Section 6(2)

Section 6(2) — the law in short

What the courts have decided on section 6(2), in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• CIT v Nandlal Gandalal Supreme CourtHelps taxpayer
  Our family business is run entirely outside India, but two coparceners are partners in Indian firms with family money. Does that make the family resident in India?
  No, on these facts. The Supreme Court held by a majority that a family is resident unless the control and management of its affairs is situated wholly outside the taxable territories, and that affairs there means affairs capable of being controlled and managed by the family as such. A partnership entered into by a coparcener with strangers is a contract between him and them, not between the family and them; neither partnership law nor Hindu law gives the family any controlling power over it. So the firms could not be affairs of the family and did not make it resident, even though the income from them belonged to the family. Hidayatullah J dissented.
• V.VR.N.M. Subbayya Chettiar v CIT Supreme CourtHelps department
  The karta of our HUF lives abroad but comes to India a few times a year to attend to family litigation and tax matters — is the family resident in India?
  It depends, and the onus is on the assessee. The Supreme Court held that an HUF is presumed resident in India unless it shows that the control and management of its affairs is situated wholly outside India. 'Control and management' means the controlling and directive power, the head and brain, functioning at a place with some degree of permanence; mere activity is not residence. Here the karta lived and was domiciled in Ceylon, but he produced no correspondence or other evidence that the Indian affairs were normally directed from Colombo, so the presumption stood and the family was held resident.

Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.