Lecture 3:- Problems on Residential Status

1. Mr. Dixit is a citizen of Bangladesh. His grandmother was born in a village near Islamabad in 1945. He came to India for 1st time on 8.10.2012 for 200 days. Find out the residential status of Mr. Dixit for A.Y. 2013 – 14?

Soln:-

The previous year for the assessment year 2013-14 is the year 2012 – 13.

Mr. Dixit was in India for 200 days in the year 2012 – 13. Thus he has stayed in India for more than 182 days in the previous year, but as per information Mr. Dixit is a citizen of Bangladesh so will he be taxed in India? The answer is “Yes”, the reason, his grandmother was born in a village near Islamabad in 1945 thus Mr. Dixit becomes a person of Indian Origin and hence he will be Resident in India .

2. Ajay came to India for the 1st time on 1st August 2008 and has been staying in India since then. What is the residential status of Ajay for the assessment year 2012- 13?

Soln:-

Years No of Days Stay Resident/Non Resident2008-09 243 Days Resident2009-10 365 Days Resident2010-11 365 Days Resident2011 -12 365 Days Resident

The previous year for the assessment year 2012-13 is the year 2011 – 12.

In the previous year Ajay has stayed in India for 365 days, hence he is a “Resident “.

To understand whether the given person is a “Resident and Ordinarily Resident” or “Resident but not Ordinarily Resident”, let’s check the tenure of the person in the country. He is been in India for 4 financial years, thus

he cannot be satisfying the conditions of sec 6(6) of being a Resident and Ordinarily Resident. Thus, Ajay is a “Resident and Ordinarily Resident”.

3. Keiron Pollard, a cricketer comes to India every year in the last 10 years for playing cricket and his stay is as under

Year Ended on No of Days stay in each year

31-3- 2012 100

31 – 3- 2011 to 31 -3- 2009 60

31 – 3 – 2008 to 31 – 3- 2003 40

Determine the residential Status?

Soln:- He is stay in India during the F.Y 2011 – 12 for less than 182 days . Also in the last 4 financial year, i.e 2007- 08 to 2010 – 11 , the stay has been in India for ( 40 + 60 + 60 + 60 ) = 220 days i.e. less than 365 days in the 4 financial year.

Thus he doesn’t satisfy either of the condition of being a “Resident” in India. Hence he is a non – resident for the A.Y. 2012 -13.

4. Mr. Ansari, an Indian Citizen, who is appointed as an Taxation Officer by Govt of China leaves India for 1st time on 26.09.2011 for joining duty in China. During the year 2012 – 13 he comes to India for 176 days. Determine the residential status for the Previous yr 2011 – 12 & 2013 -13??

Soln:- Mr. Ansari stay in India for the previous year 2011 – 12 was for 179 days, hence he is not a resident in that year.

Similarly for the previous year 2012 – 13 his stay was for 176 days , therefore he is not a resident in that year.

5. Ram is an export manager of Zara Fashions since 1 – 4 – 2007. He was on Overseas export promotion tours for the following days in the last 5 yrs.

Year Ended No. of days spent overseas

31 – 3 – 2008 250 days

31 – 3 – 2009 260 days

31 – 3- 2010 270 days

31 – 3 – 2011 280 days

31 – 3 – 2012 300 days

Determine the residential status for A.Y. 2012 – 13

Soln:- Let us 1st see for how many days Ram was in India in the last 5 yrs

Year Ended No. of days spent in India

31 – 3 – 2008 116 days

31 – 3 – 2009 105 days

31 – 3- 2010 95 days

31 – 3 – 2011 86 days

31 – 3 – 2012 65 days

In the F.Y. 2011 – 12, he was not in India for 182 days or more, he cannot be a resident of India. Lets considered the 2nd Condition for being a resident for the previous year. In the year 2011 – 12 , he was in India for 65 days which is more than 60 days in the previous year and his preceding 4 years to the previous year is also more than 365 days in a year, hence he is a “ Resident” for the year 2012 – 13.

Ram stay of 65 days cannot be extended to 182 days in the previous year 2011 – 12 as he has gone for employment purpose outside India but he is Employed in India itself.

Ram also satisfies the conditions of being in India for at least 2 out of 10 years preceding to the previous years in India and also would be in India for 730 days or more preceding the previous year in India. Thus Ram is “Resident & Ordinarily Resident” in A.Y. 2012 – 13. H

6. Lata, a US Citizen but a person of Indian Origin came to India for the 1st time on 1st October 2006. It is learnt that she was in India from 1 -4 – 2011 to 28 – 6 – 2011 (both days inclusive). Her total stay in India during the last 5 year was as under

Year Ended No. of days Stay in India

31 -3- 2007 25 days

31 – 3- 2008 182 days

31- 3- 2009 78 days

31 -3 – 2010 125 days

31 – 3 – 2011 NIL

Determine her residential status for the year 2012 – 13?

Soln:

During the F.Y. 2011 – 12 , Lata is in India for 89 days ( 30 + 31 + 28 ) . Thus the 1st condition is not satisfied. During the period i.e. 1 – 4- 2007 to 31 -3- 2011, she is in India for 386 days. Thus the 2nd condition of being in India is satisfied with 89 days in previous year i.e. 2011 – 12. Thus he would be a “Resident but not Ordinarily Resident” for the A.Y. Year 2012 -13.

7. X, an Indian citizen wants to determine his residential status. He give the following details of his stay in India.

Previous year

Days of stay

2010-2011

190

2009-2010

57

2008-2009

73

2007-2008

131

2006-2007

69

2005-2006

145

2004-2005

65

2003-2004

200

2002-2003

300

2001-2002

365

2000-2001

365

Out of the 190 days in the previous year 2010-2011, 10 days spent by X on a private ship stationed in the territorial waters of India. You are required to determine his residential status, quoting the provisions of Sections 6(1) and 6(6) of the Income Tax Act, 1961.

Soln :-

As per sec 6(1) , the stay of the person should be India for 182 days or more in the previous year or 60 days in the previous year and 365 days or more in the 4 years preceding the previous year. He is satisfying the condition one by being in India for 19 days thus , he is resident in India in A.Y. 2011 – 12.

A s per sec 6(6), his stay in the country needs to be atleast 2 years in the 10 years immediately preceding the previous year and 730 days or more during the 7 years immediately preceding the previous year.

Period of stay during the 7 preceding previous year

= 57 + 73 + 131 + 69 + 145 + 65 + 200

= 740 Days.

Thus he satisfies both the conditions, hence he is “ Resident and Ordinary Resident” for A.Y. 2011 – 12.

8. Jules is a foreign citizen (not being a person of Indian origin). Since 1981, he visits India every year in the month of May for 101 days. Determine the residential status of Jules for the assessment year 2011-2012.

Soln :- In the previous year 2010 – 2011, Jules was in India for 101 days which is less than 182 days , thus the 1st condition under 6(1) is not satisfied.

However, Jules has been staying in India for more than 60 days in the previous year and (101 * 4) = 404 days in the last 4 years immediately preceding the previous year. Thus, Jules satisfies the 2nd condition and Jules is a Resident in India for 2011 – 12.

Jules will be “Resident but not Ordinarily Resident” as he is not satisfying the conditions of 6( 6).

9. Mr. P and Mrs. P are Spanish citizens. They have come to India on November 21, 2010 for 250 days. In the earlier previous years their stay in India was as follows.

Previous year Mr. P Mrs. P

2009-2010 245 days 300 days

2008-2009 25 days 180days

2007-2008 40 days 10 days

2006.2007 130 days 50 days

You are required to find the residential status of Mr. And Mrs. P for the assessment year 2011-2012?

Soln:- In the previous year 2011 -12 the stay of Mr. P and Mrs. P in India is 10 + 31 =m 31 +m 28 + 31 = 131 days which is less than 182 days in the previous year hence the 1st condition under 6 (1) is not satisfied but in the previous 4 years their stay in India is as follows :-

Mr P = 245 + 25 + 40 + 130

= 440 days

Mrs P = 300 + 180 + 10 + 50

= 540 days

Thus the 2nd condition of 60 days in the previous year and 365 days or more in the preceding year immediately following the previous year is satisfied. Thus Mr P & Mrs. P are resident but they are “ Resident But Not Ordinarily Resident” for the A.Y. 2011 -12.