The karta of my client's HUF has lived in Dubai for years and all the family's decisions are taken there, but one property is managed from India by his brother. The Assessing Officer says the HUF is resident in India. On what test?
On the test in s.6(2): a Hindu undivided family, firm or other association of persons is said to be resident in India in any previous year in every case EXCEPT where during that year the control and management of its affairs is situated wholly outside India. The word that decides the case is "wholly". Any part of the control and management of the family's affairs being situated in India during the previous year makes the family resident. If the family is resident, s.6(6)(b) then asks whether it is "not ordinarily resident": it is, if its MANAGER has been a non-resident in India in nine out of the ten previous years preceding that year, or has during the seven previous years preceding that year been in India for 729 days or less.
Decided by the CBDT Circulars & Instructions (Not applicable — statutory text) on 1962-04-01, reported as Income-tax Act, 1961, ss.6(2) and 6(6), as printed on the departmental Year 2025, Year 2024 (No. 1) and Year 2022 pages. It bears on section 6(2), section 6(6), section 6, section 6(1A), section 5 of the Income Tax Act 1961, in Residence & Treaty Benefit, Assessment & Scrutiny and How Tax Law Is Read matters.
Two things about this section are constantly got wrong. The first is the direction of the exception. Section 6(2) does not ask where control and management is principally situated, nor where the karta lives; it makes the family resident in every case and then carves out only the family whose control and management is wholly outside India during the previous year. A single act of control exercised from India during the year is enough to defeat the exception. The second is that the residence test and the not-ordinarily-resident test look at different things. Section 6(2) looks at the situs of control and management of the family's AFFAIRS — an inquiry about the family, not about any individual. Section 6(6)(b) then switches to the MANAGER as a person and applies to him the same two limbs that s.6(6)(a) applies to an individual: non-resident in nine out of the ten preceding previous years, or presence in India of 729 days or less in the seven preceding previous years. Note the drafting: s.6(6)(b) says "whose manager", not "whose karta", and it does not attach any physical-presence test to the family itself. Note also that the two further limbs of s.6(6), clauses (c) and (d), are confined to a citizen of India or a person of Indian origin and to a citizen deemed resident under s.6(1A) — both of which are tests for individuals and cannot be applied to a family. The practical consequence is that a family with an entirely non-resident manager and any thread of Indian control is resident but not ordinarily resident, which is a materially different scope of charge under s.5(1) from that of an ordinarily resident family.
Binding on the department, not on the assessee or the courts. An assessee may rely on a circular that is beneficial to them.
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As printed identically on the Year 2022, Year 2024 (No. 1) and Year 2025 departmental pages, sub-section (2) reads: "A Hindu undivided family, firm or other association of persons is said to be resident in India in any previous year in every case except where during that year the control and management of its affairs is situated wholly outside India." Sub-section (6), as printed on the Year 2022 and Year 2024 (No. 1) pages, reads: "A person is said to be 'not ordinarily resident' in India in any previous year if such person is— (a) an individual who has been a non-resident in India in nine out of the ten previous years preceding that year, or has during the seven previous years preceding that year been in India for a period of, or periods amounting in all to, seven hundred and twenty-nine days or less; or (b) a Hindu undivided family whose manager has been a non-resident in India in nine out of the ten previous years preceding that year, or has during the seven previous years preceding that year been in India for a period of, or periods amounting in all to, seven hundred and twenty-nine days or less; or (c) a citizen of India, or a person of Indian origin, having total income, other than the income from foreign sources, exceeding fifteen lakh rupees during the previous year, as referred to in clause (b) of Explanation 1 to clause (1), who has been in India for a period or periods amounting in all to one hundred and twenty days or more but less than one hundred and eighty-two days; or (d) a citizen of India who is deemed to be resident in India under clause (1A)." Clause (b) was transcribed again from the Year 2025 page in the same words.
A Hindu undivided family is resident in India in a previous year in every case except where, during that year, the control and management of its affairs is situated wholly outside India. A resident Hindu undivided family is "not ordinarily resident" if its manager has been a non-resident in India in nine out of the ten previous years preceding that year, or has been in India for 729 days or less during the seven previous years preceding that year.
Not applicable — this is a statement of statutory text taken from departmental pages. No judicial reasoning is involved. The observation that clauses (c) and (d) of sub-section (6) cannot apply to a family is drawn from the words of those clauses as printed on the same pages.
A Hindu undivided family, firm or other association of persons is said to be resident in India in any previous year in every case except where during that year the control and management of its affairs is situated wholly outside India.
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Handle my notice → Ask a CA on WhatsAppOn the test in s.6(2): a Hindu undivided family, firm or other association of persons is said to be resident in India in any previous year in every case EXCEPT where during that year the control and management of its affairs is situated wholly outside India. The word that decides the case is "wholly". Any part of the control and management of the family's affairs being situated in India during the previous year makes the family resident. If the family is resident, s.6(6)(b) then asks whether it is "not ordinarily resident": it is, if its MANAGER has been a non-resident in India in nine out of the ten previous years preceding that year, or has during the seven previous years preceding that year been in India for 729 days or less. This was decided by the CBDT Circulars & Instructions (Not applicable — statutory text) and bears on section 6(2), section 6(6), section 6, section 6(1A), section 5 of the Income Tax Act 1961. It is reported as Income-tax Act, 1961, ss.6(2) and 6(6), as printed on the departmental Year 2025, Year 2024 (No. 1) and Year 2022 pages. Two things about this section are constantly got wrong. The first is the direction of the exception. Section 6(2) does not ask where control and management is principally situated, nor where the karta lives; it makes the family resident in every case and then carves out only the family whose control and management is wholly outside India during the previous year. A single act of control exercised from India during the year is enough to defeat the exception. The second is that the residence test and the not-ordinarily-resident test look at different things. Section 6(2) looks at the situs of control and management of the family's AFFAIRS — an inquiry about the family, not about any individual. Section 6(6)(b) then switches to the MANAGER as a person and applies to him the same two limbs that s.6(6)(a) applies to an individual: non-resident in nine out of the ten preceding previous years, or presence in India of 729 days or less in the seven preceding previous years. Note the drafting: s.6(6)(b) says "whose manager", not "whose karta", and it does not attach any physical-presence test to the family itself. Note also that the two further limbs of s.6(6), clauses (c) and (d), are confined to a citizen of India or a person of Indian origin and to a citizen deemed resident under s.6(1A) — both of which are tests for individuals and cannot be applied to a family. The practical consequence is that a family with an entirely non-resident manager and any thread of Indian control is resident but not ordinarily resident, which is a materially different scope of charge under s.5(1) from that of an ordinarily resident family. If it applies to you, the first step is this: Frame the s.6(2) inquiry as the section frames it: the family is resident unless you can show control and management was situated WHOLLY outside India throughout the previous year. Plead and prove the negative for the whole year.
As printed identically on the Year 2022, Year 2024 (No. 1) and Year 2025 departmental pages, sub-section (2) reads: "A Hindu undivided family, firm or other association of persons is said to be resident in India in any previous year in every case except where during that year the control and management of its affairs is situated wholly outside India." Sub-section (6), as printed on the Year 2022 and Year 2024 (No. 1) pages, reads: "A person is said to be 'not ordinarily resident' in India in any previous year if such person is— (a) an individual who has been a non-resident in India in nine out of the ten previous years preceding that year, or has during the seven previous years preceding that year been in India for a period of, or periods amounting in all to, seven hundred and twenty-nine days or less; or (b) a Hindu undivided family whose manager has been a non-resident in India in nine out of the ten previous years preceding that year, or has during the seven previous years preceding that year been in India for a period of, or periods amounting in all to, seven hundred and twenty-nine days or less; or (c) a citizen of India, or a person of Indian origin, having total income, other than the income from foreign sources, exceeding fifteen lakh rupees during the previous year, as referred to in clause (b) of Explanation 1 to clause (1), who has been in India for a period or periods amounting in all to one hundred and twenty days or more but less than one hundred and eighty-two days; or (d) a citizen of India who is deemed to be resident in India under clause (1A)." Clause (b) was transcribed again from the Year 2025 page in the same words. The matter was decided on 1962-04-01 by the CBDT Circulars & Instructions (Not applicable — statutory text). On those facts the CBDT Circulars & Instructions held as follows. A Hindu undivided family is resident in India in a previous year in every case except where, during that year, the control and management of its affairs is situated wholly outside India. A resident Hindu undivided family is "not ordinarily resident" if its manager has been a non-resident in India in nine out of the ten previous years preceding that year, or has been in India for 729 days or less during the seven previous years preceding that year.
Not applicable — this is a statement of statutory text taken from departmental pages. No judicial reasoning is involved. The observation that clauses (c) and (d) of sub-section (6) cannot apply to a family is drawn from the words of those clauses as printed on the same pages. In the words reproduced by the source cited on this page: "A Hindu undivided family, firm or other association of persons is said to be resident in India in any previous year in every case except where during that year the control and management of its affairs is situated wholly outside India."
It was decided by the CBDT Circulars & Instructions on 1962-04-01 and is reported as Income-tax Act, 1961, ss.6(2) and 6(6), as printed on the departmental Year 2025, Year 2024 (No. 1) and Year 2022 pages. Binding on the department, not on the assessee or the courts. An assessee may rely on a circular that is beneficial to them. A CBDT circular or instruction binds officers of the department but not the assessee and not the courts. Where a circular helps you, you may hold the department to it. Where it hurts you, it cannot override the Act or a judgment. On section 6(2), section 6(6), section 6, section 6(1A), section 5, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It cuts both ways and is cited by both sides. A Hindu undivided family is resident in India in a previous year in every case except where, during that year, the control and management of its affairs is situated wholly outside India. A resident Hindu undivided family is "not ordinarily resident" if its manager has been a non-resident in India in nine out of the ten previous years preceding that year, or has been in India for 729 days or less during the seven previous years preceding that year. It arises in Residence & Treaty Benefit, Assessment & Scrutiny and How Tax Law Is Read matters, on section 6(2), section 6(6), section 6, section 6(1A), section 5 of the Income Tax Act 1961, and was decided by Not applicable — statutory text. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Gather the evidence of where control was actually exercised — where decisions were taken, where the books were kept, where instructions to bankers and tenants originated — rather than where the karta was physically resident. Do not concede residence merely because the karta is abroad, and do not claim non-residence merely because most decisions were taken abroad. "Wholly" admits of no apportionment. If the family is resident, run the s.6(6)(b) test on the MANAGER as a person: nine out of ten preceding previous years as a non-resident, or 729 days or less in India over the seven preceding previous years. Do not apply s.6(6)(c) or s.6(6)(d) to a Hindu undivided family. On their own words they apply to a citizen of India or a person of Indian origin, and to a citizen deemed resident under clause (1A).
Still good law. Three departmental editions, the most recent stamped Year 2025, print sub-section (2) and sub-section (6)(b) in identical words. No amendment footnote for these sub-sections could be read on any of the three pages, so no commencement date is asserted for either. I did not carry out any check of judicial treatment of s.6(2) on this pass; the library already holds two Supreme Court decisions tagged to s.6(2) (V.VR.N.M. Subbayya Chettiar v. CIT and CIT v. Nandlal Gandalal) and this entry states the statutory test only. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
Sub-sections (2) and (6) were transcribed this pass from three separate departmental pages, each of which printed the Act name "Income-tax Act, 1961" and the section heading "Residence in India" alongside a "Year:" stamp: https://www.incometaxindia.gov.in/w/section-6-62 (Year: 2022), /w/section-6-64 (Year: 2024 (No. 1)) and /w/section-6-66 (Year: 2025). All three print sub-section (2) and sub-section (6)(b) in identical words. WRONG-INSTRUMENT WARNING, found this pass and not previously recorded in the brief: https://www.incometaxindia.gov.in/w/section-6 — the bare, unsuffixed URL — serves section 6 of the ACTUARIES ACT, 2006, heading "Entry of names in register", with a Year stamp of 2006. Demanding the Act name and heading is what caught it. This is the second unsuffixed departmental URL found to serve the Actuaries Act; the brief records /w/section-2 as the first. I did NOT read any amendment footnote for s.6 and I therefore make no statement about when sub-section (2) or sub-section (6)(b) was last amended; what I can say is that the Year 2022, Year 2024 (No. 1) and Year 2025 editions are word for word identical for both. 'decided_on' is the commencement date of section 6, namely 1 April 1962, the date on which the Income-tax Act, 1961 came into force under s.1(3) of that Act as printed on https://www.incometaxindia.gov.in/w/section-1-62 (Year: 2023). Sub-section (6) has since been enlarged — clauses (c) and (d) of s.6(6) refer to the fifteen-lakh threshold and to the deemed residence in clause (1A), neither of which existed in 1962 — and I did NOT establish the commencement of those clauses, which is why no date is asserted for them anywhere in this entry. It is not a decision date. 'bench' and 'favours' are inapplicable to a statutory entry. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
A Hindu undivided family is resident in India in a previous year in every case except where, during that year, the control and management of its affairs is situated wholly outside India. A resident Hindu undivided family is "not ordinarily resident" if its manager has been a non-resident in India in nine out of the ten previous years preceding that year, or has been in India for 729 days or less during the seven previous years preceding that year.
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