Residential status of a Firm or an association of person or a company

Residential status of a firm and an association of person defined under section 6 (4) of the income tax act, 1961. As per this section, the residential status is defined as below;

Residential Status of a firm or an association of person

A partnership firm or an association of person is said to be resident in India if the control and management of its affairs are wholly or partly situated within India during the relevant previous year. It is however, treated as non resident in India if the control and management of its affairs are situated wholly outside India

What is control and management

Control and management is situated at a place where the head and the directing power are situated. In the case of a firm if the partners of a firm are resident in India then the normal presumption is that the firm is resident in India.

Residential status of A Company

Residential status of a Firm or an association of person or a companyResidential status of the company is defined under section 6 (3) of the income tax act, 1961.

According to this section An Indian company is always resident in India.

A foreign company is resident in India only if, during the previous year, the control and management of its affairs are situated wholly in India.

However, a foreign company is treated as non resident if during the previous year the control and management of its affairs are either wholly or partly situated out of India.

The term control and management refers to the head and brain which directs the affairs of policy, finance, disposal of profits and vital things concerning the management of a company. Usually control and management of a company’s situated at the place where meeting of its board of directors are held.

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