RELATED DEFINITIONS

DEFINITIONS OF TERMS UNDER INCOME TAX ACT, 1961 AND THE COMPANIES ACT, 1956,  REFERRED TO IN THE CUSTOMS ACT, 1962 , CENTRAL EXCISE ACT, 1944 AND THE FINANCE ACT, 1994. 

Definitions as per Income Tax Act, 1961

      Residence in India  

Section 6 – For the purposes of this Act,-
(1) An individual is said to be resident in India in any previous year, if he-
  (a)

is in India in that year for a period of periods amounting in all to one hundred and eighty-two days or more; or

  (b) [Deleted]
  (c)

having within the four years preceding that year been in India for a period or periods amounting in all to three hundred and sixty five days or more, is in India for a period or periods amounting in all to sixty days or more in that year. 

  Explanation – In the case of a individual,-
  (a)

being a citizen of India, who leaves India in any previous year as a member of the crew of an  Indian ship as defined in clause (18) of section 3 of the Merchant Shipping Act, 1958 (44 of 1958), or for the purpose of employment outside in India, the provisions of sub-clause (c) shall apply in relation to that year as if for the words “sixty days”, occurring therein, the words “one hundred and eighty-two days” has been substituted;.

  (b)

being a citizen of India, or a person of Indian origin within the meaning of Explanation to clause (e) of section 115C, who being outside India, comes on a visit to India in any previous year, the provisions of sub-clause (c) shall apply in relation to that year as if for the words “sixty days” occurring therein, the words “one hundred and eighty-two days”, had been substituted. 

(2)

A Hindu undivided family, firm or other association of persons is said to be resident in India in any previous year in every case except where during that year the control and  management  outside India. 

(3) A company is said to be resident in India in any previous year, if -
  (i) it is an Indian company; or
  (ii)

during that year the control and management  of its affairs  is situated wholly  in India. 

(4)

Every other person is said to be resident in India in any previous year in every case, except where during that year the control and management of his affairs is situated wholly outside India. 

(5)

If a person is resident in India in a previous year relevant to an assessment year in respect of any source of income, he shall be deemed to be resident in India in the previous year relevant to the assessment year in respect of each of his other sources of income. 

(6) A person is said to be “not ordinarily resident” in India in any previous year if such person is –
  (a)

an individual who has not been resident in India in nine out of the ten previous years preceding that year, or has not during the seven previous years preceding that year been in India for a period of, or periods amounting in all to, seven hundred and thirty days or more; or

  (b)

a Hindu undivided family whose manager has not been resident in India in nine out of the ten previous years preceding that year, or has not during the seven previous years preceding that year been in India for a period of, or periods amounting in all to, seven hundred and thirty days or more. 

  The following clause (6) shall be substituted for the existing clause (6) of section 6 by the Finance Act, 2003,  w.e.f. 1-4-2004:
   
(6) A person is said to be “not ordinarily resident” in India in any previous year if such person is -
(a) an individual who has been a non-resident in India in nine out of the ten previous years preceding that year, or has during the seven previous years preceding that year been in India for a period of, or periods amounting in all to, seven hundred and twenty-nine days or less; or
(b) a Hindu undivided family whose manager has been a non-resident in India a nine out of the ten previous year preceding that year, or has during the seven previous years preceding that year been in India for a period of, or periods amounting in all to, seven hundred and twenty-nine days or less.

Non-resident 

Section 2(30)- “non resident” means a person who is not a “resident” and for the purposes of section 92, 93 and 168, includes a person who is not ordinarily resident within the meaning of clause (6) of section 6; 

Indian Company 

Section 2(26)- “Indian company” means a company formed and registered under the Companies Act, 1956 (1 of 1956), and includes- 

(i)

a company formed and registered under any law relating to companies formerly in force in any part of India (other than the State of Jammu and Kashmir and the Union territories specified in sub-clause (iii) of this clause);

(ia) a corporation established by or under a Central, State or Provincial Act;
(ib)

any institution, association or body which is declared by the Board to be a company under clause (17)   *** ;

(ii)

in the case of the State of Jammu and Kashmir, a company formed and registered under any law for the time being in force in that State;

(iii)

in the case of any of the Union territories of Dadra and Nagar Haveli, Goa, Daman and Diu, and Pondicherry, a company formed and registered under any law for the time being in force in that Union territory. 

Provided that the registered or, as the case may be, principal office of the company, corporation, institution, association or body in all cases is in India; 

***      Section 2(17) “company” means-

(i) any Indian company, or
(ii) any body corporate incorporated by or under the law of a country outside India, or
(iii)

any institution, association or body which is or was assessable or was assessed as a company for any assessment year under the Indian Income-tax Act, 1922 (11 of 1922), or which is or was assessable or was assessed under this Act as a company for any assessment year commencing on or before the 1st day of April, 1970, or

(iv)

any institution, association or body, whether incorporated or not and whether Indian or non-Indian, which is declared by general or special order of the Board to be a company:

Provided that such institution, association or body shall be deemed to be a company only for such assessment year or assessment years (whether commencing before the 1st day of April, 1971, or on or after that date) as may be specified in the declaration;

Foreign company 

Section 2(23A) -“foreign company” means a company which is not a domestic company 

 

Definitions as per Companies Act,  1956 

Meaning of holding company” and “subsidiary”  

Section 4 – (1) For the purposes of this Act, a company shall, subject to the provisions of sub-section (3), be deemed to be a subsidiary of another if, but only if,- 

  (a) that other controls the composition of its Board of directors; or
  (b)

that the other exercises or controls more than one-half of its total voting power in a case where it has issued securities and such securities have the same voting rights as equity shares;  or

  (c) that the other holds more than one-half in value of its paid-up capital, in any other case; 
(1A)

No company which is a subsidiary of another company shall, after the commencement of the Companies (Amendment) Act, 2003, become a holding company;

(2)

For the purposes of sub-section (1), the composition of a company’s Board of directors shall be deemed to be controlled by another company if, but only if, that other company by the exercise of some power exercisable by it at its discretion without the consent or concurrence of any other person, can appoint or remove the holders of all or a majority of the directorships; but for the purposes of this provision that other company shall be deemed to have power to appoint to a directorship with respect to which any of the following conditions is satisfied, that is to say- 

  (a)

that a person cannot be appointed thereto without the exercise in his favour by that other company of such a power as aforesaid; 

  (b)

that a person’s appointment thereto follows necessarily from his appointment as director or manager of, or to any other office or employment in, that other company, or 

  (c)

that the directorship is held by an individual nominated by that other company or a subsidiary thereof. 

(3) In determining whether one company is a subsidiary of another- 
  (a)

any shared held or power exercisable by that other company in a fiduciary capacity shall be treated as not held or exercisable   by it; 

  (b)

subject to the provisions of clauses (c) and (d), any shares held or power exercisable – 

    (i)

by any person as a nominee for that other company (except where that other is concerned only a fiduciary capacity); or

    (ii)

by, or by a nominee for, a subsidiary of that other company, not being a subsidiary which is concerned only in a fiduciary capacity; 

    shall be treated as held or exercisable by that other company; 
  (c)

any shares held or power exercisable by any person by virtue of the provisions of any debentures of the first-mentioned company or of a trust deed for securing any issue of such debentures shall be disregarded; 

  (d)

any shares held or power exercisable by, or by a nominee for, that other or its subsidiary not being held or exercisable as mentioned in clause(c) shall be treated as not held or exercisable by that other, if the ordinary business of that other or its subsidiary, as the case may be, includes the lending of money and the shares are held or the power is exercisable as foresaid by way of security only for the purposes of a transaction entered into in the ordinary course of that business. 

(4)

For the purposes of this Act, a company shall be deemed to be the holding company of another if, but only, if that other is its subsidiary

(5)

In this section, the expression “company” includes any body corporate, and the expression “equity share capital” has the same meaning as in sub-section (2) of section 85. 

(6)

In the case of a body corporate which is incorporated in a country outside India, a subsidiary or holding company of the body corporate under the law of such country shall be deemed to be a subsidiary or holding company of the body corporate within the meaning and for the purposes of this Act also, whether the requirements of this section are fulfilled or not. 

(7)

A private company, being a subsidiary of a body corporate incorporated outside India, which, if incorporated in India, would be a public company within the meaning of this Act, shall be deemed for the purposes of this Act to be a subsidiary of a public company if not less than ninety-nine per cent. of the share capital   in that private company is not held by that body corporate whether alone or together with one or more other bodies corporate incorporated outside India. 

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