Determination of resident & nonresident status for assessee other than individual

ü    To day I am going to discuss about the status of the taxpayer or assessee who are a group of people , not individual . Here I will give information about the way to determine their status.

        In the case of                  (i) Hindu Undivided Family (HUF)

                                         (ii) Partnership firm

                               (iii) Association of Persons (AOP)

determination of the place of its control and management of its affairs is necessary

§  if it is wholly outside Bangladesh it is non resident

§  if a part of it is outside Bangladesh it is  resident

For example,

 ABC is a HUF or partnership firm or AOP . Name of its  karta or director is Mr. X . In  Fiscal year 2010-11 he lives in Canada. But  income of his AOP or Firm or HUF generated in Egypt . Other members/partners of firm ,HUF, AOP control and manage it from Bangladesh in his absence.  Then  ABC is a resident assesse (tax payer) in Bangladesh.

ü Control and management 

·        Significance

§  the controlling and directive power

§   situated implies the functioning of such power at a particular place performance.

·        Place 

§  The place of control may be different from the place where the actual trading (buying and selling) is carried on. Therefore, the place where trading activities or physical operations are carried on is not  the place of control and management . 

comment

If it is controlled from more than one country and also from Bangladesh then it is resident in those countries and Bangladesh.

·        Right

§  Again, control means de facto control ( actually controlled by any member of AOP / HUF or partner of Firm in absence of responsible member or partner but whether justified or not ) not necessarily the right to control is verified at the time of assessment. 

company-

              Resident

                           two types

 

        §  Bangladeshi company

        §  foreign company 

 registered at Registrar of Joint Stock Companies of Bangladesh or not

  Control and management

If the control and management of its affairs is situated fully in Bangladesh during the income year, it is resident company. 

Significance

Here control means de facto control not merely de jure control. The control and management, the head and brain, does not reside .Where there is some ultimate power of control such as the power to alter the articles of associations by a special resolution or the power to interfere with fundamental finance.

Place

 If it keeps house and does business in Bangladesh      or

 the central management and control actually abides in Bangladesh. 

For example,

 XYZ is a company not registered in Bangladesh. It sells and buys products in Sudan but it is controlled from Bangladesh. It is a resident  assesse.