Residential status of a Hindu undivided family 56

the burden of proving that an individual or a company is resident in India lies on the department— Moosa S. Madha & Azam S. Madha v. CIT [1973] 89 ITR 65 (SC). Residential status of an individual [Sec. 6]†

24. An individual may be (a) resident and ordinarily resident, (b) resident but not ordinarily resident, or (c) non-resident. 24.1 Resident and ordinarily resident [Sec. 6(1), 6(6)(a)] - To find out whether an individual is “resident and ordinarily resident” in India, one has to proceed as follows —

Step 1 First find out whether such individual is “resident” in India. See para 24.1-1 Step 2 If such individual is “resident” in India, then find out whether he is “ordinarily See para 24.1-2 resident” in India. However, if such individual is a “non-resident” in India, then no further investigation is necessary.

24.1-1 - Under section 6(1) an individual is said to be resident in India in any previous year, if he satisfies at least one of the following basic conditions—

Basic condition (a) He is in India in the previous year for a period of 182 days or more. Basic condition (b) He is in India for a period of 60 days or more during the previous year and 365 days or more during 4 years immediately preceding the previous year.

24.1-1a - The aforesaid rule of residence is subject to the following exceptions— ■ Exception one (Special Case 1) - In Special Case 1, the period of “60 days” referred to in (b) above has been extended to 182 days by virtue of Explanation 1(a) to section 6(1). However, Special Case 1 is available in the case of an Indian citizen who leaves India during the previous year for the purpose of employment outside India or an Indian citizen who leaves India during the previous year as a member of the crew of an Indian ship‡. For this purpose, the requirement is not leaving India for taking employment outside India but leaving India for the purposes of employment (the employment may be in India or may be outside India). To put it differently, the individual need not be an unemployed person—British Gas India (P.) Ltd., In re [2006] 155 Taxman 326 (AAR - New Delhi). He may be employed in India and leave India during the previous year on a foreign assignment of his employer company. Travelling abroad on business visa to take up any employment or for any business carried outside India, is sufficient to prove this condition—K. Sambasiva Rao v. ITO [2014] 42 taxmann.com 115 (Hyd.). Alternatively, he may be an unemployed person who goes outside India to take an employment outside India. In Special Case 1, an individual will be resident in India only if he is in India during the relevant previous year for at least 182 days. ■ Exception two (Special Case 2) - In Special Case 2, the period of “60 days” referred to in (b) above has been extended to 182 days# by virtue of Explanation 1(b) to section 6(1). However, Special Case 2 covers an Indian citizen or a person of Indian origin who comes on a visit to India during the previous year. A person is deemed to be of Indian origin if he, or either of his parents or any of his grand-parents, was born in undivided India. It may be noted that grand-parents include both maternal and paternal grand-parents.

† Vide Circular No. 2/2021, dated March 3, 2021, CBDT has provided that if any individual is facing double taxation even after taking into account the relief provided by the relevant Double Taxation Avoidance Agreement (DTAA), he/ she may furnish the specified information by March 31, 2021 in Form-NR annexed to the said Circular. This form is to be submitted electronically to the Principal Chief CIT (International Taxation). ‡In the case of an individual, being a citizen of India and a member of the crew of a foreign bound ship leaving India, the period or periods of stay in India shall, not include the period given in rule 126. Under rule 126, the period beginning on the date entered into the Continuous Discharge Certificate in respect of joining the ship by the said individual for the eligible voyage and ending on the date entered into the Continuous Discharge Certificate in respect of signing off by that individual from the ship in respect of such voyage, shall not be included in the period of stay in India.