Analysis:

• HUF is treated as “Resident” in India if the control and management of its affairs is situated wholly or partly in India in the relevant previous year.
• Thus, we can say that if in any previous year, the control and management of affairs of HUF is situated wholly outside India, it would be “Non-Resident” in India.

If the residential status of HUF is “Resident”, it could be either ROR or RNOR. The residential status of HUF as ROR or RNOR is determined on the basis of residential status of Karta. Karta is the person who heads and manages the affairs of the Hindu Undivided Family (HUF). All the crucial decisions in respect of affairs of HUF are generally taken by the Karta. This is the reason residential status of HUF as ROR/RNOR depends upon residential status of Karta. Thus,

• If the Karta is Resident and ordinarily resident (ROR): then HUF is also ROR
• If the Karta is Resident but not ordinarily resident (RNOR): then HUF is also RNOR

Analysis:

• A firm or an AOP shall be considered as “Resident” in India if the control and management of its affairs is situated wholly or partly in India.
• However, where the control and management of affairs is situated wholly outside India, the firm and AOP shall be “Non-resident”.
• A firm or an AOP can be only resident or non-resident. It can not be ROR or RNOR
• The residential status of the partners or the firm or members of AOP are not relevant in determining the residential status of firm or AOP.

Meaning of “Control and Management”:

• The term “Control and management” refers to the central control and management and not to carrying on of day-to-day business by servants, employees or agents. It implies the functioning of the controlling and directing power at a particular place with some degree of permanence.
• The business may be done from outside India and yet its control and management may be wholly within India. Therefore, the control and management of the business is said to be situated at a place where the head office and brain of the adventure is situated.
• The place of control may be different from the usual place of running the business and sometimes even the registered office of the assesses. This is because the control and management of a business need not necessarily be done from the place of business or from the registered office of the assessee.