resident (c) Non-resident
(b) Resident but not ordinary resident (d) Foreign national
26. AB was born 5th April 1999 in India and he later on took the citizenship of U.S.A. Neither his parents nor his grandparents
were born in divided / undivided India. AB in this case shall be a:
(a) Citizen of India (c) Person of Indian Origin
(b) Foreign national (d) Resident of India
27. Dividend from British Co. of ₹ 2,00,000 received in London will be taxable in case of:
(a) Resident and ordinary resident (ROR) only (c) Not ordinary resident (NOR) only
(b) Non-resident (NR) only (d) ROR, NOR and NR all
28. Praful has stayed in India in the P.Y. 2022-23 for 121 days. And he is non-resident in 10 out of 10 years immediately
preceding the current previous year and he has stayed in India for 465 days in all in the 4 years immediately preceding
the current previous year and 820 days in all in the 7 years immediately preceding the current previous year, his
residential status for the A.Y. 2023-24 would be:
(a) Resident and ordinarily resident (c) Resident but not ordinarily resident
(b) Non-resident (d) Cannot be ascertained with the given information
29. Rohan, an Indian citizen was employed in Federal Bank in India. He received a salary of ₹ 50,000 p.m. from 1.4.2022 to
25.8.2022. He resigned and left for Sharjah for the first time on 1.9.2022 and got salary of rupee equivalent of ₹ 90,000
p.m. from 1.09.2022 to 31.3.2023. His entire salary from September to March 2023 was credited in his Sharjah bank
account. He remitted the salary for November & December 2022 to India in January 2023. He is liable to tax in respect
of:
(a) Income received in India from Federal Bank;
(b) Income received in India and in Sharjah;
(c) Income received in India from Federal Bank and income remitted to India;
(d) Income received in Sharjah
30. Income earned from a contract negotiated by an agent in India in the name of a non-resident but approved by such
non-resident shall:
(a) Be taxable in India as such income is deemed to accrue or arise in India
(b) Not be taxable in India as there is no business connection in India
(c) Be taxable in India only if it is received in India
(d) Be taxable in India as such income accrues or arises in India
31. Fees for technical services paid by the Central Government will be taxable in case of:
(a) Resident and ordinarily resident only
(b) Both resident and ordinarily resident and resident but not ordinarily resident
(c) Non- resident
(d) All the above
32. Short term capital gains on sale of shares of an Indian company received in Australia is taxable in case of
(c) Non- resident only
(d) All the above
33. Income from a business in Canada, controlled from Canada is taxable in case of
(c) Non- resident
(d) All the above
34. Mr. J is Citizen of India and left India for USA on 16/8/2021 for doing business meetings on behalf of his employer, which
is an India company, for exporting goods to USA. He came back to India on 15/9/2022. He has been resident in India for
past 10 years. For the PY 2022-2023, Mr. J shall be:
(a) Resident and ordinarily resident in India (c) Resident but not ordinarily in India
(b) Non-resident in India (d) Non-citizen of India
35. Mr. Sharma is an Indian citizen. He stays in India every year for 50 days only. His having income (other than foreign
sources) of ₹ 16 lakhs shall be considered as …………. assuming that he is not a resident of any other country.
(a) Resident and ordinary resident (c) Deemed Resident (RNOR)
(b) Non-Residen (d) None of the above
36. In the case of an individual being not ordinarily resident, which of the following Income is chargeable to tax in India:
(a) Business income accruing outside India
(b) Income accruing outside India if it is derived from a business controlled in India
(c) Property income accruing outside India
(d) Interest income accruing outside India
37. Mr. R is a foreign citizen. His father was born in Delhi in 1961 and mother was born in England in 1955. His grandfather
was born in Dhaka in 1932. Mr. R visited India to see historical places. He came to India on 1st December, 2022 for 150
days. He has never come to India before. His residential status for P/Y 2022-2023 will be:
(a) Non-resident in India (c) Not ordinarily resident in India
(b) Resident and ordinary resident in India (d) None of the above
38. Dividend income from a German company received in Australia in the year 2019, brought to India during the previous
year 2022-23 is taxable in case of-
(a) Resident and ordinarily resident only (c) Resident but not ordinarily resident
(b) Non-resident (d) Not taxable for any status
39. Mr. Verma a person of India origin visited India on 5/2/2023 and plans to stay here for 210 days. During 4 years prior to
the PY 2022-2023, he was in India for 950 days. Earlier to that he was never in India. For the AY 2023-2024, Mr. Verma
shall be:
(a) Resident and ordinarily resident in India (c) Resident but not ordinarily resident in India
(b) Non-resident (d) None of the above
40. Royalty paid by a resident in India to a non-resident outside India:

(a) Shall be taxable in India unless it is paid for the acquisition of any right/information/ property used for the purpose
of business or profession carried on outside India.
(b) Shall be taxable in India whether such right/ information/property used for the purpose of carrying on business or
profession in India or outside India.
(c) Shall not be taxable in India.
(d) Always taxable in India
41. Determine the residential status of a HUF if HUF's control and management is wholly situated in India and Karta of HUF
is a non-resident in India for that previous year.
(a) Resident and Ordinary Resident (ROR) (c) Resident but not ordinary resident (NOR)
(b) Non-Resident (NR) (d) ROR or RNOR
42. Salary of a non-resident received for the period in which he is working in India is not taxable.
(a) True
(b) False
43. Dividend of ₹ 5,000 was received from foreign company, outside India by a Resident and Ordinary Resident of India,
out of which ₹ 4,000 is remitted to India. Income taxable in India will be—
(a) ₹ 1,000 (c) ₹ 4,000
(b) ₹ 5,000 (d) Nil
44. Fee for technical services paid outside India by a non-resident in India to a non-resident in India shall:
(a) Never taxable in India
(b) Always taxable in India
(c) Taxable in India provided the know-how, for which royalty was paid, was used for the purpose of carrying on any
business or profession in India
(d) None of the above
45. Salary payable by a foreign company to an Indian citizen for services rendered outside India is an income, which is
deemed to accrue or arise in India.
(a) True
(b) False
46. Mrs. Sunita Williams (citizen of USA), a famous astronaut, comes to India on 31/10/2022 to visit her grandmother who
was born in Gujarat in 1935. She stays in India till 26/1/2023 and then leaves for USA. Her residential status for the PY
2022-23 will be:
(a) Person of Indian origin (c) Resident and not ordinary resident
(b) Resident and ordinary resident (d) Non resident
47. HUF is situated in Mumbai. Its karta is Mr. J. who is of 95 years of age has delegated power to his eldest son Mr. Y. Mr.
J. is in USA for his medical treatment and left India for the first time on 18/9/2021. Mr. Y has full controls over affairs of
HUF. Mr. Y excises partial control from India and partially from Nepal. Calculate residential status of HUF and Karta Mr.
J for the PY 2022-23:
(a) HUF is resident, Mr. J is non resident
(b) HUF is non-resident, Mr. J is non resident
(c) HUF is resident and ordinary resident, Mr. J is non resident
(d) HUF is resident and ordinary resident, Mr. J is resident and ordinary resident
48. A foreign Company having no Indian citizen/ resident of India as shareholder has shot a TV film entirely on Indian
locations. The film is to be telecast exclusively in the foreign countries. But it has also agreed with the Government of
India to give the rights of telecast in India, free of charge. Whether the above transaction will rise to income which will
be deemed to accrue or arise in India.
(a) Yes
(b) No
49. Income earned from a contract negotiated by an agent in Srilanka in the name of a non-resident but approved by such
non-resident shall:
(a) be taxable in India as such income accrues or arises in India
(b) not be taxable in India as there is no business connection in India
(c) be taxable in India only if it is received in India
(d) none of the above
50. Mr. X, an NRI, engaged in the business of running a news channel. His business is confined to the collection of news and
views in India for transmission outside India. Such income is
(a) Fully taxable (c) 50% Taxable – 50% Exempt
(b) Not deemed to accrue or arise in India (d) Depends on the assessing officer
51. If Anirudh, a citizen of India, has stayed in India in the P.Y. 2022-23 for 181 days, and he is non-resident in 9 out of 10
years immediately preceding the current previous year and he has stayed in India for 365 days in all in the 4 years
immediately preceding the current previous years and 420 days in all in the 7 years immediately preceding the current
previous year, his residential status for the A.Y. 2022-23 would be – (ICAI MCQ Booklet)
(a) Resident and ordinarily resident (c) Non-resident
(b) Resident but not ordinarily resident (d) Deemed resident but not ordinarily resident
52. Raman, a citizen of India, was employed in Hindustan Lever Ltd. he resigned on 27-09-2022. He received a salary of ₹
40,000 p.m. from 1-4-2022 to 27-9-2022 from Hindustan Lever Ltd. thereafter he left for Dubai for the first time on 1-
10-2022 and got salary of rupee equivalent of ₹ 80,000 p.m. from 1-10-2022 to 31-03-2023 in Dubai. His salary for
October to December 2022 was credited in his bank account in Dubai and the salary for January to March 2023 was
credited in his Mumbai account directly. He is liable to tax in respect of – (ICAI MCQ Booklet)
(a) Income received in India from Hindustan Lever Ltd;
(b) Income received in India and Dubai;
(c) Income received in India from Hindustan Lever Ltd and income directly credited in India;
(d) Income received in Dubai
53. Aashish earns the following income during the P.Y. 2022-23:
• Interest on U.K. Development Bonds (1/4th being received in India): ₹ 4,00,000
• Capital gain on sale of a building located in India but received in Holland: ₹ 6,00,000
If Aashish is a resident but not ordinarily resident in India, then what will be amount of Income chargeable to tax in
India for A.Y. 2023-24? (ICAI MCQ Booklet)
(a) ₹ 7,00,000 (c) ₹ 6,00,000
(b) ₹ 10,00,000 (d) ₹ 1,00,000
54. Mr. Sumit is an Indian citizen and a member of the crew of an America bound Indian ship engaged in carriage of freight
in international traffic departing from Chennai on 25th April, 2022. From the following details for the P.Y. 2022-23, what
would be the residential status of Mr. Sumit for A.Y. 2023-24, assuming that his stay in India in the last 4 previous years
preceding P.Y. 2022-23 is 365 days and last seven previous years preceding P.Y. 2022-23 is 730 days?
• Date entered in the Continuous Discharge Certificate in respect of joining the ship by Mr. Sumit: 25th April, 2022
• Date entered in the Continuous Discharge Certificate in respect of signing off the ship by Mr. Sumit: 24 th October,
2022.
Mr. Sumit has been filing his income tax return in India as a Resident for the preceding 2 previous years. (ICAI MCQ
Booklet)
(a) Resident and ordinarily resident (c) Non-resident
(b) Resident but not-ordinarily resident (d) Deemed resident but not-ordinarily resident
55. Mr. Square, an Indian citizen, currently resides in Dubai. He came to India on a visit and his total stay in India during the
F.Y. 2022-23 was 135 days. He is not liable to pay any tax in Dubai. Following is his details of stay in India in the preceding
previous years:
Financial Year Days of Stay in India
2021-22 100
2020-21 125
2019-20 106
2018-19 83
2017-18 78
2016-17 37
2015-16 40
What shall be his residential status for the P.Y. 2022-23 if his income (other than income from foreign sources) is ₹ 10
lakhs? (ICAI MCQ Booklet)
(a) Resident and Ordinary Resident (c) Non-Resident
(b) Resident but not Ordinary Resident (d) Deemed resident but not ordinarily resident.
56. Dividend income from Australian company received in Australia in the year 2021, brought to India during the previous
year 2022-23 is taxable in the A.Y. 2023-24 in the case of – (ICAI MCQ Booklet)
(c) Non-resident
(d) None of the above
57. Mr. Ramesh, a citizen of India, is employed in the Indian embassy in Australia. He is a non-resident for the A.Y. 2023-24.
He received salary and allowances in the Australia from the Government of India for the year ended 31-03-2023 for
services rendered by him in Australia. In addition, he was allowed perquisites by the Government. Which of the
following statements are correct? (ICAI MCQ Booklet)
(a) Salary, allowances and perquisites received outside India are not taxable in the hands of Mr. Ramesh, since he is
non-resident
(b) Salary, allowances and perquisites received outside India by Mr. Ramesh are taxable in India since they are deemed
to accrue or arise in India.
(c) Salary received by Mr. Ramesh is taxable in India but allowances and perquisites are exempt.
(d) Salary received by Mr. Ramesh is exempt in India but allowances and perquisites are taxable.
58. Who among the following will qualify as non-resident for the previous year 2022-23? (ICAI MCQ Booklet)
- Mr. Joey, an Italian designer came on visit to India to explore Indian handloom on 03-09-2022 and left on 15-12-
2022. For past four years, he visited India for fashion shows and stayed in India for 100 days each year.
- Mr. Sanjay born and settled in Canada, visits India each year for three months to meet his parents and grandparents,
born in India in 1946, living in Mumbai. His Indian income is ₹ 15,20,000.
- Mr. Chang, a Korean scientist left India to his home country for fixed employment there. He stayed in India for study
and research in medicines from 01-01-2018 till01-07-2022.
Choose the correct answer: (ICAI MCQ Booklet)
(a) Mr. joey and Mr. Chang (c) Mr. Sanjay and Mr. Chang
(b) Mr. Sanjay (d) Mr. Chang
59. Mr. Harry, an Indian citizen, is a marketing consultant who provides consultancy to various countries around the globe.
Due to his profession, he is required to travel across various countries throughout the year. His marketing project does
not last for more than 40 days and therefore his stay in any country including India usually never exceeds 40 days during
a year. His income is ₹ 80 lakhs across the globe which is not liable to tax in any country. During the P.Y. 2022-23 an
Indian company provides him a marketing project in India. His stay in India for the project is expected to be only 25 days
and his income from that project would be ₹ 30 lakhs. Being a highly qualified professional, he consults you about the
tax regime on his income and his residential status in India. (ICAI MCQ Booklet)
(a) He shall be treated as resident but not ordinarily resident and shall be liable to pay tax on ₹ 30 lakhs.
(b) He shall be treated as resident and ordinarily resident and shall be liable to pay tax on ₹ 30 lakhs.
(c) He shall be treated as non-resident and shall not be liable to tax.
(d) He shall be treated as resident but not ordinarily resident and shall be liable to pay tax on his entire income of ₹ 80
lakhs earned across the globe.
60. Determine residential status of Sundaram (HUF) which carries out its transactions in Malaysia. Its affairs are partly
controlled from India. The Karta of HUF, Mr. Sundaram who is from Chennai visits India on 01-06-2021 and leaves to
Malaysia on 10-02-2022. He has not visited India for the past 11 years. (ICAI MCQ Booklet)
(a) Resident and ordinarily resident (c) Deemed resident
(b) Resident but not ordinarily resident (d) Non-resident
MCQs Answers
1. (c) 2. (a) 3. (c) 4. (d) 5. (a) 6. (b) 7. (a) 8. (b) 9. (d) 10. (b)
11. (b) 12. (a) 13. (a) 14. (a) 15. (a) 16. (a) 17. (a) 18. (b) 19. (c) 20. (a)
21. (a) 22. (b) 23. (a) 24. (a) 25. (c) 26. (b) 27. (a) 28. (c) 29. (a) 30. (a)
31. (d) 32. (d) 33. (a) 34. (a) 35. (c) 36. (b) 37. (a) 38. (d) 39. (b) 40. (a)
41. (d) 42. (b) 43. (b) 44. (c) 45. (b) 46. (d) 47. (c) 48. (b) 49. (b) 50. (b)
51. (b) 52. (b) 53. (a) 54. (a) 55. (c) 56. (d) 57. (c) 58. (b) 59. (a) 60. (b)

Residential Status & Scope of Total Income

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Residential Status & Scope of Total Income

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CA SHREY RATHI RESIDENTIAL STATUS & SCOPE OF TOTAL INCOME 2.

“I don’t count my sit-ups. I only count

Sol 1: Computation of residential status of Mr Lee for the A/Y 2023-24:

Sol 5: Computation of residential status of Ram for the P/Y 2022-23:

Sol 12: Computation of residential status of Mr. C for A/Y 2023-24:

MULTIPLE CHOICE QUESTIONS

2. An individual can be resident in more than one country.

10. Which of the following shall be taxable for a Non-resident in India?

14. Every year, the residential status of an assessee:

40. Royalty paid by a resident in India to a non-resident outside India:

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