Actually, it goes on the side opposite of the nut. could be inside or outside of the water.
Flange side and gasket go inside the aquarium. Water side. Bulk Reef Supply has a video on this.
I agree the nut side should always been on the dry side, if possible, for this reason. However sometimes you're forced to put the nut on the wet side for spacial reasons. Certainly the less water you have above the bulkhead (and weight) the less risk here. (if you noticed on my build, I have a drain capped off and the bulkhead had to have the nut on the wet side, but you'll also notice the pipe I capped it off with extends nearly to the surface in the overflow - to decrease the water weight on the bulkhead)Don't Install it upside down on a tank. Just because it will hold does not mean its the appropriate way to install a bulkhead on a tank. Install it how you want on your sump/refugium.
With the flange on the water side you have the weight of the water pushing down on the flange and the seal only making a better seal.
With the flange and seal on the outside you have the water pushing against the seal trying to separate it from the glass so it can run out. If your looking to have a bulkhead fail this is a good way to set it up.
And this is the reason I'd personally never have a closed loop; one leaky bulkhead and you might have to drain the whole tank! But that's a different discussion.What if you put that bulkhead in upside down with the nut on the inside of the tank, then you accidentally bump your drain line or your close loop during maintenance and you have a leak. Good luck getting your hand down the inside of your overflow box to tighten that nut.
I saw such before I posted and you were correct, but a picture speaks a thousand words.See post #3.