A B C D E Q.

Resident & Ordinarily Resident Resident & NOT Ordinarily Resident Non Resident in India Any one of A, B or C None of A, B and C QUESTION A B C D E

AMIT left India for the first time on May 20, 2003. During the financial year 2005-06, he came to India once on May 27 for a period of 53 days. Determine his residential status for the assessment year 200607? EXPLANATION:- Since AMIT comes to India only for 53 days in the previous year 2005-06, he does not satisfy any of the basic conditions laid down in section 6(1). He is, therefore, non-resident in India for the assessment year 2006-07.

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AMIT comes to India, for the first time, on April 16, 2003. During his stay in India up to October 5, 2005, he stays at Delhi up to April 10, 2005 and There after remains in Chennai till his departure from India. Determine his residential status for the assessment year 200607. EXPLANATION:- AMIT satisfies one of the basic 0 conditions and only one of the two additional conditions. He is, therefore, resident but not ordinarily resident in India for the assessment year 2006-07.

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X, a foreign citizen comes to India, for the first time 0 in the last 30 years on March 20, 2005. On September 1, 2005, he leaves India for Nepal on a business trip. He comes back on February 26, 2006. Determine the residential status of X for the assessment year 2006-07. EXPLANATION:- he is not following any condition so we can say he is NRI. He live in India only for 133 days

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Mr. ram 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.

Explanation: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

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X a foreign citizen comes to India for the first time on June 20,2011. On S eptember 6,2011 , he leaves India for Burma on business trip. He comes back on January 1,2012. He maintains a dwelling place in India from the date of his arrival (i.e. June 20,2011) till January 15,2012 when he leaves for Kuwait. Determine his residential status for A.Y. 2012-13.

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Mr. X, a citizen of India, received salary from the Government of India for the service rendered outside India. Is the salary income chargeable to tax?

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Explanation:As per S ection 9(1)(iii), salaries payable by the Government to a citizen of India for services rendered outside India is deemed to accrue or arise in India. Hence, salary received by Mr. X, a citizen of India, from the Government of India for services rendered outside India is chargeable to tax under the head S alaries. But all allowances or perquisites paid outside India by the Government to Indian citizens for their rendering services outside India are exempt under section 10(7).

3.

Are there any restrictions on deduction allowable to the partnership firm in respect of salary and interest to its partners under section 40(b) of the Income-tax Act, 1961? Explanation:(i) The remuneration payable to its working partners and interest payable to partners should be authorized by and in accordance with the partnership deed and should fall after the date of execution of the deed. (ii) The payment of interest to partners is allowable up to 12% p.a. simple interest if it is authorized in the partnership deed and must fall after the date of the deed. (a) On the first `3 lakh of book profit or in the case of loss `1,50,000 or 90%of book profits whichever is more. Ms. Nomi contends that sale of a work of art held by her is not eligible to capital gains tax; is she correct.

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Explanation:As per section 2(14)(ii), the term personal effect excludes any work of art. As a result, any work of art will be considered as a capital asset and sale of the same will attract capital gains tax. Thus, the contention of Ms. Nomi is not correct Mr. X, an individual resident woman, wanted to know whether income-tax is attracted on sale of gold and jewelry gifted to her by her parents on the occasion of her marriage in the year 1979 which was purchased at a total cost of `2,00,000 Explanation:Under section 2(14) includes jewelry. Therefore, capital gains is attracted on sale of jewelry, since jewelry is excluded from personal effects. The cost to the previous owner or the fair market value as on 1/4/1981, whichever is more beneficial to assesse, would be treated as the cost of acquisition. Accordingly, in this case, long term capital gain @ 20% will be attracted in the year in which the gold and jewelry is sold by Mr. X