Praise be to Allah! The short and simple answer to your question is that Allah Most High exists beyond time, space, location and 'physical' direction; He is where He has always been. Part of this central point of Aqeedah is recognizing that Allah Most High is not confined to time (zaman) and space (makan), since He is the creator of both and absolutely free from needing anything (ghaniyy) that He has created. "Surely Allah is independent of all the worlds." (Qur'an 29:6)

The people of Sunnah and Jama’ah (adherents to the prophetic way) believe that Allah is exalted above His creation. This is evident from following sources

• Quranic proof
• Sunnah proof (Hadiths)
• Consensus of the scholars
• Common sense (the Logical proof)
• Man's innate instinct (fitrah)

Let us now analyze each source separately:

• The Quran
Quran describes the "exaltedness" or "highness" of Allah in different ways, as His being high and above, and by describing how things come down from Him, and go up to Him, and by stating that He is above heaven. Quranic references quoted below. (interpretations of the meaning)

Highness
and He is the Most-High, the Most-Great." (Al Quran 2:255) "Glorify the Name of your Lord, the Most-High." (Al Quran 87:1)

Above
And He is the Irresistible, above His slaves …" (Al Quran 6:18)

"They fear their Lord above them, and they do what they are commanded." (Al Quran 16:50)

Things coming down from Him
"He arranges (every) affair from the heavens to the earth … " (Al Quran 32:5)

"Verily We: it is We Who have sent down the Dhikr (i.e., the Quran) …" (Al Quran 15:9)

Things going up to Him
"To Him ascend (all) the goodly words, and the righteous deeds exalt it …" (Al Quran 35:10)

"The angels and the Rooh (Jibreel) ascend to Him …" (Al Quran 70:4)

Allah is above heaven
"Do you feel secure that He, Who is over the heaven, will not cause the earth to sink with you …?" (AL Quran 67:16)

• The Sunnah
Many reports were narrated "mutawatir" (i.e. with a large number of narrators at every stage of the isnad/chain, such that it is impossible for them all to have agreed on a lie) from the Prophet (peace and blessings of Allah be upon him), describing his words and deeds and things of which he approved. For example, he used to say "Subhana Rabbi al-A’la (Glory be to my Lord Most High)" in sujood (prostration), and in some ahadeeth (reports) he is reported to have said "By Allah Who is above the Throne."

Among his deeds is the gesture of pointing up with his finger, when addressing the people in the greatest gathering, on the Day of ‘Arafah during his Farewell Pilgrimage. He asked the people, "Have I not conveyed the message?" and they said, "Yes!" He asked again, "Have I not conveyed the message?" and they said, "Yes!" He asked a third time, “Have I not conveyed the message?" and they said "Yes!" Each time, he said: "O Allah, bear witness!" - pointing up to the sky and then at the people. He also used to raise his hands towards heaven when he made du’a (supplication), as reported in many ahadeeth. This is proof via his actions that Allah is exalted and high.

An example of an approval of the Prophet (peace and blessings of Allah be upon him) which indicates that Allah is exalted and high is the hadeeth (report) concerning the young slave girl, to whom the Prophet (peace and blessings of Allah be upon him) said: "Where is Allah?" She said: "Above the Sky." He asked, "Who am I?" She said, "The Messenger of Allah." So he said to her master: "Set her free, for she is a believer."

This young girl was uneducated, as many are, and she was a slave, but she knew that her Lord is above heaven. Some misguided people deny that Allah is above heaven, and say, "He is neither above nor below; neither to the right nor to the left. He is everywhere!" The rationale from above hadith is that Prophet declared her to be a believer based on her assertion that “Allah” is above the sky.

• The consensus of the scholars
The statements of early scholars of Islam confirming Allah’s transcendence are too numerous to mention in this brief answer. The 15th century scholar al-Dhahabi, wrote an entire book on this topic titled “al-ulooo lil-Ali al-Adhim in which he gathered the statements of over 200 major scholars of the past on this topic. A good example of such statements can be found in “Mutee’Al-Balakhis” report that he asked Abu Haneefa his opinion of a person who says he does know whether his Lord is in the heavens or on earth. Abu Haneefa replied. “He has disbelieved”, because Allah has said, The Most Merciful is above the throne” (Al Quran 20:5) and His throne is above seven heavens.

• Common sense (The logical proof)
Logically speaking, it is obvious that in a case where two things exists, one of those things must either be a part of the other and dependent on it like its attributes, or it must exist by itself, distinct from the other. Thus, when Allah created the world, either He created inside Himself or HE created it outside of Himself. The first possibility is unacceptable because it would mean that Allah, the infinite Supreme Being, has within Himself finite attributes of deficiency and weakness. Therefore, He must have created the world outside of Himself as an entity distinct from Himself yet depending on Him. Having created the world outside of Himslef, he either created it above Himself or below Himself. Since human experience nowhere confirms prayer downwards and being below creation contradicts Allah’s majesty and supremacy, therefore, he must be above His creation and distinct from it. Alos, Highness is a quality which is associated in people’s minds with perfection and thus, it should be attributed to Allah because every absolute perfection should be attributed to Him.

• The innate instinct of man (fitrah)
There should be no dispute that man instinctively knows that Allah is above heaven. Whenever something overwhelming befalls a person, and he turns to Allah for help, he looks towards heaven, not in any other direction. But it is strange that those who deny that Allah is above His creation still raise their hands in supplication to no other direction than towards heaven.

Even Pharaoh, the enemy of Allah who disputed with Moosa (peace be upon him) about his Lord, told his minister Haman (interpretation of the meaning):

"O Haman! Build me a tower that I may arrive at the ways, - the ways of the heavens, and I may look upon the god of Moosa …" (Al Quran 40:36-37)

Therefore, we conclude from above evidences that:

• Allah is completely separate from His creation.
• Creation neither surrounds Him nor is above Him in any way.
• He, Allah, is above all things We ask Allah to guide us towards the Truth. And Allah knows best.