Concept of “Residence” under Income Tax Act
By Sabaha Khan
LLm (Business Laws)
National law school of India university, Bangalore
Tax incidence on an assessed depends on his residential status. For instance, whether an income, accrued to an individual outside India, is taxable in India depends upon the residential status of an individual in India. Similarly, whether an income earned by a foreign national in India (or outside India) is taxable in India depends on the residential status of an individual, rather than his citizenship. Therefore, the determination of the residential status of the person is very significant in order to find out his tax liability[1]. One can say that taxation of the assessee depends on his residence. Therefore, the first inquiry is always towards proper ascertainment of the residential status of an assessee. In a decision of the Calcutta High Court[2] the learned judge observed,
“in my opinion, the word residence in its simple and ordinarily meaning signifies the place where the human eats, drinks or sleeps, or where his family and servants eats, drink and sleep and where there is some permanence and continuance of such eating. Drinking and sleeping and the statement of Bayley Justice in the case of King v. Inhabitants of North curry, is in m opinion, an authority on that proposition.”
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