Professional Documents
Culture Documents
2
Prices of refrigerator and AC likely to
go up due to customs duty increase on
compressor
3
• Prices of refrigerator and air-conditioner are likely to
go up marginally by around 1% due to a small increase
in basic customs duty on their key component –
compressor – by 2.5%.
• A public company is a corporation whose ownership is open to the public. In other words,
anyone can buy the shares of a public company. There are no restrictions to the number of
members of a public company or to the transferability of shares. However, there are some
other restrictions:
• (In UK) A public limited company should have at least 2 shareholders and 2 directors, have
allotted shares to the total value of at least £50,000, be registered with company house, and
have a qualified company secretary.
• (In India) A public company should have at least 7 members and 3 directors, and issue a
prospectus or file a statement in lieu of prospectus with the Registrar before allotting shares.
Private Company (Or Private Limited Company)
• A private company cannot be owned by the public; it restricts the number of
members, the right to transfer its shares and prohibits any invitation to the
public to subscribe for any shares or debentures of the company.
• (In UK) A private company is a separate legal entity with a suitable company
name, an address, at least one director, at least one shareholder, and
memorandum of association and article of association.
• Section 455 of companies Act speaks about the dormant company. The meaning of Dormant
company means inactive or inoperative. The basic idea of dormant company is for the
benefit of a company to start a future project or hold an asset/intellectual property without
having significant accounting transactions.
• On the other hand if a company has not filed its annual returns for two consecutive years
then such a company will also be called as a dormant company. Companies may apply for a
dormant status if the company is incorporated for a future project, incorporated for holding
an asset or intellectual property, company which has not filed Financial Statement and
Annual Returns during the last two financial years and the company which is not carrying out
any business or has made any significant accounting transactions
TYPES OF COMPANIES
On the basis of Ownership and
Control
Foreign
Companies
Domestic Companies
The company which is
Is a company that is
incorporated outside India
incorporated in the
but has a place of business
country(India)
in India through its
branches or agencies is
known as foreign company
It mainly consists of three levels of management.
They are as follows:
Types of Residents
Resident Non-Resident
(a) Stay in India in the P.Y. for a period of 182 days or more,
OR
(b) Stay in India for at least 365 days during the 4 years
preceding the P.Y. and is in India for at least 60 days during the
Solution
• Since X comes to India only for 53 days in the previous
year 2005-06,
he does not satisfy any of the basic conditions laid
down in section 6(1).
He is, therefore, non-resident in India for the assessment
year 2006-07.
Knowledge check MCQ Practice
20
Residential Status Of A Company [Section 6(3)]
Determination of total income of a company depends upon its residential status during the relevant previous year. The residential status of the company is determined
either
1.on the basis of its incorporation (Registration ) ; or
2.on the basis of the control and management of its affairs.
On the basis of Residential Status, companies can be classified in to’ two categories
A.Resident Companies
B.Non Resident Companies.
(A) Resident Companies [Section 6(3)]
A company is said to be resident in India in any previous year
i.It is an Indian Company ; or
ii.during the relevant previous year the control and management
of its affairs is situated wholly in India.
Observations
1.An Indian company is always a resident company for income
tax purposes even if the control and management of its affairs is
saturated outside India
2.A non-Indian company or a foreign company will be treated
as resident of India for any previous year only if the entire
control and management of affairs of such company, during the
relevant previous year is situated in India.
For example :
i.A company is incorporated in India but has head office in
Dacca,
ii.A company is incorporated in Bangladesh but has head office
in Kolkata
In first case it is incorporated in India and situation of its head
office is immaterial, as such it is resident company. In second
case though it is incorporated outside India but its control and
management is wholly situated in India hence it is resident
company.
(B) Non Resident Company [Section 2(30)]
A Company will be a non-resident in any previous year if:
1.it is not an Indian company and
2.its place of effective management, in that year, is not in India.
It means a foreign company whose control and management is
situated wholly or partially outside India will be a non-resident
company. For example an American company holds 8 meetings
in India out of total of 12 meetings held during the previous
year such company will be non-resident for income tax
purposes for such previous year.