INCOME TAX LAW & PRACTICE

Prepared by
Dr.L.Vijayakumar
Assistant Professor of commerce
St.Joseph’s college of Arts & Science (Autonomous),
cuddalore-1.
Class :III B.com B Day
Subject Code:ECM514S
Date: 14..08.2020
Residential status –HUF -Ex. No:17

Mr. Mani ,an Indian Citizen,is a resident and

ordinarily resident in India for assessment year
2020-21.In previous year 2019-20, the affairs
of HUF in which he is karta, are managed both
from India and France. Determine the
residential status of Mani (HUF).
 solution
Determination of Residential status of A for Previous Year 2019-20 (Assessment
Year 2020-21):
Step: 1
Assessment Year : 2020-21 . Twelve months commencing on the first day of April
every year. (Financial year)
Step :2
Previous year :2019-20, it is the year in which income is earned.

Step: 3
Basic conditions
As per sec.6(2), a HUF is considered as resident if its affairs are controlled and
managed wholly or partly inindia in the previous year.in this case, the affairs of
HUF are mangaged both from india and france in the PY 2019-2 0.
Cont…
Additional conditions:
a) karta has been a resident in india in atleast 2 out of 10
years preceding the previous year.
b) karta has been in india for 730 days or more in the 7 years
immediately preceding the previous year.
in this case, Mani could satisfy both these conditions as he
was resident and ordinarily resident in the PY-2019-20.
Conclusion:
Both basic as well as additional conditions are
satisfied.hence, the HUF is a resident and ordinarily
resident in india in the previous Year 2019-20.
Residential status of a company- Ex-24.
• In the following cases, identify the residential
status.
a) ABC Ltd., An Indian company,situated in
Ludhiana.
b) KPC Ltd, a foreign company situated in chennai
but controlled for Dubai.
c) S Ltd.,a foreign company situated in india, but
partly controlled from Hubli and party from
Taiwan.
 solution
A) ABC Ltd., (is a resident)
B) KPC Ltd, (is a Non-resident)
C) S Ltd., (is a Non-resident)
Incidence of tax /scope of total Income
Source of Income Resident Resident Not Non Resident
ordinarily ordinarily
Resident Resident

Indian Income
Income received or Taxable Taxable Taxable
deemed to be received in
India during the P.Y
Income Accruing or arising Taxable Taxable Taxable
deemed to accrue or arise
India during the P.Y

Income Accruing or arising Taxable Taxable Taxable

or deemed to accrue or
arise outside India, but
first receipt is in India
during the P.Y
 Cont….
Source of Income Resident ordinarily Resident Not Non Resident
Resident ordinarily Resident

Indian Income
Income Accruing or Taxable Not Taxable Not Taxable
arising or deemed to
accrue or arise outside
India, but first receipt is
outside India during the
P.Y

Income Accruing or Taxable Taxable Not Taxable

arising outside India from
a Business or Profession
controlled from during
the P.Y

Income Accruing or Taxable Not Taxable Taxable

arising outside India from
any source other than
Business/profession
controlled from India
 Problem -Ex.26
Following amounts of income were earned by
Mr.Ramchand in the PY 2019-20:
i) Salary earned and received in India Rs.25000.
ii) Profit from hotel Business in Japan Rs.50000.
iii) Dividends declared in Japan,received in india
Rs.10000.
Compute his total Income for the AY 2020-21 if he
is an ordinarily Resident.
 Solution
Particulars Rs.
Salary earned and Received in India 25000

Profit from hotel Business in Japan 50000.

Dividends declared in Japan, Received in India 10000.

Total Income (ROR) 85000

 Problem –Ex.28
• Particulars of income of Mr.Subramani who is
resident but not ordinarily resident in india for
the Ay 2020-21 are given below:
a) Income earned in Pakistan but received in
India Rs.5,00,000.
b) Share of profit from a firm in india Rs.1,00,000.
c) Past untaxed foreign income Rs.3,00,000
d) Compute his Gross total Income.
 Solution
Particulars Rs.
Income earned in Pakistan but received in India 5,00,000
Share of profit from a firm in india NIL
Past untaxed foreign income NiL
Total Income (RNOR) 5,00,000
 Problem-Ex.29
Mr.D furnishes the following Particulars:
a) Interest on German Development Bonds (2/5th
received in India) Rs.60,000
b) Income earned from a business in Kampla which is
controlled from Delhi (Rs.15000 received in india
Rs.65000).
c) Profit on sale of building inindia but received in Sri
lanka Rs.14,80,000. find out his total income if he is
not ordinarily resident during the PY 2019-20.
 Solution
Particulars Rs.
Interest on German Development Bonds (2/5 * 60,000) 24000
Income earned from a business in Kampla which is controlled from 65000
Delhi
Profit on sale of building inindia but received in Sri lanka 14,80,000
Total Income (RNOR) 15,69,000
 Problem-Ex.31.
following are the incomes of Mr.X .compute the
Gross total Income if he is a a) ordinarily Resident
b) non-ordinarily Resident c) non-resident.
i) Income from business carried from Hyderabad
Rs.50,000
ii) Income accured in India but received in Dubai
Rs.75,000
iii) Income from agricultural in London Rs.1,00,000
 solution
Source of Income Resident Resident Non Resident
ordinarily Not
Resident ordinarily
Resident
Income from business carried 50000 50000 50000
from Hyderabad
Income accured in India but 75000 75000 75000
received in Dubai
Income from agricultural in 100000 NIL NIL
London
Total Income 2,25,000 1,25,000 1.25,000