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Monday, March 20, 2017

Residential Status of an Assesse and Determination of Total Income Practical Problems

Unit – 1: Practical Problems
Determination of Residential Status of an Assessee
Q. Mr. X an Indian citizen leaves India for the first time on 31st may 2007 and comes back on 15th may 2010. Again he leaves India on 10th June 2011 and come back on 14th January 2012. He is living in India since then. Determine his residential status for the previous year 2011 – 2012 and 2012 – 2013.
Q. Ascertain the residential status of the assessee in the following cases for the assessment year 2013 – 2014:
1.       Mr. X is a citizen of India. He left for Iran on 18th April 2011 and could not return to India till the end of the financial year 2012- 2013.
2.       Mr. Y left for USA on 10th march 2009 and after having being lived in India for 20 years. He returned to India on 10th sep. 20111.
3.       Mr. Z is a citizen of India. He left on 15th may, 2011 for London for higher studies. He came back to India on 25th may 2012. He maintained a dwelling place in India during his absence.
4.       Mr. P, a foreign national came to India for the first time on June 15, 2006. During the financial years 2006 – 07, 2007 – 08, 2008 – 09, 2009 – 10 and 2010 – 11, he stays in India for 150 days, 15 days, 191 days, 120 days and 80 days. He left for USA permanently on 10th aug 2012. Determine his residential status for each year mentioned above including current previous year.

Q. Ascertain the residential status of the assessee in the following cases for the assessment year  for 2012 – 2013 and 2013 – 2014:
1.       Mr. M an Indian citizen left India for the first time on 24 – 9 – 2011 for employment in USA. During the previous year 2012 -13 he comes to visit India on 5 – 6 - 2012 for 165 days.
2.       R was born in Dhaka in 1945. He has been studying in Canada since 1974. He comes to visit India on 13 – 10 – 2012 and returns on 29 – 3 – 2013.
3.       A, a citizen of India, left India on 21 – 10 – 2010 for employment abroad. Earlier to this date, he was always in India. During 2011 – 2012 and 2013 – 13 he came to India for 168 days and 185 days respectively.
Q. Questions Relating to HUF, AOP, BOI, Firms and Company:
1.       Mr. X is Karta of a HUF whose property is situated in Srilanka. During the previous year 2012 – 13, he came to India with his family for 15 days and went back leaving his family in India. Determine his residential status.
2.       Mr. X is Karta of a HUF whose property is situated in India. During the previous year 2012 – 13, he went to Srilanka with his family for 15 days and return back leaving his family in Srilanka. Determine his residential status.
3.       Head office of a HUF is situated in UK. The family is managed by Y who is resident in India only in 1 previous year out of 10 previous years preceding the relevant previous year 2012 – 13 and his stay during these 7 years was 720 days. Determine the residential status of family for the assessment year 2012 – 13 if the HUF is:
(a)    Wholly controlled from India
(b)   Partially controlled from India
(c)    Fully controlled outside India.

4.       Head office of a HUF is situated in Kanpur. The family is managed by Y who is resident in India only in 2 previous years out of 10 previous years preceding the relevant previous year 2012 – 13 and his stay during these 7 years was 730 days. Determine the residential status of family for the assessment year 2012 – 13 if the HUF is:
(a)    Wholly controlled from India
(b)   Partially controlled from India
(c)    Fully controlled outside India.
(d)   The Karta of the family was is Kenya for business purposes throughout the years enden on 31st march, 2013.
5.       JK is a partnership firm registered in India and is controlled from India. Mr. J who is one of the partners of the firm, was in UK for more than 340 days during the year enden on 31st March 2013. Determine the residential status of the firm. What will be your answer if:
(a)    JK is registered outside India and Controlled from India
(b)   JK is registered and managed outside India.
(c)    Place of meeting of partners to decide the affairs of the firm is India
(d)   Place of meeting of partners to decide the affairs of the firm are UK.
(e)   Place of meeting of partners to decide the affair of the firm is India but partners have right to control or manage outside India.
(f)     Firm is registered outside India, Place of meeting of partners to decide the affairs of the firm is outside India but partners have right to control or manage in India.
6.       A Ltd. Is an Indian co. It carries on business in New Delhi and London. The entire control and management of A Ltd. Is situated outside India. 80% of the total income of the company is from London. Determine its residential status for the assessment year 2013 – 2014.
7.       R Ltd. and S Ltd. companies are registered in Nepal and India respectively. All meeting of Board of directors of R Ltd. were held in India, whereas all board meeting of S Ltd. were held in Nepal during the previous year 2012 – 2013. Determine the residential status of both the companies for the assessment year 2013 – 2014.
Q. Ascertain the residential status of the assessee in the following cases for the assessment year  for 2012 – 2013 and 2013 – 2014:
1.       The control and Management of a HUF is situated in India. The manager of the HUF visited England with his wife from 14 – 8 – 2012 to 30 – 6 – 2013. Earlier to that he was always in India.
2.       A company, whose registered office is in America, is partly controlled and managed from its branch established in India.
3.       In a partnership firm, there are three partners namely A,B and C. A and B inside in India while C lives in Germany. The firm is fully controlled by C. During the previous year, Mr. C stayed for 6 months in India.
4.       A VIP club is in India, whose director Mr. X Belongs to China. The club is controlled fully by Mr. X. In the previous year, Mr. X did not for a single day to India.
Q. Ascertain the residential status of the assessee in the following cases:
1. X left India for the first time on May 20, 2010. During the financial year 2012-13, he came to India once on May 27 for a period of 53 days. Determine his residential status for the assessment year 2012 – 13 and 2013 – 14.
2. X comes to India, for the first time, on April 16, 2010. During his stay in India up to October 5, 2010, he stays at Delhi up to April 10, 2011 and thereafter remains in Chennai till his departure from India. Determine his residential status for the assessment year 2011-12, 2012 – 13 and 2013 - 14.
3. X, a foreign citizen comes to India, for the first time in the last 30 years on March 20, 2012. On September 1, 2012, he leaves India for Nepal on a business trip. He comes back on February 26, 2013. Determine his residential status for the assessment year 2011-12, 2012 – 13 and 2013 - 14.
Computation of Total Income of ROR, RNOR and NRI:
1. Subhash discloses following particulars of his receipts during the financial year 2012-2013:
(i) Salary income earned at Pune but received in Srilanka 2,50,000
(ii) Profits earned from a business in Kenya which is controlled in India, half of the profits being received in India. 2,20,000.
(iii) Income from property, situated in Nairobi and received there 75,000
(iv) Income from agriculture in Bangladesh and brought to India 68,000
(v) Dividend-paid by an Indian company but received in London on 15 May 2013 22,000
(vi) Interest on USA Development Bonds and one half of which was received in India 44,000
(vii) Past foreign untaxed income brought to India 2,10,000
(viii) Gift of $1000 from father, settled in USA, received in India 80,000
(ix) Land sold in Delhi, consideration received in Canada, , resulting into capital gain 2,50,000
(x) Income from structure-designing constancy service, set up in Germany, 4,00,000 profits being received outside India
(xi) Loss from foreign business, controlled from India, sales being received in India (-) 2,00,000
Determine his taxable income for the previous year 2012-2013 if he is (i) resident and ordinarily resident, (ii) resident but not ordinarily resident, (iii) non-resident.
2. Mr.Tajuddin, Indian citizen, earns the following incomes during the financial year 2012-2013:
(i) Profits from a business in Mumbai, managed from France 1,00,000.
(ii) Pension for services rendered in Kenya but kept with State Bank in Kenya with the permission of the Reserve Bank of India 1,00,000.
(iii) Income from property in Kuwait, received in India 1,00,000.
(iv) Profits from business in Nepal and deposited in a bank there 1,00,000.
(v) Income received in Oman from a profession, which was set up in India, extended to Oman and managed from Kenya
(vi) Profit on sale of machinery in India but received in Italy
(vii) Profits, before allowing depreciation, from business Kuwait 50% of profits were received in India 1,00,000.
(viii) Interest on foreign bank deposit, received by his minor son in India. Bank deposit was made out of funds gifted by grandfather 1,00,000.
ix) A German company credited commission to his bank account outside India for sale of goods by him in India 5,000.
(x) Commission earned and received by him outside India on export orders collected by him in India for foreign exporters, without any authority being given to him by them 1,00,000.
(xi) Dividends remitted in India by an Egyptian company to him under his instruction through Bank of Patiala 6,20,000
Determine his taxable income for the previous year 2012 -2013 if he is (i) resident and ordinarily resident; (ii) resident but not ordinarily resident; and (iii) non-resident.

3. Mr J, settled in Japan, comes back to India on 25 August 2012 to settle down here permanently. He purchased a house property on 2 October 2012. He started business on 1 November 2012. He disclosed the following incomes/outgoing during the financial year 2012-13.
(i) Income from house property 1,00,000.
(ii) Business profits 1,00,000.
(iii) Loss from speculation business 1,00,000.
(iv) Dividends from Japanese companies received there 1,00,000.
(v) Profits from Japan business, controlled from India but received there 1,00,000.
(vi) Deposit in public provident fund 1,00,000.
Determine the residential status, total income and tax liability for the previous year 2012-2013. Would you change your answer if house property is purchased on 1 October 2012?
4. Kimono, a Japanese national discloses the following particulars of his income during financial year 2012-2013.
(i) Income from house property in Japan, remitted by tenant to him in India through State Bank of India 1,00,000.
(ii) Loss from business in India 1,00,000.
(iii) Profits from speculation business in India 1,00,000.
(iv) Interest received on bonds of Indian companies outside India 1,00,000.
(v) Net dividends received from Japanese companies outside India (tax deducted at source Rs 15,000) 1,00,000.
(vi) Interest received on compensation of land, acquired by Government of India during the financial year 2002-2003 1,00,000.
(vii) Profit from business in Japan, controlled and managed from India but being received in Japan 1,00,000.
Determine his total income for the previous year 2012-2013 in the following cases :
(i) He is resident and ordinarily resident during the previous year;
(ii) He is resident but not ordinarily resident during the previous year;
(iii) He is non-resident during the previous year.

5. R discloses the following particulars of his income during the previous year 2012-2013:
(i) Dividends from Sri Lanka companies received in India. Dividends were received partly in cash and partly in shares. Face value of shares is Rs 80,000 but their market value is Rs 3,20,000. However, currently there is no buyer in the market: 40,000
(ii) Pension remitted to him in India by Sri Lankan Government after deduction of tax source (Rs 15,000) 1,70,000
(iii) Fees received in Qatar for arguing a patent case in Delhi High Court on behalf of a fellow-lawyer friend of Mumbai 2,00,000
(iv) Commission credited to his account in India under his instructions by law firms in India, for referring clients from outside India but commission was received in Mauritius : 2,20,000
(v) Share of income from his HUF, received in Kolkata 1,50,000
(vi) Income from law practice in Mauritius and Qatar, received there, but practice was set up in Delhi 6,80,000
(vii) 5% commission for the year 2012-2013 from publishers of law books on their annual profits, received in India, commission has been paid after setting off Rs 30,000 for books purchased by him. He has purchased the dealership rights from Mumbai Law House on 1 January 2013: 1,20,000
(viii) Gift from a foreign client, received outside India: 20,000
Determine his total income for the previous year 2012-2013 if his residential status during the previous year is (i) ROR, or (ii) NOR or (iii) NR.

6. Mr X furnishes the following particulars of his income earned during previous year ended on 31 March 2013:
(i) Income from agriculture in Bangladesh, received there Rs. 3,80,000, but later on remitted to India,
(ii) Interest on Pakistani Development Bonds, Rs. 60,000, one-sixth of which received in India,
(iii) Gift of Rs. 70,000 received in foreign currency from a relative in India,
(iv) Arrears of salary Rs. 1,50,000 received in Pakistan from a former employer in India.
(v) Income from property received outside India Rs. 3,00,000 (Rs. 1,00,000 is used in Bahrain for the educational expenses of his son in Bahrain, and Rs. 2,00,000 later on remitted to India).
(vi) Income from business in Iran which is controlled from India (Rs. 1,00,000 being received in India) Rs. 2,00,000.
(vii) Dividends received on 30.06.2012 outside India from an Indian company, Rs. 2,50,000.
(viii) Untaxed .profit of the FY 2003-2004 brought to India in July 2012, Rs. 2,50,000.
(ix) Profit (computed) on sale of building in India received in Pakistan Rs. 21,00,000.
(x) Profit from business in Kolkata managed from outside India Rs. 90,000, 60% of which is received outside India.
Find out gross total income of Mr. X for AY 2013-2014, if Mr. X is (a) resident and ordinarily resident; (b) resident but not ordinarily resident; (c) non-resident.
Q.N. From the given below particulars, find the heads under which such income are taxable:
(i) Resident and ordinarily resident of India;
(ii) Resident but not ordinarily resident of India;
(iii) Non-resident.
Ø  Income from property in Sri Lanka remitted by the tenant to the assessee In India through SBI Rs. 2,10,000
Ø  Profit from business in India Rs. 1,00,000
Ø  Loss from business in Sri Lanka (whose control and management of business wholly remained in India) Rs. 80,000
Ø  Dividend from shares in foreign companies received outside India Rs. 60,000
Ø  Interest on deposits in India companies Rs. 1,20,000
Ø  Profit from business in Bombay managed from London Rs. 1,00,000
Ø  Pension from services rendered in India but received in Burma Rs. 50,000
Ø  Past foreign untaxed income brought to India during the previous year Rs. 10000
Ø  Income from agriculture in Nepal received there and then brought to India Rs. 5000
Ø  Interest on UK government bonds half of which received in India Rs. 10000
Ø  Interest paid by and Indian company but received in London Rs. 5000
Ø  Profit from business in London which is controlled from India, 50% received in India Rs. 500000
Ø  Profit from profession in London which is controlled from India, 100% of which received in India Rs. 50000
Ø  Profit from profession in London which is controlled from India, 50% of which received in India Rs. 50000
Ø  Salary drawn during the year from Govt. of India for services rendered outside India Rs. 50000
Ø  Allowances and car facility provided to employee by Govt. of India for serving outside India worth Rs. 100000
Ø  Salary drawn for employment in London office of an Indian company for three months Rs. 40000
Ø  Profits from business transaction outside India and kept in bank there Rs. 10000
Ø  Agricultural income from India Rs. 50000
Ø  Remuneration due to him Rs. 30000 for services rendered in London was credited to his bank account in Singapore and immediately thereafter remitted to India Rs. 10000
Ø  Salary income received in India for services rendered in Hong Kong  390000
Ø  Income from profession in India but received in Germany 360000
Ø  Property income in Uganda (Out of which 240000 was remitted to India) 500000
Ø  Profit earned form a business in Bangalore 150000
Ø  Agricultural income in Kenya 160000
Ø  Profits from a business carried on in Nepal but controlled from India 230000
Ø  Fees for technical services paid by a non-resident for a business outside India Rs. 20000
Ø  Interest income of a non-resident Rs. 10000 form an Indian bank
Ø  Interest paid by a resident in India on money borrowed and used for the purpose of business in India Rs. 500
Ø  Interest paid by a resident in India on money borrowed and used for the purpose of business outside India Rs. 500
Ø  Royalty paid by a resident in India for the purpose of business in India Rs. 500
Ø  Royalty paid by a resident in India for the purpose of business outside India Rs. 500
Ø  Interest paid by a non resident  in India on money borrowed and used for the purpose of business in India Rs. 500
Ø  Interest paid by a non resident  in India on money borrowed and used for the purpose of business outside India Rs. 500
Ø  Fees for technical services paid by resident in India for business  in India Rs. 10000
Ø  Fees for technical services paid by resident in India for business  outside India Rs. 10000
Ø  Income of a non resident from transfer of land in India Rs. 10000
Ø  Income from purchase of goods in India for purpose of exports of a non-resident Rs. 5000
Ø  Income from operations confined to shooting of cinematograph films in India of  a non resident who is a citizen of India Rs. 10000
Ø  Income from operations confined to shooting of cinematograph films in India of  a non resident who is a not citizen of India Rs. 10000
Ø  Income from operations confined to shooting of cinematograph films in India of  a non resident partnership firm Rs. 10000, one of the partner is a citizen of India.
Ø  Profit from sale of machinery at Delhi, half of which is received in London Rs. 5000
Ø  Profit on sale of Land in India to a citizen of Uk, cash received there but later on remitted to India Rs. 50000
Ø  Royalty earned in India but received in Nepal Rs. 5000
Ø  Speculation profit earned and received outside India Rs. 50000
Ø  Speculation profit earned and received in India Rs. 50000
Ø  Income from house property in Japan, remitted to tenant through SBI Rs. 50000.
Ø  Interest received on compensation of land, acquired by government of India  5 years back Rs. 10000
Ø  A sum equivalent to Rs. 100000 was earned from business in the USA but the profits have been remitted to India. Business was attended by the assessee when he was in USA.

Ø  Honorarium received from Govt. of India (15000 was incurred as travelling expenses in this connection) Rs. 100000.

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