{"id":22808,"date":"2023-04-28T12:35:26","date_gmt":"2023-04-28T07:05:26","guid":{"rendered":"https:\/\/gstguntur.com\/?p=22808"},"modified":"2023-04-28T12:35:26","modified_gmt":"2023-04-28T07:05:26","slug":"residence-and-scope-of-total-income-ca-inter-tax-question-bank","status":"publish","type":"post","link":"https:\/\/gstguntur.com\/residence-and-scope-of-total-income-ca-inter-tax-question-bank\/","title":{"rendered":"Residence and Scope of Total Income \u2013 CA Inter Tax Question Bank"},"content":{"rendered":"<p>Residence and Scope of Total Income \u2013 <a href=\"https:\/\/gstguntur.com\/ca-inter-tax-question-bank\/\">CA Inter Tax Question Bank<\/a>\u00a0is designed strictly as per the latest syllabus and exam pattern.<\/p>\n<h2>Residence and Scope of Total Income \u2013 CA Inter Tax Question Bank<\/h2>\n<p>Question 1.<br \/>\nState with reason, any whether the following statements is true or false with regard to the provisions of the Income-tax Act, 1961 for the Assessment year 2021-22:<br \/>\nIncome to a non-resident by way of interest, royalty and fee for technical services deemed to accrue or arise in India is taxable in India irrespective of territorial nexus. (Nov 2008, 2 marks)<br \/>\nAnswer:<br \/>\nTrue: If income accrues or arises in India it is taxable in India for all categories (resident, non-resident, not ordinarily resident) irrespective of territorial nexus.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/gstguntur.com\/wp-content\/uploads\/2021\/10\/GST-Guntur.png\" alt=\"Residence and Scope of Total Income \u2013 CA Inter Tax Question Bank\" width=\"123\" height=\"13\" \/><\/p>\n<p>Question 2.<br \/>\nState with reason, whether the following statements is True or False:<br \/>\nMr. 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. (May 2009, 2 marks)<br \/>\nAnswer:<br \/>\nTrue: 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.<\/p>\n<p>Question 3.<br \/>\nMs. Bindu, a non-resident, residing in New York since 1991, came back to India on 19-02-2019 for permanent settlement in India. Explain the residential status of Ms. Bindu for the Assessment Year 2021 -22. In accordance with the various provision of Indian Income tax Act. (May 2015, 4 marks)<br \/>\nAnswer:<br \/>\nMs. Bindu would be said to be resident in India:<\/p>\n<ul>\n<li>She stays for 182 days or more during previous year, or<\/li>\n<li>365 days or more during 4 P.Y. immediately preceding relevant P.Y. and has been in India for atleast 60 days in the previous year.<\/li>\n<\/ul>\n<p>Since in the P.Y. 2020-21, she is in India for a period of 182 days or more. Hence she is resident in India.<br \/>\nShe will be called ordinarily resident if she is<br \/>\n1. Resident in India in 2 out of 10 P.Y. She is resident in 2019-20 only.<br \/>\n2. Stayed for 730 days or more in 7 P.Y. preceding relevant P.Y .<br \/>\n<img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-22819\" src=\"https:\/\/gstguntur.com\/wp-content\/uploads\/2023\/04\/Residence-and-Scope-of-Total-Income-\u2013-CA-Inter-Tax-Question-Bank-1.png\" alt=\"Residence and Scope of Total Income \u2013 CA Inter Tax Question Bank 1\" width=\"516\" height=\"95\" srcset=\"https:\/\/gstguntur.com\/wp-content\/uploads\/2023\/04\/Residence-and-Scope-of-Total-Income-\u2013-CA-Inter-Tax-Question-Bank-1.png 516w, https:\/\/gstguntur.com\/wp-content\/uploads\/2023\/04\/Residence-and-Scope-of-Total-Income-\u2013-CA-Inter-Tax-Question-Bank-1-300x55.png 300w\" sizes=\"(max-width: 516px) 100vw, 516px\" \/><br \/>\nShe does not satisfies both the conditions, therefore she is resident and not ordinarily resident.<\/p>\n<p>Question 4.<br \/>\nHow is the residential status of a company determined for the purposes of Income-tax Act, 1961, for the assessment year 2021 -22? (May 2016, 4 marks)<br \/>\nAnswer:<br \/>\nRules to determine residential status of companies (Sec. 6(3))<br \/>\nA person being a company shall be said to be resident in India in any previous year if:<\/p>\n<ul>\n<li>It is an Indian company, or<\/li>\n<li>Its place of effective management at any time in that year, is in India<\/li>\n<\/ul>\n<p>Note:<\/p>\n<ul>\n<li>A company cannot be \u201cordinarily\u201d or \u201cnot ordinarily resident\u201d.<\/li>\n<li>Place of effective management to mean the place where key management and commercial decisions that are necessary for the &#8216; conduct of the entity\u2019s business as a whole, are, in substance made.<\/li>\n<\/ul>\n<p><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/gstguntur.com\/wp-content\/uploads\/2021\/10\/GST-Guntur.png\" alt=\"Residence and Scope of Total Income \u2013 CA Inter Tax Question Bank\" width=\"123\" height=\"13\" \/><\/p>\n<p>Question 5.<br \/>\nFrom the following particulars of Income furnished by Mr. Anirudh pertaining to the year ended 31.3.2021, compute the total income for the assessment year 2021 -22,- if he is : (May 2010, 10 marks)<br \/>\n(i) Resident and ordinary resident;<br \/>\n(ii) Resident but not ordinarily resident;<br \/>\n(iii) Non-resident:<\/p>\n<table border=\"2\">\n<tbody>\n<tr>\n<td>Particulars<\/td>\n<td>Amount (\u20b9)<\/td>\n<\/tr>\n<tr>\n<td>(a) Profit on sale of shares in Indian Company received in Germany<\/td>\n<td>15,000<\/td>\n<\/tr>\n<tr>\n<td>(b) Dividend from a Japanese Company received in Japan<\/td>\n<td>10,000<\/td>\n<\/tr>\n<tr>\n<td>(c) Rent from property in London deposited in a bank in London, later on remitted to India through approved banking channels<\/td>\n<td>75,000<\/td>\n<\/tr>\n<tr>\n<td>(d) Dividend from RP Ltd., an Indian Company<\/td>\n<td>6,000<\/td>\n<\/tr>\n<tr>\n<td>(e) Agricultural income from lands in Gujarat<\/td>\n<td>25,000<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>Answer:<br \/>\n<img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-22818\" src=\"https:\/\/gstguntur.com\/wp-content\/uploads\/2023\/04\/Residence-and-Scope-of-Total-Income-\u2013-CA-Inter-Tax-Question-Bank-2.png\" alt=\"Residence and Scope of Total Income \u2013 CA Inter Tax Question Bank 2\" width=\"575\" height=\"428\" srcset=\"https:\/\/gstguntur.com\/wp-content\/uploads\/2023\/04\/Residence-and-Scope-of-Total-Income-\u2013-CA-Inter-Tax-Question-Bank-2.png 575w, https:\/\/gstguntur.com\/wp-content\/uploads\/2023\/04\/Residence-and-Scope-of-Total-Income-\u2013-CA-Inter-Tax-Question-Bank-2-300x223.png 300w\" sizes=\"(max-width: 575px) 100vw, 575px\" \/><br \/>\nNotes:<br \/>\n(i) It has been assumed that the rental income is the Gross Annual Value of the Property. Therefore, deductions @ 30% under section 24, has been provided and the net income so computed is taken into account for determining the total income of a resident and ordinarily resident.<br \/>\n<img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-22817\" src=\"https:\/\/gstguntur.com\/wp-content\/uploads\/2023\/04\/Residence-and-Scope-of-Total-Income-\u2013-CA-Inter-Tax-Question-Bank-3.png\" alt=\"Residence and Scope of Total Income \u2013 CA Inter Tax Question Bank 3\" width=\"394\" height=\"64\" srcset=\"https:\/\/gstguntur.com\/wp-content\/uploads\/2023\/04\/Residence-and-Scope-of-Total-Income-\u2013-CA-Inter-Tax-Question-Bank-3.png 394w, https:\/\/gstguntur.com\/wp-content\/uploads\/2023\/04\/Residence-and-Scope-of-Total-Income-\u2013-CA-Inter-Tax-Question-Bank-3-300x49.png 300w\" sizes=\"(max-width: 394px) 100vw, 394px\" \/><br \/>\n(ii) Agricultural income is exempt under Section 10 (1).<\/p>\n<p>Question 6.<br \/>\nMiss Vivitha paid a sum of 5000 USD to Mr. Kulasekhara, a management consultant practicing in Colombo, specializing in project financing. The payment was made in Colombo. Mr. Kulasekhara is a non-resident. The consultancy related to a project in India with possible Ceylonese collaboration. Is this payment chargeable to tax in India in the hands of Mr. Kulasekhara, since the services were used in India? (May 2011, 4 marks)<br \/>\nAnswer:<br \/>\nA non-resident is chargeable to tax in respect of income received outside India only if such income accrues or arises or is deemed to accrue or arise to him in India.<\/p>\n<ul>\n<li>The income deemed to accrue or arise in India under section 9 comprises, Inter alia, income by way of fees for technical services, which includes any consideration for rendering of any managerial, technical or consultancy services.<\/li>\n<li>Therefore, payment to a management consultant relating to project financing is covered within the scope of \u201cfees for technical services\u201d.<\/li>\n<li>The Explanation below Sec. 9(2) has been substituted to clarify that income by way of, Inter alia, fees for technical services, from services utilized in India 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.<\/li>\n<li>In the instant case, since the services were utilized in India, the payment received by Mr. Kulasekhara, a non-resident, in Colombo is chargeable to tax in his hands in India, as it is deemed to accrue or arise in India.<\/li>\n<\/ul>\n<p><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/gstguntur.com\/wp-content\/uploads\/2021\/10\/GST-Guntur.png\" alt=\"Residence and Scope of Total Income \u2013 CA Inter Tax Question Bank\" width=\"123\" height=\"13\" \/><\/p>\n<p>Question 7.<br \/>\nBrett Lee, an Australian cricket player visits India for 100 days in every financial year. This has been his practice for the past 10 financial years. Find out his residential status for the assessment year 2021-22.<br \/>\n(a) Would your answer change if the above facts relate to Srinath, an Indian citizen who resides in Australia and represents the Australian cricket<br \/>\nteam?<br \/>\n(b) What would be your answer if Srinath had visited India for 120 days instead of 100 days every year, including P.Y.2020-21 ? (Nov 2011, 4 marks)<br \/>\nAnswer:<br \/>\nDetermination of Residential Status of Mr. Brett Lee for the A.Y. 2021-22:<br \/>\nPeriod of stay during previous year 2020-21 = 100 days.<br \/>\nCalculation of period of stay during 4 preceding previous year (100 \u00d7 4 = 400 days)<\/p>\n<table border=\"2\">\n<tbody>\n<tr>\n<td>P.Y.<\/td>\n<td>Days<\/td>\n<\/tr>\n<tr>\n<td>2019-20<\/td>\n<td>100 days<\/td>\n<\/tr>\n<tr>\n<td>2018-19<\/td>\n<td>100 days<\/td>\n<\/tr>\n<tr>\n<td>2017-18<\/td>\n<td>100 days<\/td>\n<\/tr>\n<tr>\n<td>2016-17<\/td>\n<td>100 days<\/td>\n<\/tr>\n<tr>\n<td>Total<\/td>\n<td>400 days<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>Since Mr. Brett Lee has been in India for a period more than 60 days during previous year 2020-21 and for a period of more than 365 days during the 4 immediately preceding previous years. Therefore, since he satisfies one of the basic conditions under section 6(1), he is a resident for the assessment year 2021-22.<br \/>\nComputation of period of stay during 7 preceding previous year<\/p>\n<table border=\"2\">\n<tbody>\n<tr>\n<td>P.Y.<\/td>\n<td>Days<\/td>\n<\/tr>\n<tr>\n<td>2019-20<\/td>\n<td>100 days<\/td>\n<\/tr>\n<tr>\n<td>2018-19<\/td>\n<td>100 days<\/td>\n<\/tr>\n<tr>\n<td>2017-18<\/td>\n<td>100 days<\/td>\n<\/tr>\n<tr>\n<td>2016-17<\/td>\n<td>100 days<\/td>\n<\/tr>\n<tr>\n<td>2015-16<\/td>\n<td>100 days<\/td>\n<\/tr>\n<tr>\n<td>2014-15<\/td>\n<td>100 days<\/td>\n<\/tr>\n<tr>\n<td>2013-14<\/td>\n<td>100 days<\/td>\n<\/tr>\n<tr>\n<td>Total<\/td>\n<td>700 days<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>Since his period of stay in India during the past 7 previous years is less than 730 days, he is a not ordinarily resident during the assessment year 2021-22. (See Note below)<br \/>\nTherefore, Mr. Brett Lee is a resident but not ordinarily resident during the previous year 2020-21 relevant to the assessment year 2021 -22.<\/p>\n<p>Note:<br \/>\nAn individual, not being an Indian citizen, would be not-ordinarily resident person if he satisfies any one of the conditions specified under section 6(6), i.e.,<br \/>\n(i) If such individual has been non-resident in India in any 9 out of the 10 previous years preceding the relevant previous year, or<br \/>\n(ii) If such individual has during the 7 previous years preceding the relevant previous year been in India for a period of 729 days or less.<br \/>\nIn this case, since Mr. Brett Lee satisfies condition (ii), he is a not-ordinarily resident for the A.Y. 2021-22.<br \/>\n(a) If the above facts relate to Mr. Srinath, an Indian citizen, who residing in Australia, comes on a visit to India, he would be treated as non-resident in India, irrespective of his total income (excluding income from foreign sources), since his stay in India in the current financial year is, in any case, less than 120 days.<br \/>\n(b) In this case, if Srinath\u2019s total income (excluding income from foreign sources) exceeds \u20b9 15 lakh, he would be treated as resident but not ordinarily resident in India for P.Y.2020-21, since his stay in India is 120 days in the P.Y.2020-21 and 480 days (i.e., 120 days \u00d7 4 years) in the immediately four preceding previous years.<br \/>\nIf his total income (excluding income from foreign sources) does not exceed \u20b9 15 lakh, he would be treated as non-resident in India for the P.Y.2020-21, since his stay in India is less than 182 days in the P.Y.2020-21.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/gstguntur.com\/wp-content\/uploads\/2021\/10\/GST-Guntur.png\" alt=\"Residence and Scope of Total Income \u2013 CA Inter Tax Question Bank\" width=\"123\" height=\"13\" \/><\/p>\n<p>Question 8.<br \/>\nDevesh and Siddhant are brothers and they earned the following incomes during the financial year 2020-21. Devesh settled in America in the year 1986 and Siddhant settled in Mumbai. Devesh visits India for 20 days every year. Siddhant also visits America every year\/ for a month. Compute their total income for the Assessment year 2021-22 from the following information. (May 2013, 8 marks)<\/p>\n<table border=\"2\">\n<tbody>\n<tr>\n<td>Particulars<\/td>\n<td>Devesh<br \/>\n\u20b9<\/td>\n<td>Siddhant<strong><br \/>\n<\/strong>\u20b9<\/td>\n<\/tr>\n<tr>\n<td>1. Interest on American Development bonds, 50% of interest received in India.<\/td>\n<td>46,000<\/td>\n<td>18,000<\/td>\n<\/tr>\n<tr>\n<td>2. Dividend from a Japanese Company received in America.<\/td>\n<td>10,000<\/td>\n<td>15,000<\/td>\n<\/tr>\n<tr>\n<td>3. Profit on sale of shares of an Indian company received in India.<\/td>\n<td>45,000<\/td>\n<td>75,000<\/td>\n<\/tr>\n<tr>\n<td>4. Profit from a business in Mumbai, but managed directly from America.<\/td>\n<td>10,000<\/td>\n<td>&#8211;<\/td>\n<\/tr>\n<tr>\n<td>5. Income from a business in Mumbai.<\/td>\n<td>32,000<\/td>\n<td>28,000<\/td>\n<\/tr>\n<tr>\n<td>6. Fees for technical services rendered in America and received in America. The services were, however, utilized in India.<\/td>\n<td>1,50,000<\/td>\n<td>&#8211;<\/td>\n<\/tr>\n<tr>\n<td>7. Interest on savings bank deposit in State Bank of India, Mumbai.<\/td>\n<td>4,500<\/td>\n<td>12,000<\/td>\n<\/tr>\n<tr>\n<td>8. Rent received in respect of house property at Mumbai.<\/td>\n<td>96,000<\/td>\n<td>55,000<\/td>\n<\/tr>\n<tr>\n<td>9. Life Insurance Premium paid<\/td>\n<td>&#8211;<\/td>\n<td>25,000<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>Answer:<br \/>\n<img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-22816\" src=\"https:\/\/gstguntur.com\/wp-content\/uploads\/2023\/04\/Residence-and-Scope-of-Total-Income-\u2013-CA-Inter-Tax-Question-Bank-4.png\" alt=\"Residence and Scope of Total Income \u2013 CA Inter Tax Question Bank 4\" width=\"568\" height=\"617\" srcset=\"https:\/\/gstguntur.com\/wp-content\/uploads\/2023\/04\/Residence-and-Scope-of-Total-Income-\u2013-CA-Inter-Tax-Question-Bank-4.png 568w, https:\/\/gstguntur.com\/wp-content\/uploads\/2023\/04\/Residence-and-Scope-of-Total-Income-\u2013-CA-Inter-Tax-Question-Bank-4-276x300.png 276w\" sizes=\"(max-width: 568px) 100vw, 568px\" \/><\/p>\n<p>Working Notes:<br \/>\n1. Devesh is a non-resident since he has been living in America since 1986 and Siddhant, who is settled in Mumbai, is a reside<\/p>\n<p>2. In case of a resident, his global income is taxable as per Section 5(1). However, as per Section 5(2), in case of a non-resident, the following income are chargeable to tax:<\/p>\n<ul>\n<li>Income received or deemed to be received in India during the previous year; plus<\/li>\n<li>Income accruing or arising or deemed to accrue or arise in India during the previous year.<br \/>\nThose income referred to in SI. No. 3, 4, 5 and 7 are taxable in the hands of both Devesh and Siddhant, since they accrue or arise in India. Interest on American Development Bonds would be fully taxable in the hands of Siddhant, whereas only 50% which is received in India is taxable in the hands of Devesh.<\/li>\n<\/ul>\n<p>3. Income by way of fees for technical services rendered outside India and which is received outside India, would be deemed to accrue and arise in India in the case of a nonresident, if the services are utilised in India. Such income would, accordingly be included in the total income of Devesh.<\/p>\n<p>4. The dividend received from Japanese company in America by Devesh is not taxable since it accrues and is received outside India. However, dividend received by Siddhant is taxable, since he is a resident. Exemption under section 10(34) would not be available in respect of dividend received from a foreign company.<\/p>\n<p>5. Income from house property<\/p>\n<table border=\"2\">\n<tbody>\n<tr>\n<td>Particular<\/td>\n<td>Devesh (\u20b9)<\/td>\n<td>Siddhant (\u20b9)<\/td>\n<\/tr>\n<tr>\n<td>Rent received<\/td>\n<td>96,000<\/td>\n<td>55,000<\/td>\n<\/tr>\n<tr>\n<td>Less: Deduction under section. 24@ 30%<\/td>\n<td>28,800<\/td>\n<td>16,500<\/td>\n<\/tr>\n<tr>\n<td>Net income from house property<\/td>\n<td>67,200<\/td>\n<td>38,500<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>The net income from house property in India would be taxable, in the hands of both Devesh and Siddhant, since the accrual and receipt of the same are in India.<\/p>\n<p>6. As per the question in case of an individual, interest upto ? 10,000 from savings account with, inter alia, a bank is allowable as deduction under section 80TTA.<br \/>\nNote: The solution has been worked out on the basis of the following assumptions:<\/p>\n<ul>\n<li>The profit made on sale of shares of an Indian company is not exempt under section 10(38).<\/li>\n<li>Life insurance premium which is paid is fully allowable as deduction under section 80C on the assumption that the same is within the limit of 10% or 20% of actual capital sum assured, as the case may be (20%, in case the policy is issued before 1.4.2012 and 10% if the policy is issued on or after 1.4.2012).<\/li>\n<li>The savings bank deposit is not a time deposit with a bank.<\/li>\n<li>Rent received has been taken as the annual value in the absence of other information relating to municipal value, fair rent and standard rent.<\/li>\n<\/ul>\n<p><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/gstguntur.com\/wp-content\/uploads\/2021\/10\/GST-Guntur.png\" alt=\"Residence and Scope of Total Income \u2013 CA Inter Tax Question Bank\" width=\"123\" height=\"13\" \/><\/p>\n<p>Question 9.<br \/>\nMrs. Geetha and Mrs. Leena are sisters and they earned the following income during the Financial Year 2020-21. Mrs. Geetha is settled in Malaysia since 1985 and visits India for a month every year. Mrs. Leena is settled in Indore since her marriage in 1993. Compute the total income of Mrs. Geetha and Mrs. Leena for the assessment year 2021 -22: (Nov 2022, 8 marks)<\/p>\n<table border=\"2\">\n<tbody>\n<tr>\n<td>Particulars<\/td>\n<td>Mrs. Geetha \u20b9<\/td>\n<td>Mrs. Leena \u20b9<\/td>\n<\/tr>\n<tr>\n<td>(i) Income from Profession in Malaysia, (set up in lndia)received there<\/td>\n<td>15,000<\/td>\n<td>&#8211;<\/td>\n<\/tr>\n<tr>\n<td>(ii) Profit from business in Delhi, but managed directly from Malaysia<\/td>\n<td>40,000<\/td>\n<td>&#8211;<\/td>\n<\/tr>\n<tr>\n<td>(iii) Rent (computed) from property in Malaysia deposited in a Bank at Malaysia, later on remitted to India through approved banking channels.<\/td>\n<td>1,20,000<\/td>\n<td>&#8211;<\/td>\n<\/tr>\n<tr>\n<td>(iv) Dividend from PQR Ltd. an Indian Company<\/td>\n<td>5,000<\/td>\n<td>9,000<\/td>\n<\/tr>\n<tr>\n<td>(v) Dividend from a Malaysian company received in Malaysia<\/td>\n<td>15,000<\/td>\n<td>8,000<\/td>\n<\/tr>\n<tr>\n<td>(vi) Cash gift received from a friend on Mrs. Leena\u2019s 50<sup>th<\/sup> birthday<\/td>\n<td>_<\/td>\n<td>51,000<\/td>\n<\/tr>\n<tr>\n<td>(vii) Agricultural income from land in Maharashtra<\/td>\n<td>7,500<\/td>\n<td>4,000<\/td>\n<\/tr>\n<tr>\n<td>(viii) Past foreign untaxed income brought to India<\/td>\n<td>5,000<\/td>\n<td>&#8211;<\/td>\n<\/tr>\n<tr>\n<td>(ix) Fees for technical services rendered in India received in Malaysia<\/td>\n<td>25,000<\/td>\n<td>&#8211;<\/td>\n<\/tr>\n<tr>\n<td>(x) Income from a business in Pune (Mrs. Geetha receives 50% of the income in India)<\/td>\n<td>12,000<\/td>\n<td>15,000<\/td>\n<\/tr>\n<tr>\n<td>(xi) Interest on debentures in an Indian company (Mrs. Geetha received the same in Malaysia)<\/td>\n<td>18,500<\/td>\n<td>14,000<\/td>\n<\/tr>\n<tr>\n<td>(xii) Short-term capital gain on sale of shares of an Indian\u2018company<\/td>\n<td>15,000<\/td>\n<td>25,500<\/td>\n<\/tr>\n<tr>\n<td>(xiii) Interest on savings account with SBI<\/td>\n<td>12,000<\/td>\n<td>8,000<\/td>\n<\/tr>\n<tr>\n<td>(xiv) Life insurance premium paid to LIC<\/td>\n<td>&#8211;<\/td>\n<td>30,000<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>Answer:<br \/>\nThe residential status of Mrs. Geetha and Mrs. Leena has to be determined on the basis of the number of days of their stay in India. Since Mrs. Geetha is settled in Malaysia since 1985, she would be a non-resident for A.Y. 2021 &#8211; 22. Her visit to India for a month every year would not change her residential status. However, Mrs. Leena would be resident and ordinarily resident for A.Y. 2021-22, since she is settled in India permanently since 1993.<br \/>\nBased on their residential status, the total income of Mrs, Geetha and Mrs. Leena would be determined as follows:<br \/>\n<img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-22815\" src=\"https:\/\/gstguntur.com\/wp-content\/uploads\/2023\/04\/Residence-and-Scope-of-Total-Income-\u2013-CA-Inter-Tax-Question-Bank-5.png\" alt=\"Residence and Scope of Total Income \u2013 CA Inter Tax Question Bank 5\" width=\"609\" height=\"529\" srcset=\"https:\/\/gstguntur.com\/wp-content\/uploads\/2023\/04\/Residence-and-Scope-of-Total-Income-\u2013-CA-Inter-Tax-Question-Bank-5.png 609w, https:\/\/gstguntur.com\/wp-content\/uploads\/2023\/04\/Residence-and-Scope-of-Total-Income-\u2013-CA-Inter-Tax-Question-Bank-5-300x261.png 300w\" sizes=\"(max-width: 609px) 100vw, 609px\" \/><br \/>\n<img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-22814\" src=\"https:\/\/gstguntur.com\/wp-content\/uploads\/2023\/04\/Residence-and-Scope-of-Total-Income-\u2013-CA-Inter-Tax-Question-Bank-6.png\" alt=\"Residence and Scope of Total Income \u2013 CA Inter Tax Question Bank 6\" width=\"572\" height=\"692\" srcset=\"https:\/\/gstguntur.com\/wp-content\/uploads\/2023\/04\/Residence-and-Scope-of-Total-Income-\u2013-CA-Inter-Tax-Question-Bank-6.png 572w, https:\/\/gstguntur.com\/wp-content\/uploads\/2023\/04\/Residence-and-Scope-of-Total-Income-\u2013-CA-Inter-Tax-Question-Bank-6-248x300.png 248w\" sizes=\"(max-width: 572px) 100vw, 572px\" \/><br \/>\nNotes:<br \/>\n1. As per Section 5(1), global income is taxable, in case of a resident. However, as per Section 5(2), only the following incomes are chargeable to tax, in case of a non-resident:<\/p>\n<ul>\n<li>Income received or deemed to be received in India; and<\/li>\n<li>Income accruing or arising or deemed to accrue or arise in India. Therefore, income from profession in Malaysia, rent from property in Malaysia and dividend from Malaysian company received in Malaysia by Mrs. Geetha, a non-resident, would not be taxable in India, since both the accrual and receipt are outside India.<br \/>\nHowever, profit from business in Delhi would be taxable in India in the hands of Mrs. Geetha, even though it is managed directly from Malaysia. Further, by virtue of Section 9(1)(vii), fees for technical services rendered in India would also be taxable in the hands of Mrs. Geetha, since it is deemed to accrue or arise in India.<\/li>\n<\/ul>\n<p>2. The income referred to in S. No. 10, 11, 12 and 13 are taxable in the hands of both Mrs. Geetha and Mrs. Leena due to their accrual\/deemed accrual in India, even though a part of income from business in Pune and the entire interest on debentures in Indian company is received by Mrs. Geetha outside India.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/gstguntur.com\/wp-content\/uploads\/2021\/10\/GST-Guntur.png\" alt=\"Residence and Scope of Total Income \u2013 CA Inter Tax Question Bank\" width=\"123\" height=\"13\" \/><\/p>\n<p>Question 10.<br \/>\nExplain with reasons whether the following transactions attract income-tax in India in the hands of recipients?<br \/>\n(a) Salary paid to Mr. David, a citizen of India \u20b9 15,00,000 by the Central Government for the services rendered in Canada.<br \/>\n(b) Legal charges of \u20b9 7,50,000 paid to Mr. Johnson, a lawyer of London, who visited India to represent a case at the Supreme Court.<br \/>\n(c) Royalty paid to Rajeev, a non-resident by Mr. Mukesh, a resident for a business carried on in Sri Lanka.<br \/>\n(d) Interest received of \u20b9 1,00,000, on money borrowed from France, by Ms.Dyana, a non-resident for the business at Bangalore. (May 2015, 4 marks)<br \/>\nAnswer:<br \/>\n(a) Taxable in India, as it is deemed to accrue in India.<br \/>\n(b) Taxable in India, as it is accrued in India.<br \/>\n(c) Not Taxable &#8211; Royalty Paid by a resident to a non resident in respect of business carried on outside India would not be taxable in the hands of the non-residents.<br \/>\n(d) Taxable in India, as income is received in India.<\/p>\n<p>Question 11.<br \/>\nMr. Soham, an Indian Citizen left India on 20-04-2019 for the first time to setup a software firm in Singapore. On 10-04-2020, he entered into an agreement with LK Limited, an Indian Company for the transfer of technical documents and designs to setup an automobile factory in Faridabad. He reached India along with his team to render the requisite services on 15-05-2020 and was able to complete his assignment on 20-08- 2019. He left for Singapore on 21-08-2020. He charged \u20b9 50.Lakhs for his services from LK Limited.<br \/>\nDetermine the residential status of Mr. Soham for the Assessment Year 2021-2022 and explain as to the taxability of the fees charged from LK Limited as per the Income Tax Act, 1961. (Nov 2015, 8 marks)<br \/>\nAnswer:<br \/>\nDetermination of residential status of Mr. Soham<br \/>\nAs per Section 6(1), an individual is said to be resident in India in any previous year, if he satisfies the conditions:<\/p>\n<ul>\n<li>He has been in India during the previous year for a total period of 182 days or more, or<\/li>\n<li>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.<\/li>\n<\/ul>\n<p>In the case of an Indian citizen leaving India for the purposes of employment outside India during the previous year or an Indian citizen, who being outside India, comes on a visit to India in any previous year, the period of stay during the previous year in condition (ii) above, to qualify as a resident, would be 182 days instead of 60 days.<\/p>\n<p>In this case, Mr. Soham is an Indian citizen who left India to set up a software firm in Singapore on 20.04.2019. Therefore, he is an Indian citizen living in Singapore, who comes on a visit to India during the P.Y.2020-21. His stay in India during the period of his visit is only 99 days (i.e., 17 + 30 + 31 + 21 days). Since, his stay in India during the previous year 2020-21 is only 99 days, he does not satisfy the minimum criterion of 182 days stay in India for being a resident. Hence, his residential status for A.Y.2021-22 is Non- Resident.<\/p>\n<p>Taxability of income:<br \/>\nAs per Section 5(2), in case of a non-resident, only.income which accrues or arises or which is deemed to accrue or arise to him in India or which is received or deemed to be received in India in the relevant previous year is taxable in India.<br \/>\nIn this case, Mr. Soham, a non-resident, charges fees from LK Ltd., an Indian company, for transfer of technical documents and designs to set up an automobile factory in Faridabad. He renders the requisite services in India for which he stays in India for 99 days during the P.Y.2020-21.<br \/>\nExplanation 2 to Section 9(1 )(vi) defines \u201croyalty\u201d to mean consideration for transfer of all or any rights in respect of, inter alia, a design and also for the rendering of services in connection with such activity. As per Explanation 4 to Section 9(1 )(vi), transfer of rights in the above definition includes transfer of right for use or right to use a computer software also. Therefore, the fees received by Mr. Soham for transfer of technical documents and designs and rendering of requisite services in relation thereto would fall within the meaning of \u201croyalty\u201d.<\/p>\n<p>As per Section 9(1 )(vi), income by way of royalty payable by a person who is a resident (in this case, LK Limited, an Indian company) would be deemed to accrue or arise in India in the hands of the non-resident (Mr. Soham, in this case), except where such royalty is payable in respect of any right or property or information used or for services utilized for the purpose of a business carried on by such person outside India or for the purposes of making or earning income from any source outside India.<br \/>\nIn this case, since the royalty is payable by an Indian company to Mr. Soham, a non-resident, in respect of services utilized for a business in India (namely, for setting up an automobile factory in Faridabad), the same is deemed to accrue or arise in India and is hence, taxable in India in the hands of Mr. Soham, a non-resident for the A.Y. 2021-22.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/gstguntur.com\/wp-content\/uploads\/2021\/10\/GST-Guntur.png\" alt=\"Residence and Scope of Total Income \u2013 CA Inter Tax Question Bank\" width=\"123\" height=\"13\" \/><\/p>\n<p>Question 12.<br \/>\nMr. Rajnesh, a citizen of India, serving in the Ministry of Finance in India and transferred to High Commission of Australia on 15th March 2020. He did not come to India during the financial year 2020-21. His income during the financial year 2020-21 is given here under:<\/p>\n<table border=\"2\">\n<tbody>\n<tr>\n<td>Particulars<\/td>\n<td>\u20b9<\/td>\n<\/tr>\n<tr>\n<td>Salary from Govt, of India<\/td>\n<td>7,20,000<\/td>\n<\/tr>\n<tr>\n<td>Foreign Allowances from Govt. of India<\/td>\n<td>6,00,000<\/td>\n<\/tr>\n<tr>\n<td>Rent from a house situated at London, received in London<\/td>\n<td>3,60,000<\/td>\n<\/tr>\n<tr>\n<td>Interest accrued on National Saving Certificate during the year 2020-21<\/td>\n<td>45,000<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>Compute The Gross Total Income of Mr. Rajnesh for the Assessment year . 2021-22. (Nov 2016, 4 marks)<br \/>\nAnswer:<br \/>\nAs per Section 6(1), Mr. Rajnesh is a non-resident for the A.Y. 2021-22, since he was not present in India at any time during the previous year 2020- 21.<br \/>\nAs per Section 5(2), a non-resident is chargeable to tax in India only in respect of following incomes:<\/p>\n<ul>\n<li>Income received or deemed to be received in India; and<\/li>\n<li>Income accruing or arising or income deemed to accrue or arise in India.<\/li>\n<\/ul>\n<p>Computation of Gross Total Income of Mr. Rajnesh for A.Y. 2021-22<br \/>\n<img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-22813\" src=\"https:\/\/gstguntur.com\/wp-content\/uploads\/2023\/04\/Residence-and-Scope-of-Total-Income-\u2013-CA-Inter-Tax-Question-Bank-7.png\" alt=\"Residence and Scope of Total Income \u2013 CA Inter Tax Question Bank 7\" width=\"569\" height=\"572\" srcset=\"https:\/\/gstguntur.com\/wp-content\/uploads\/2023\/04\/Residence-and-Scope-of-Total-Income-\u2013-CA-Inter-Tax-Question-Bank-7.png 569w, https:\/\/gstguntur.com\/wp-content\/uploads\/2023\/04\/Residence-and-Scope-of-Total-Income-\u2013-CA-Inter-Tax-Question-Bank-7-298x300.png 298w, https:\/\/gstguntur.com\/wp-content\/uploads\/2023\/04\/Residence-and-Scope-of-Total-Income-\u2013-CA-Inter-Tax-Question-Bank-7-150x150.png 150w\" sizes=\"(max-width: 569px) 100vw, 569px\" \/><\/p>\n<p>Question 13.<br \/>\nState with reason whether the following receipt is taxable or not under the provision of Income-tax Act, 1961?<br \/>\n(2) Mr. Federer, a non-resident residing in Sweden, has received rent from Mr. Nadal, also a non-resident residing in France in respect of a property taken on lease at Mumbai. Since this income is received outside India from a non-resident, Federer claims that his income is not chargeable to Tax in India. (Nov 2016, 2 marks)<br \/>\nAnswer:<br \/>\nTaxability of receipt under the provision of the Income-tax Act, 1961<\/p>\n<table border=\"2\">\n<tbody>\n<tr>\n<td>Taxable\/ Not Taxable<\/td>\n<td>Reason<\/td>\n<\/tr>\n<tr>\n<td>Taxable<\/td>\n<td>As per Section 9(1)(i), all income accruing or arising,<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>&#8216;It is assumed that Mr. Rajnesh follows mercantile system of accounting. Otherwise, it would be taxable only in the year of receipt, in which case his total income for A.Y. 2021-22 would be \u20b9 7,20,000.<\/p>\n<p>whether directly or indirectly, through or from any property in India is deemed to accrue or arise in India and hence, chargeable to tax even in the case of a non-resident.<br \/>\nIn this case, since the property is situated in Mumbai, India, income from the property is deemed to accrue or arise in India in the hands of Mr. Federer, even though the same is received outside India and both the recipient and the payer are non-residents residing outside India.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/gstguntur.com\/wp-content\/uploads\/2021\/10\/GST-Guntur.png\" alt=\"Residence and Scope of Total Income \u2013 CA Inter Tax Question Bank\" width=\"123\" height=\"13\" \/><\/p>\n<p>Question 14.<br \/>\nDuring the last four years preceding the financial year 2020-21, Mr. Damodhar, a citizen of India, was present in India for 430 days. During the last seven previous years preceding the previous year 2020-21, he was present in India for 830 days.<br \/>\nMr. Damodhar is a member of crew of a Dubai bound Indian ship, carrying passengers in the international waters, which left Kochi port in Kerala, on 12th August, 2020.<br \/>\nFollowing details are made available to you for the previous year 2020-21:<\/p>\n<table border=\"2\">\n<tbody>\n<tr>\n<td>Particulars<\/td>\n<td>Date<\/td>\n<\/tr>\n<tr>\n<td>Date entered into the Continuous Discharge Certificate in respect of joining the ship by Mr. Damodhar<\/td>\n<td>12<sup>th<\/sup> August, 2020<\/td>\n<\/tr>\n<tr>\n<td>Date entered into the Continuous Discharge Certificate in respect of signing off the ship by Mr. Damodhar<\/td>\n<td>21<sup>st<\/sup> January, 2021<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>In May, 2020 he had gone out of India to Singapore and Malaysia on a private tour for a continuous period of 29 days.<br \/>\nYou are required to determine the residential status of Mr. Damodhar for the previous year 2020-21. (May 2017, 4 marks)<br \/>\nAnswer:<br \/>\nMr. Damodhar leaves India during the previous year as member of crew of an Indian Ship.<br \/>\nHe shall be resident only if he stayed for more than 182 days during PY.<br \/>\nStay in India in PY 2020-21.<\/p>\n<table border=\"2\">\n<tbody>\n<tr>\n<td>April<\/td>\n<td>30<\/td>\n<\/tr>\n<tr>\n<td>May<\/td>\n<td>2<\/td>\n<\/tr>\n<tr>\n<td>June<\/td>\n<td>30<\/td>\n<\/tr>\n<tr>\n<td>July<\/td>\n<td>31<\/td>\n<\/tr>\n<tr>\n<td>August<\/td>\n<td>11<\/td>\n<\/tr>\n<tr>\n<td>January<\/td>\n<td>10<\/td>\n<\/tr>\n<tr>\n<td>February<\/td>\n<td>28<\/td>\n<\/tr>\n<tr>\n<td>March<\/td>\n<td>31<\/td>\n<\/tr>\n<tr>\n<td><\/td>\n<td>173<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>Mr. Damodhar is Non-resident in India, since he is in India for a period of 173 days only.<\/p>\n<p>Question 15.<br \/>\n(i) A Korean Company Damjung Ltd. entered in to the following transactions during the financial year 2020-21:<br \/>\n(a) Received \u20b9 20 lakhs from a non-resident for use of patent for a business in India.<br \/>\n(b) Received \u20b9 15 lakhs from a non-resident Indian for use of know-how for a business in Sri Lanka and this amount was received in Japan. [Assume that the above amount is converted\/stated in Indian Rupees],<br \/>\n(c) Received \u20b9 7 lakhs from RR Co. Ltd., an Indian company for providing technical know-how in India.<br \/>\n(d) Received \u20b9 5 lakhs from R &amp; Co. Mumbai for conducting the feasibility study for a new project in Nepal and the payment was made in Nepal.<br \/>\nExplain briefly, whether the above receipts are chargeable to tax in India. (May 2017, 4 marks)<br \/>\nAnswer:<br \/>\n(a) \u20b9 20 lakhs for use of patent in India &#8211; Taxable in India.<br \/>\n(b) \u20b9 15 lakhs for know-how used in Sri Lanka, money received in Japan &#8211; Not taxable in India.<br \/>\n(c) \u20b9 7 lakhs for know-how in India &#8211; Taxable in India.<br \/>\n(d) \u20b9 5 lakhs from R &amp; Co. Mumbai &#8211; Not Taxable in India.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/gstguntur.com\/wp-content\/uploads\/2021\/10\/GST-Guntur.png\" alt=\"Residence and Scope of Total Income \u2013 CA Inter Tax Question Bank\" width=\"123\" height=\"13\" \/><\/p>\n<p>Question 16.<br \/>\nDAISY Ltd., a foreign company, incorporated in USA and engaged in the manufacturing and distribution of diamonds, set up a branch office in India in June 2020. The branch office was required to purchase uncut and unassorted diamonds from the dealers of Mumbai and export them to USA. During the Previous Year 2020-21, profit from such export , amounted to \u20b9 75 lakhs.<br \/>\nOut of 20 shareholders of DAISY Ltd., 12 shareholders are non-resident in India. All the major decisions were taken through Board Meetings held at USA.<br \/>\n(i) Determine the residential status of DAISY Ltd. for the Assessment Year 2021-22.<br \/>\n(ii) Discuss the tax treatment of profit from export business. (Nov 2017, 5 marks)<br \/>\nAnswer:<br \/>\n(i) As per Section 6(3), a foreign company would be resident in India in the P.Y.2020-21, if its place of effective management (POEM), in that year, is in India.<br \/>\n\u201cPlace of Effective Management\u201d means the place where key management and commercial decisions that are necessary for the conduct of business of an entity as a whole are, in substance, made. In this case, since all major decisions were taken through Board Meetings held at the USA, the place of effective management of Daisy Ltd., a foreign company incorporated in the USA, is outside India. Hence, Daisy Ltd. is a non-residentfortheP.Y.2030-21 (A.Y.2021-22)<\/p>\n<p>(ii) As per Section 5(2), in case of a non-resident, income which, inter alia, is deemed to accrue or arise to him in India is taxable in India.<br \/>\nAs per Explanation 1 (b) to Section 9(1 )(i), in case of a non-resident, no income shall be deemed to accrue or arise in India to him through or from operations which are confined to the purchase of goods in India for the purpose of export.<br \/>\nAccordingly, profit of \u20b9 75 lakhs from export of uncut and unassorted diamonds purchased from dealers of Mumbai by the branch office of Daisy Ltd. in India would not be deemed to accrue or arise in India in the hands of Daisy Ltd, being a non- resident. Hence, the same would not be taxable in India in the hands of Daisy Ltd.<\/p>\n<p>Question 17.<br \/>\nCompote the Gross Total Income in the hands of an individual, if he is<br \/>\n(a) a resident and ordinary resident; and<br \/>\n(b) a non-resident for the A.Y. 2021 -22. (May 2018, 10 marks)<\/p>\n<table border=\"2\">\n<tbody>\n<tr>\n<td>Particulars<\/td>\n<td>Amount<br \/>\n(\u20b9)<\/td>\n<\/tr>\n<tr>\n<td>Interest from German Derivatives Bonds (1\/3 received in India)<\/td>\n<td>21,000<\/td>\n<\/tr>\n<tr>\n<td>Income from agriculture land situated in Malaysia, remitted to India<\/td>\n<td>51,000<\/td>\n<\/tr>\n<tr>\n<td>Income earned from business in Dubai, controlled from India (\u20b9 20,000 received in India)<\/td>\n<td>75,000<\/td>\n<\/tr>\n<tr>\n<td>Profit from business in Mumbai, controlled from Australia<\/td>\n<td>1,75,000<\/td>\n<\/tr>\n<tr>\n<td>Interest received from Mr. Ashok (NRI) on loan provided to him for business in India<\/td>\n<td>35,000<\/td>\n<\/tr>\n<tr>\n<td>Dividend from Brown Ltd., an Indian Co.<\/td>\n<td>30,000<\/td>\n<\/tr>\n<tr>\n<td>Profit from business in Canada controlled from Mumbai (60% of profits deposited in a bank in Canada and 40% remitted to India)<\/td>\n<td>60,000<\/td>\n<\/tr>\n<tr>\n<td>Amount received from an NRI for the use of know-how for his business in Singapore<\/td>\n<td>8,00,000<\/td>\n<\/tr>\n<tr>\n<td>Dividend received from foreign company in India<\/td>\n<td>25,000<\/td>\n<\/tr>\n<tr>\n<td>Past years untaxed foreign income brought to India<\/td>\n<td>50,000<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>Answer:<br \/>\nComputation of Total Income for the Assessment Year 2021-22<\/p>\n<table border=\"2\">\n<tbody>\n<tr>\n<td>Particulars<\/td>\n<td>Case 1<\/td>\n<td>Case 2<\/td>\n<\/tr>\n<tr>\n<td><\/td>\n<td>ROR<\/td>\n<td>NR<\/td>\n<\/tr>\n<tr>\n<td>1. Interest from german derivatives bonds (1 \/3<sup>rd <\/sup>received in India)<\/td>\n<td>21,000<\/td>\n<td>7,000<\/td>\n<\/tr>\n<tr>\n<td>2. Income from agriculture land situated in Malaysia, remitted to India<\/td>\n<td>51,000<\/td>\n<td>&#8211;<\/td>\n<\/tr>\n<tr>\n<td>3. Income earned from business in Dubai, controlled in India (\u20b9 20,000 received in India)<\/td>\n<td>75,000<\/td>\n<td>20,000<\/td>\n<\/tr>\n<tr>\n<td>4. Profit from business in Mumbai, controlled from Australia<\/td>\n<td>1,75,000<\/td>\n<td>1,75,000<\/td>\n<\/tr>\n<tr>\n<td>5. Interest received from Mr. Ashok (NRI) on loan provided to him for business in India<\/td>\n<td>35,000<\/td>\n<td>35,000<\/td>\n<\/tr>\n<tr>\n<td>6. Dividend from Brown Ltd. an Indian co.<\/td>\n<td>30,000<\/td>\n<td>30,000<\/td>\n<\/tr>\n<tr>\n<td>7. Profit from business in Canada controlled from Mumbai (Assuming received in Canada and remitted to India)<\/td>\n<td>60,000<\/td>\n<td>&#8211;<\/td>\n<\/tr>\n<tr>\n<td>8. Amount received from an NRI for the use of know-how for his business in Singapore<\/td>\n<td>8,00,000<\/td>\n<td>&#8211;<\/td>\n<\/tr>\n<tr>\n<td>9. Dividend received from foreign co. in India<\/td>\n<td>25,000<\/td>\n<td>25,000<\/td>\n<\/tr>\n<tr>\n<td>10. Past years untaxed foreign income brought to India<\/td>\n<td>&#8211;<\/td>\n<td>&#8211;<\/td>\n<\/tr>\n<tr>\n<td>Gross Total Income<\/td>\n<td>12,72,000<\/td>\n<td>2,92,000<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>Note: In case of a resident and ordinarily resident, global income is taxable as per Section 5(1). However, in case of a non-resident, only the following incomes are chargeable to tax as per Section 5(2):<br \/>\n(i) Income received or deemed to be received in India; and<br \/>\n(ii) Income accruing or arising or deemed to accrue or arise in India. Therefore, income from German derivative bonds, income from agriculture land in Malaysia, income earned from business in Dubai and profit from business in Canada would be fully taxable in the hands of the resident and ordinarily resident, even though such income accrues or arises outside India, since global income is taxable in case of a resident and ordinarily resident. However, in case of a non-resident, such income would be taxable only to the extent it is received in India. Subsequent remittance to India, would however, not attract taxability of such income in India in the hands of the non-resident.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/gstguntur.com\/wp-content\/uploads\/2021\/10\/GST-Guntur.png\" alt=\"Residence and Scope of Total Income \u2013 CA Inter Tax Question Bank\" width=\"123\" height=\"13\" \/><\/p>\n<p>Question 18.<br \/>\nFollowing incomes are derived by Mr. Krishna Kumar during the year ended 31 -3-2021 :<br \/>\nPension received from the US Government 3,20,000<br \/>\nAgricultural income from lands in Malaysia 2,70,000<br \/>\nRent received from let out property in Colombo, Sri Lanka 4,20,000<br \/>\nDiscuss the taxability of the above items where the assessee is (i) Resident, (ii) Non-resident. (Nov 2018, 6 marks)<br \/>\nAnswer:<br \/>\nTaxability of items in the hands of Mr. Krishna Kumar<br \/>\n<img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-22812\" src=\"https:\/\/gstguntur.com\/wp-content\/uploads\/2023\/04\/Residence-and-Scope-of-Total-Income-\u2013-CA-Inter-Tax-Question-Bank-8.png\" alt=\"Residence and Scope of Total Income \u2013 CA Inter Tax Question Bank 8\" width=\"573\" height=\"616\" srcset=\"https:\/\/gstguntur.com\/wp-content\/uploads\/2023\/04\/Residence-and-Scope-of-Total-Income-\u2013-CA-Inter-Tax-Question-Bank-8.png 573w, https:\/\/gstguntur.com\/wp-content\/uploads\/2023\/04\/Residence-and-Scope-of-Total-Income-\u2013-CA-Inter-Tax-Question-Bank-8-279x300.png 279w\" sizes=\"(max-width: 573px) 100vw, 573px\" \/><\/p>\n<p>Question 19.<br \/>\n2019 &#8211; May [2] (a) The following are the incomes of Shri Subhash Chandra, a citizen of India for the previous year 2020-21:<br \/>\n(i) Income from business in India \u20b9 2,00,000. The business is controlled from London and \u20b9 60,000 were remitted to London.<br \/>\n(ii) Profits from business earned in Japan \u20b9 70,000 of which \u20b9 20,000 were received in India. This business is controlled from India.<br \/>\n(iii) Untaxed income of \u20b9 1,30,000 for the year 2018-19 of a business in England which was brought in India on 3rd March, 2021.<br \/>\n(iv) Royalty of \u20b9 4,00,000 received from Shri Ramesh, a resident for technical service provided to run a business outside India.<br \/>\n(v) Agricultural income of \u20b9 90,000 in Bhutan.<br \/>\n(vi) Income of \u20b9 73,000 from house property in Dubai, which was deposited in bank at Dubai.<br \/>\nCompute Gross total income of Shri Shubhash Chandra for the A.Y. 2021- 22, if he is-<br \/>\n1. A Resident and Ordinary-Resident, and<br \/>\n2. A Resident and Not Ordinarily Resident (7 marks)<br \/>\nAnswer:<br \/>\nComputation of Gross Total Income of Shri Subhash Chandra for the A.Y. 2021 &#8211; 22<\/p>\n<table border=\"2\">\n<tbody>\n<tr>\n<td>Particulars<\/td>\n<td>Resident and Ordinarily Resident [ROR] (\u20b9)<\/td>\n<td>Resident but Not Ordinarily Resident [RNOR] (\u20b9)<\/td>\n<\/tr>\n<tr>\n<td>(i) Income from business in India, controlled from London<\/p>\n<p>[Taxable both in the hands ROR and RNOR, since income accrues\/arises from business in India, irrespective of the fact that business is controlled from London<\/td>\n<td>2,00,000<\/td>\n<td>2,00,000<\/td>\n<\/tr>\n<tr>\n<td>(ii) Profits earned from business in Japan<\/p>\n<p>[Profits from business in Japan is taxable in the hands of ROR, since global income is taxable in the hands of ROR. Moreover, entire profit of \u20b9 70,000 would be taxable in the hands of RNOR, even if oniy \u20b9 20,000 is received in India, since the business in Japan is controlled from India]<\/td>\n<td>70,000<\/td>\n<td>70,000<\/td>\n<\/tr>\n<tr>\n<td>(iii) Untaxed income for the year 2018-19 of a business in England which was brought in India during the P.Y. 2020-21<\/p>\n<p>[Not taxable either in the hands of ROR or RNOR, since such income is not related to the P.Y. 2020-21<\/td>\n<td>Nil<\/td>\n<td>Nil<\/td>\n<\/tr>\n<tr>\n<td>(iv) Royalty received from a resident for technical service provided to run a business outside India<\/p>\n<p>[Taxable in the hands of ROR, since global income is taxable in the hands of ROR. Not taxable in the hands RNOR, since royalty income is not deemed to accrue or arise in India as such income is paid by a resident for technical services Used to rur. a business outside India.]<\/td>\n<td>4,00,000<\/td>\n<td>Nil<\/td>\n<\/tr>\n<tr>\n<td>(v) Agricultural Income in Bhutan<sup>3<\/sup><\/p>\n<p>[Since agricultural income accrues\/arises outside India, it is taxable only in the hands of ROR. No exemption is available in respect of agricultural income earned outside India]<\/td>\n<td>90,000<\/td>\n<td>Nil<\/td>\n<\/tr>\n<tr>\n<td>(vi) Income from house property in Dubai, which was deposited in a Bank at Dubai Since income accrues\/arises outside India and is also received outside India, it is<br \/>\ntaxable only in the hands of ROR 73,000<br \/>\nLess: Deduction u\/s 24@30% <span style=\"text-decoration: underline;\">21.900<\/span><br \/>\n[See Note below for alternative treatment]<\/td>\n<td>51,100<\/td>\n<td>Nil<\/td>\n<\/tr>\n<tr>\n<td>Gross Total Income<\/td>\n<td>8,11,100<\/td>\n<td>2,70,000<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>Note: In the above solution, income of \u20b9 73,000 from house property in m<br \/>\nDubai is presumed to be the rent received, since the said amount is stated to be the amount deposited in bank. Accordingly, deduction @30% of the said amount has been provided to compute the \u201cIncome from house property\u201d, where Shri Subhash Chandra is a ROR.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/gstguntur.com\/wp-content\/uploads\/2021\/10\/GST-Guntur.png\" alt=\"Residence and Scope of Total Income \u2013 CA Inter Tax Question Bank\" width=\"123\" height=\"13\" \/><\/p>\n<p>Question 20.<br \/>\nMr. Thomas, a non-resident and citizen of Japan entered info following transactions during the previous year ended 31.03.2021.<br \/>\nExamine the tax implications in the hands of Mr. Thomas for the Assessment Year 2021-22 as per Income Tax Act, 1961. (Give brief reasoning)<\/p>\n<ul>\n<li>Interest received from Mr. Marshal, a non-resident outside India (The borrowed fund is used by Mr. Marshal for investing in Indian company\u2019s debt fund for earning interest).<\/li>\n<li>Received \u20b9 10 lakhs in Japan from a business enterprise in India for granting license for computer software (not hardware specific).<\/li>\n<li>He is also engaged in the business of running news agency and earned income of \u20b9 10 lakhs from collection of news and views in India for transmission outside India.<\/li>\n<li>He entered into an agreement with SKK &amp; Co., a partnership firm for transfer of technical documents and design and for providing services relating thereto, to set up a Denim Jeans manufacturing plant, in Surat (India). He charged \u20b9 10 lakhs for these services from SKK &amp; Co. (Nov 2020, 5 marks)<\/li>\n<\/ul>\n<p>Question 21.<br \/>\nRajesh was employed in Axis Ltd., Mumbai. He received a salary of \u20b9 45,000 p.m. from 1.04.2020 to 20.09.2020. He resigned and left for Dubai for the first time on 28.09.2020 and got monthly salary of rupee equivalent of \u20b9 90,000 from 1.10.2020 to 31.03.2021. His salary for October to December was credited in his Mumbai bank account directly and the salary for January to March 2021 was credited in his Dubai bank account. The cost of his air tickets to Dubai costing \u20b9 1,50,000 was funded by her sister staying in London. The cost of his initial stay at Dubai costing \u20b9 40,000 was funded by one of his friend staying in Delhi.<br \/>\nHe further received interest of \u20b9 10,500 on his fixed deposits and \u20b9 7,500 on his savings a\/c with his Mumbai bank. He also paid LIC Premiums of \u20b9 15,000 for self, \u20b9 10,000 for spouse and \u20b9 25,000 for dependent mother aged 71 years.<br \/>\nCompute taxable income of Mr. Rajesh for the Assessment Year 2021-22. (Jan 2021, 7 marks)<\/p>\n<p>Question 22.<br \/>\nDiscuss the taxability of the following transactions giving reasons, in the light of relevant provisions, for your conclusion:<br \/>\nAttempt the following:<br \/>\nMr. Pratham, a non-resident in India, received a sum of \u20b9 1,14,000 from Mr. Rakesh, a resident and ordinarily resident in India. The amount was paid to Pratham on account of transfer of right to use the manufacturing process developed by Pratham. The manufacturing process was developed by Mr. Pratham in Singapore and Mr. Rakesh uses such process for his business carried on by him in Dubai. (Jan 2021, 3 marks)<\/p>\n<p>Question 23.<br \/>\nMr. D, an Indian citizen, leaves India on 22.9.2020 for the first time, to work as an officer of a company in France. Determine his residential status for the A.Y. 2021-22.<br \/>\nAnswer:<br \/>\nDuring the previous year 2020-21, Mr. D, an Indian citizen, was in India for 175 days (i.e., 30+31+30+31 +31 +22 days). He does not satisfy the minimum criteria of 182 days. Also, since he is an Indian citizen leaving India for the purposes of employment, the second condition under Section 6(1) is not applicable to him.<br \/>\nTherefore, Mr. D is a non-resident for the A.Y. 2021-22.<\/p>\n<p>Question 24.<br \/>\nThe business of a HUF is transacted from Australia and all the policy decisions are taken there. Mr. E, the karta of the HUF, who was born in Kolkata, visits India during the P.Y. 2020-21 after 15 years. He comes to India on 1.4.2020 and leaves for Australia on 1.12.2020. Determine the residential status of Mr. E and the HUF for A.Y. 2021 -22. Answer:<br \/>\n(a) During the P.Y. 2020-21, Mr. E has stayed in India for 245 days (i.e.30+31 +30+ 31 +31 + 30+31 +30+1 days). Therefore, he is a resident. However, since he has come to India after 15 years, he does not satisfy any of the conditions for being ordinarily resident.<br \/>\nTherefore, the residential status of Mr. E for the P.Y. 2020-21 is resident but not ordinarily resident.<br \/>\n(b) Since the business of the HUF is transacted from Australia and nothing is mentioned regarding its control and management, it is assumed that the control and management is also wholly outside India. Therefore, the HUF is a non-resident for the P.Y. 2020-21.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/gstguntur.com\/wp-content\/uploads\/2021\/10\/GST-Guntur.png\" alt=\"Residence and Scope of Total Income \u2013 CA Inter Tax Question Bank\" width=\"123\" height=\"13\" \/><\/p>\n<p>Question 25.<br \/>\nMr. David, aged 40 years a Government employee serving in the Ministry of External Affairs, left India for the first time on 31.03.2020 due to his transfer to High Commission of Canada. He did not visit India any time during the previous year 2020-21. He has received the following income for the Financial Year 2020-21:<\/p>\n<table border=\"2\">\n<tbody>\n<tr>\n<td>Particulars<\/td>\n<td>\u20b9<\/td>\n<\/tr>\n<tr>\n<td>(i) Salary (Computed)<\/td>\n<td>5,00,000<\/td>\n<\/tr>\n<tr>\n<td>(ii) Foreign Allowance<\/td>\n<td>4,00,000<\/td>\n<\/tr>\n<tr>\n<td>(iii) Interest on fixed deposit from bank in India<\/td>\n<td>1,00,000<\/td>\n<\/tr>\n<tr>\n<td>(iv) Income from agriculture in Pakistan<\/td>\n<td>2,00,000<\/td>\n<\/tr>\n<tr>\n<td>(v) Income from house property in Pakistan<\/td>\n<td>2,50,000<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>Compute his gross total income for Assessment Year 2021-22.<br \/>\nAnswer:<br \/>\nAs per Section 6(1), Mr. David is a non-resident for the A.Y. 2021 -22, since he was not present in India at any time during the previous year 2020-21. As per Section 5(2), a non-resident is chargeable to tax in India only in respect of following incomes:<\/p>\n<ul>\n<li>Income received or deemed to be received in India; and<\/li>\n<li>Income accruing or arising or deemed to accrue or arise in India.<\/li>\n<\/ul>\n<p>In view of the above provisions, income from agriculture in Pakistan and income from house property in Pakistan would not be chargeable to tax in the hands of David, assuming that the same were received in Pakistan. Income from \u2018Salaries\u2019 payable by the Government to a citizen of India for services rendered outside India is deemed to accrue or arise in India as per Section 9(1 )(iii). Hence, such income is taxable in the hands of Mr. David, even though he is a non- resident. It has been assumed that Mr. David is a citizen of India.<br \/>\nHowever, allowances or perquisites paid or allowed as such outside India by the Government to a citizen of India for rendering service outside India is exempt under Section 10(7). Hence, foreign allowance of \u20b9 4,00,000 is exempt under Section 10(7).<br \/>\nGross Total Income of Mr. David for A.Y, 2021-22<\/p>\n<table border=\"2\">\n<tbody>\n<tr>\n<td>Particulars<\/td>\n<td>\u20b9<\/td>\n<\/tr>\n<tr>\n<td>Salaries (Computed)<\/td>\n<td>5,00,000<\/td>\n<\/tr>\n<tr>\n<td>Income from other sources (Interest on fixed deposit in India)<\/td>\n<td>1,00,000<\/td>\n<\/tr>\n<tr>\n<td>Gross Total Income<\/td>\n<td>6,00,000<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>Question 26.<br \/>\nCompute the total income in the hands of an individual, aged 45 years being a resident and ordinarily resident, resident but not ordinarily resident, and non-resident for the A.Y. 2021-22.<\/p>\n<table border=\"2\">\n<tbody>\n<tr>\n<td>Particulars<\/td>\n<td>Amount (\u20b9)<\/td>\n<\/tr>\n<tr>\n<td>Interest on Uk Development Bonds, 50% of interest received in India<\/td>\n<td>10,000<\/td>\n<\/tr>\n<tr>\n<td>Income from a business in Chennai (50% is received in India)<\/td>\n<td>20,000<\/td>\n<\/tr>\n<tr>\n<td>Profits on sale of shares of an Indian company received in London<\/td>\n<td>20,000<\/td>\n<\/tr>\n<tr>\n<td>Dividend from British Company received in London<\/td>\n<td>5,000<\/td>\n<\/tr>\n<tr>\n<td>Profits on sale of plant at Germany 50% of profits are received in India<\/td>\n<td>40,000<\/td>\n<\/tr>\n<tr>\n<td>Income earned from Business in Germany, which is controlled from Delhi (\u20b9 40,000 is received in India)<\/td>\n<td>70,000<\/td>\n<\/tr>\n<tr>\n<td>Profits from a business in Delhi but managed entirely from London<\/td>\n<td>15,000<\/td>\n<\/tr>\n<tr>\n<td>Income from House Property in London deposited in a Indian Bank at London, brought to India (computed)<\/td>\n<td>50,000<\/td>\n<\/tr>\n<tr>\n<td>Interest on debentures in an Indian company received in London.<\/td>\n<td>12,000<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/gstguntur.com\/wp-content\/uploads\/2021\/10\/GST-Guntur.png\" alt=\"Residence and Scope of Total Income \u2013 CA Inter Tax Question Bank\" width=\"123\" height=\"13\" \/><\/p>\n<p>Question 27.<br \/>\nRajesh was employed in Axis Ltd., Mumbai. He received a salary of \u20b9 45,000 p.m. from 1.04.2020 to 20.09.2020. He resigned and left for Dubai for the first time on 28.09.2020 and got monthly salary of rupee equivalent of \u20b9 90,000 from 1.10.2020 to 31.03.2021. His salary for October to December was credited in his Mumbai bank account directly and the salary for January to March 2021 was credited in his Dubai bank account. The cost of his air tickets to Dubai costing \u20b9 1,50,000 was funded by her sister staying in London. The cost of his initial stay at Dubai costing \u20b9 40,000 was funded by one of his friend staying in Delhi.<br \/>\nHe further received interest of \u20b9 10,500 on his fixed deposits and \u20b9 7,500 on his savings a\/c with his Mumbai bank. He also paid LIC Premiums of \u20b9 15,000 for self, \u20b9 10,000 for spouse and \u20b9 25,000 for dependent mother aged 71 years.<br \/>\nCompute taxable income of Mr. Rajesh for the Assessment Year 2021-22. (Jan 2021, 7 marks)<\/p>\n<p>Question 28.<br \/>\nDiscuss the taxability of the following transactions giving reasons, in the light of relevant provisions, for your conclusion:<br \/>\nAttempt the following:<br \/>\nMr. Pratham, a non-resident in India, received a sum of ? 1,14,000 from Mr. Rakesh, a resident and ordinarily resident in India. The amount was paid to Pratham on account of transfer of right to use the manufacturing process developed by Pratham. The manufacturing process was developed by Mr. Pratham in Singapore and Mr. Rakesh uses such process for his business carried on by him in Dubai. (Jan 2022, 3 marks)<\/p>\n<p>Question 29.<br \/>\nMr. D, an Indian citizen, leaves India on 22.9.2020 for the first time, to work as an officer of a company in France. Determine his residential status for the A.Y. 2021 -22.<br \/>\nAnswer:<br \/>\nDuring the previous year 2020-21, Mr. D, an Indian citizen, was in India for 175 days (i.e., 30+31 +30+31 +31 +22 days). He does not satisfy the minimum criteria of 182 days. Also, since he is an Indian citizen leaving India for the purposes of employment, the second condition under Section 6(1) is not applicable to him.<br \/>\nTherefore, Mr. D is a non-resident for the A.Y. 2021-22.<\/p>\n<p>Question 30.<br \/>\nThe business of a HUF is transacted from Australia and all the policy decisions are taken there. Mr. E, the karta of the HUF, who was born in Kolkata, visits India during the P.Y. 2020-21 after 15 years. He comes to India on 1.4.2020 and leaves for Australia on 1.12.2020. Determine the residential status of Mr. E and the HUF for A.Y. 2021 -22. Answer:<br \/>\n(a) During the P.Y. 2020-21, Mr. E has stayed in India for 245 days (i.e.30+31 +30+ 31 +31 + 30+31 +30+1 days). Therefore, he is a resident. However, since he has come to India after 15 years, he does not satisfy any of the conditions for being ordinarily resident.<br \/>\nTherefore, the residential status of Mr. E for the P.Y. 2020-21 is resident but not ordinarily resident.<br \/>\n(b) Since the business of the HUF is transacted from Australia and nothing is mentioned regarding its control and management, it is assumed that the control and management is also wholly outside India. Therefore, the HUF is a non- resident for the P.Y. 2020-21.<\/p>\n<p>Question 31.<br \/>\nMr. David, aged 40 years a Government employee serving in the Ministry of External Affairs, left India for the first time on 31.03.2020 due to his transfer to High Commission of Canada. He did not visit India any time during the previous year 2020-21. He has received the following income for the Financial Year 2020-21:<\/p>\n<table border=\"2\">\n<tbody>\n<tr>\n<td>Fees for technical services rendered in India but received in London<\/td>\n<td>8,000<\/td>\n<\/tr>\n<tr>\n<td>Profits from a business in Bombay managed from London<\/td>\n<td>26,000<\/td>\n<\/tr>\n<tr>\n<td>Pension for services rendered in India but received in Burma<\/td>\n<td>4,000<\/td>\n<\/tr>\n<tr>\n<td>Income from property situated in Pakistan received there<\/td>\n<td>16,000<\/td>\n<\/tr>\n<tr>\n<td>Past foreign untaxed Income brought to India during the previous year<\/td>\n<td>5,000<\/td>\n<\/tr>\n<tr>\n<td>Income from agricultural land in Nepal received there and then brought to India<\/td>\n<td>18,000<\/td>\n<\/tr>\n<tr>\n<td>Income from profession in Kenya which was set up in India, received there but spent in India<\/td>\n<td>5,000<\/td>\n<\/tr>\n<tr>\n<td>Gift received on the occasion of his wedding<\/td>\n<td>20,000<\/td>\n<\/tr>\n<tr>\n<td>Interest on Savings Bank Deposit in State Bank of India<\/td>\n<td>12,000<\/td>\n<\/tr>\n<tr>\n<td>Income from a business in Russia, controlled from Russia<\/td>\n<td>20,000<\/td>\n<\/tr>\n<tr>\n<td>Dividend from Reliance Petroleum Limited, an Indian company<\/td>\n<td>5,000<\/td>\n<\/tr>\n<tr>\n<td>Agricultural income from a land in Rajasthan<\/td>\n<td>15,000<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>Answer:<br \/>\nComputation of total Income for the A.Y. 2021-22<br \/>\n<img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-22811\" src=\"https:\/\/gstguntur.com\/wp-content\/uploads\/2023\/04\/Residence-and-Scope-of-Total-Income-\u2013-CA-Inter-Tax-Question-Bank-9.png\" alt=\"Residence and Scope of Total Income \u2013 CA Inter Tax Question Bank 9\" width=\"574\" height=\"852\" srcset=\"https:\/\/gstguntur.com\/wp-content\/uploads\/2023\/04\/Residence-and-Scope-of-Total-Income-\u2013-CA-Inter-Tax-Question-Bank-9.png 574w, https:\/\/gstguntur.com\/wp-content\/uploads\/2023\/04\/Residence-and-Scope-of-Total-Income-\u2013-CA-Inter-Tax-Question-Bank-9-202x300.png 202w\" sizes=\"(max-width: 574px) 100vw, 574px\" \/><br \/>\n<img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-22810\" src=\"https:\/\/gstguntur.com\/wp-content\/uploads\/2023\/04\/Residence-and-Scope-of-Total-Income-\u2013-CA-Inter-Tax-Question-Bank-10.png\" alt=\"Residence and Scope of Total Income \u2013 CA Inter Tax Question Bank 10\" width=\"578\" height=\"853\" srcset=\"https:\/\/gstguntur.com\/wp-content\/uploads\/2023\/04\/Residence-and-Scope-of-Total-Income-\u2013-CA-Inter-Tax-Question-Bank-10.png 578w, https:\/\/gstguntur.com\/wp-content\/uploads\/2023\/04\/Residence-and-Scope-of-Total-Income-\u2013-CA-Inter-Tax-Question-Bank-10-203x300.png 203w\" sizes=\"(max-width: 578px) 100vw, 578px\" \/><\/p>\n<p><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/gstguntur.com\/wp-content\/uploads\/2021\/10\/GST-Guntur.png\" alt=\"Residence and Scope of Total Income \u2013 CA Inter Tax Question Bank\" width=\"123\" height=\"13\" \/><\/p>\n<p>Question 32.<br \/>\nExamine the correctness or otherwise of the statement- \u201cIncome 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\u201d.<br \/>\nAnswer:<br \/>\nThis statement is correct.<br \/>\nAs per Explanation to Section 9, income by way of interest, royalty or fee for technical services which is deemed to accrue or arise in India by virtue of clauses (v), (vi) and (vii) of Section 9(1), shall be included in the total income of the non-resident, whether or not &#8211;<\/p>\n<ul>\n<li>non-resident has a residence or place of business or business connection in India; or<\/li>\n<li>the non-resident has rendered services in India.<\/li>\n<\/ul>\n<p>In effect, the income by way of fee for technical services, interest or royalty from services utilised in India 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.<\/p>\n<p>Question 33.<br \/>\nAn 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?<br \/>\nAnswer:<br \/>\nCitizenship of a country and residential status of that country are separate concepts. A person may be an Indian national \/citizen, but may not be a resident in India. On the other hand, a person may be a foreign national \/citizen, but may be a resident in India. The citizenship of an individual has no role in determining the residential status of an individual.<br \/>\nThe residential status of resident, non-resident, etc. is determined on the basis of number of days an individual actually stays in India during the previous year.<br \/>\nThe provisions of Section 6 of the Income-tax Act, 1961 are the determining factor of residential status of an individual.<\/p>\n<p>Question 34.<br \/>\nWhat do you mean by significant economic presence? How does it constitutes business connection in India?<br \/>\nAnswer:<br \/>\nSignificant economic presence [Explanation 2A to section 9(1)(i)]<br \/>\nSignificant economic presence of a non-resident in India shall also constitute business connection in India.<br \/>\nSignificant economic presence means-<\/p>\n<table border=\"2\">\n<tbody>\n<tr>\n<td>Nature of transaction<\/td>\n<td>Condition<\/td>\n<\/tr>\n<tr>\n<td>(a) In respect of any goods, services or property carried out by a non\u00adresident in India including provision of download of data or software in India,<\/td>\n<td>Aggregate of payments arising from such transaction or transactions during the previous year exceeds such amount as may be prescribed<\/td>\n<\/tr>\n<tr>\n<td>(b) Systematic and continuous soliciting of business activities or engaging in interaction with users in India through digital means<\/td>\n<td>The users should be of such number as may be prescribed<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>The threshold of \u201crevenue\u201d and \u201cusers\u201d in India would be prescribed. Further, the above transactions or activities shall constitute significant economic presence in India, whether or not:<\/p>\n<ul>\n<li>the agreement for such transactions or activities is entered in India;<\/li>\n<li>the non-resident has a residence or place of business in India; or<\/li>\n<li>the non-resident renders services in India;<\/li>\n<\/ul>\n<p>However, where a business connection is established by reason of significant economic presence in India, only so much of income as is attributable to the transactions or activities referred to in (a) or (b) above shall be deemed to accrue or arise in India.<\/p>\n<p>Note:<br \/>\nThis provision has been inserted to take care of new business models such as digitized businesses, which do not require physical presence of itself or any agent in India. Such businesses can now be covered within the scope of Section 9(1)(i).<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/gstguntur.com\/wp-content\/uploads\/2021\/10\/GST-Guntur.png\" alt=\"Residence and Scope of Total Income \u2013 CA Inter Tax Question Bank\" width=\"123\" height=\"13\" \/><\/p>\n<p><strong>Multiple Choice Questions<\/strong><\/p>\n<p>Question 1.<br \/>\nAshni was born in India in 1989. His father was born in India in 1949 and his mother was born in England. His grandfather was born in England and his grandmother was born in South Africa. The parents of Ashni along with Ashni took the citizenship of England. Ashni is:<br \/>\n(a) Citizen of India<br \/>\n(b) Person of Indian origin<br \/>\n(c) Resident<br \/>\n(d) None of these<br \/>\nAnswer:<br \/>\n(d) None of these<\/p>\n<p>Question 2.<br \/>\nDa citizen of India left India for U.S. on 16.08.2020 for booking orders on behalf of an Indian co. for exporting goods to U.S. He came back to India on 05.05.2021. He had been resident in India for the past 10 years. For AY 2021-22 D shall be:<br \/>\n(a) Resident and ordinarily resident in India<br \/>\n(b) &#8220;Resident but not ordinarily resident in India<br \/>\n(c) Non-resident.<br \/>\n(d) None of the above<br \/>\nAnswer:<br \/>\n(c) Non-resident.<\/p>\n<p>Question 3.<br \/>\nWhich of the following incomes is deemed to accrue or arise in India?<br \/>\n(a) Income by way of fees for technical services payable by non-resident, where it is payable in respect of any services utilised in a business or profession carried on by such person in India.<br \/>\n(b) Income by way of royalty payable by resident where it is payable in respect of any right used for the purposes of a business or profession carried on by such person outside India<br \/>\n(c) Income chargeable under the head &#8220;Salaries&#8221; payable by the Indian Company to a citizen of India for service rendered outside India.<br \/>\n(d) Income through transfer of capital asset situated outside India.<br \/>\nAnswer:<br \/>\n(a) Income by way of fees for technical services payable by non-resident, where it is payable in respect of any services utilised in a business or profession carried on by such person in India.<\/p>\n<p>Question 4.<br \/>\nThe following income is deemed to be received in India:<br \/>\n(a) Employer&#8217;s contribution to a recognised provident fund in excess of 12% of salary; and interest credited thereon in excess of 9.5% p.a.;<br \/>\n(b) Transferred balance in a recognised provident fund to the extent of employer&#8217;s contribution and interest thereon;<br \/>\n(c) Contribution made by the Central Government or any other employer in the previous year, under a pension scheme referred to in Section 80CCD;<br \/>\n(d) All of these.<br \/>\nAnswer:<br \/>\n(d) All of these.<\/p>\n<p>Question 5.<br \/>\nFrom the following particulars of Income furnished by Mrs. Preeti pertaining to the year ended 31 -03-2021,<\/p>\n<table border=\"2\">\n<tbody>\n<tr>\n<td>Particulars<\/td>\n<td>Amount (\u20b9)<\/td>\n<\/tr>\n<tr>\n<td>Profit on sale of shares of private limited Indian Company received in Germany<\/td>\n<td>15,000<\/td>\n<\/tr>\n<tr>\n<td>Dividend from a Japanese Company received in Japan<\/td>\n<td>10,000<\/td>\n<\/tr>\n<tr>\n<td>Agricultural income from lands in Gujarat<\/td>\n<td>27,000<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>If Preeti is Non- Resident what is his total income?<br \/>\n(a) \u20b9 15,000<br \/>\n(b) \u20b9 10,000<br \/>\n(c) \u20b9 27,000<br \/>\n(d) \u20b9 25,000<br \/>\nAnswer:<br \/>\n(a) \u20b9 15,000<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/gstguntur.com\/wp-content\/uploads\/2021\/10\/GST-Guntur.png\" alt=\"Residence and Scope of Total Income \u2013 CA Inter Tax Question Bank\" width=\"123\" height=\"13\" \/><\/p>\n<p>Question 6.<br \/>\nH, a foreign national but a person of Indian origin visited India during previous year 2020-21 for 181 days. During 4 preceding previous years he was in India for 400 days. H shall be:<br \/>\n(a) Resident in India<br \/>\n(b) Non-resident in India<br \/>\n(c) Not ordinarily Resident in India<br \/>\n(d) None of the above<br \/>\nAnswer:<br \/>\n(b) Non-resident in India<\/p>\n<p>Question 7.<br \/>\nIncome chargeable under the head &#8220;Salaries&#8221; payable by the Government to a citizen of India for service rendered outside India is taxable if the person is:<br \/>\n(a) Resident<br \/>\n(b) Not Ordinarily Resident<br \/>\n(c) Non Resident<br \/>\n(d) Any of these<br \/>\nAnswer:<br \/>\n(d) Any of these<\/p>\n<p>Question 8.<br \/>\nFollowing are the particulars of Income of Nitin<br \/>\n(i) Income from agriculture in Indonesia being invested there only &#8211; \u20b9 12,350<br \/>\n(ii) Income from business in Bangladesh being controlled from India &#8211; \u20b9 10,150. If Nitin is NOR what is his total income?<br \/>\n(a) \u20b9 12,350<br \/>\n(b) \u20b9 10,150<br \/>\n(c) \u20b9 22,500<br \/>\n(d) \u20b9 2,200<br \/>\nAnswer:<br \/>\n(b) \u20b9 10,150<\/p>\n<p>Question 9.<br \/>\nFrom the following particulars of Income furnished by Mr. Ankit pertaining to the year ended 31-03-2021<\/p>\n<table border=\"2\">\n<tbody>\n<tr>\n<td>Particulars<\/td>\n<td>Amount (\u20b9)<\/td>\n<\/tr>\n<tr>\n<td>Interest received from Indian Government bonds outside India<\/td>\n<td>15,000<\/td>\n<\/tr>\n<tr>\n<td>Royalty received in India from non resident who used the rights for business outside India<\/td>\n<td>10,000<\/td>\n<\/tr>\n<tr>\n<td>Agricultural income from lands in Japan received in India<\/td>\n<td>37,000<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>If Ankit is Non- Resident what is his total income?<br \/>\n(a) \u20b9 15,000<br \/>\n(b) \u20b9 10,000<br \/>\n(c) \u20b9 25,000<br \/>\n(d) \u20b9 62,000<br \/>\nAnswer:<br \/>\n(d) \u20b9 62,000<\/p>\n<p>Question 10.<br \/>\nPast untaxed profit of the financial year 2004-05 brought to India in 2020-21 is chargeable to tax in the assessment year 2021-22 in the hands of<br \/>\n(a) All the assessees<br \/>\n(b) Resident and ordinarily resident in India<br \/>\n(c) Non-resident in India<br \/>\n(d) None of the above.<br \/>\nAnswer:<br \/>\n(d) None of the above.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/gstguntur.com\/wp-content\/uploads\/2021\/10\/GST-Guntur.png\" alt=\"Residence and Scope of Total Income \u2013 CA Inter Tax Question Bank\" width=\"123\" height=\"13\" \/><\/p>\n<p><strong>Residence and Scope of Total Income Notes<\/strong><\/p>\n<p>Residential Status of Individual:<br \/>\nSection 6 of the Act enunciates the scope of residential status. As per provisions of the said section, an individual is said to be a resident in India in any previous year if he satisfies any of the following conditions:<br \/>\n(a) He is in India in the previous year for a period of 182 days or more; or<br \/>\n(b) He is in India for a period of 60 days or more in previous year and 365 days or more during 4 years immediately preceding the relevant previous year<\/p>\n<p>Exceptions:<br \/>\nThe following categories of individuals will be treated as resident in India only if the period of their stay during the relevant previous year amounts to 182 days or more. In other words, even if such persons were in India for 60 days or more (but less than 182 days) in the relevant previous year, they will not be treated as resident due to the reason that their stay in India was for 365 days or more during the 4 immediately preceding years.<br \/>\n1. Indian citizen, who leaves India during the relevant previous year as a member of the crew of an Indian ship or for purposes of employment outside India, or<br \/>\n2. Indian citizen or person of Indian origin who, being outside India comes on a visit to India during the relevant previous year.<br \/>\nHowever, such person having total income, other than the income from foreign sources [i.e., income which accrues or arises outside India (except income from a business controlled from or profession set up in India) and which is not deemed to accrue or arise in India], exceeding \u20b9 15 lakhs during the previous year will be treated as resident in India if<\/p>\n<ul>\n<li>the period of his stay during the relevant previous year amounts to 182 days or more, or<\/li>\n<li>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 120 days in the previous year.<\/li>\n<\/ul>\n<p>Deemed resident [Section 6(1 A)]- An individual, being an Indian citizen, having total income, other than the income from foreign sources [i.e., income which accrues or arises outside India (except income from a business controlled from or profession set up in India) and which is not deemed to accrue or arise in India], exceeding ? 15 lakhs during the previous year would be deemed to be resident in India in that previous year, if he is not liable to pay tax in any other country or territory by reason of his domicile or residence or any other criteria of similar nature. However, this provision will not apply in case of an individual who is a resident of India in the previous year as per section 6(1).<br \/>\nResident and ordinarily resident\/Resident but not ordinarily resident Only individuals and HUF can be \u201cresident but not ordinarily resident\u201d in India. Ail other classes of assessees can be either a resident or non-resident. A not-ordinarily resident person is one who satisfies any one of the conditions specified u\/s 6(6).<br \/>\n(i) If such individual has been non-resident in India in any 9 out of the 10 previous years preceding the relevant previous year, or<br \/>\n(ii) If such individual has during the 7 previous years preceding the relevant previous year been in India for a period of 729 days or less, or<br \/>\n(iii) If such individual is an Indian citizen or person of Indian origin (who, being outside India, comes on a visit to India in any previous year) having total income, other than the income from foreign sources [i.e., income which accrues or arises outside India (other than income derived from a business controlled in or profession set up in India) and which is not deemed to accrue or arise in India], exceeding \u20b9 15 lakhs during the previous year, who has been in India for 120 days or more but less than 182 days during that previous year, or<br \/>\nIf such individual is an Indian citizen who is deemed to be resident in India under section 6(1 A) [It may be noted that a deemed resident will always be a resident but not ordinarily resident].<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/gstguntur.com\/wp-content\/uploads\/2021\/10\/GST-Guntur.png\" alt=\"Residence and Scope of Total Income \u2013 CA Inter Tax Question Bank\" width=\"123\" height=\"13\" \/><\/p>\n<p>Dividend paid by an Indian company outside India [Section 9(1)(iv)]:<br \/>\nDividends paid by an Indian company outside India is deemed to be accrue or arise in India and would be taxable in the hands of shareholders at normal slab rates.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Residence and Scope of Total Income \u2013 CA Inter Tax Question Bank\u00a0is designed strictly as per the latest syllabus and exam pattern. Residence and Scope of Total Income \u2013 CA Inter Tax Question Bank Question 1. State with reason, any whether the following statements is true or false with regard to the provisions of the &hellip;<\/p>\n<p class=\"read-more\"> <a class=\"\" href=\"https:\/\/gstguntur.com\/residence-and-scope-of-total-income-ca-inter-tax-question-bank\/\"> <span class=\"screen-reader-text\">Residence and Scope of Total Income \u2013 CA Inter Tax Question Bank<\/span> Read More &raquo;<\/a><\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"spay_email":"","footnotes":""},"categories":[167],"tags":[],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/gstguntur.com\/wp-json\/wp\/v2\/posts\/22808"}],"collection":[{"href":"https:\/\/gstguntur.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/gstguntur.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/gstguntur.com\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/gstguntur.com\/wp-json\/wp\/v2\/comments?post=22808"}],"version-history":[{"count":6,"href":"https:\/\/gstguntur.com\/wp-json\/wp\/v2\/posts\/22808\/revisions"}],"predecessor-version":[{"id":22886,"href":"https:\/\/gstguntur.com\/wp-json\/wp\/v2\/posts\/22808\/revisions\/22886"}],"wp:attachment":[{"href":"https:\/\/gstguntur.com\/wp-json\/wp\/v2\/media?parent=22808"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/gstguntur.com\/wp-json\/wp\/v2\/categories?post=22808"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/gstguntur.com\/wp-json\/wp\/v2\/tags?post=22808"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}