Section 2(35)

Section 2(35) — the law in short

What the courts have decided on section 2(35), in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• Mansarovar Commercial P Ltd v CIT Supreme CourtHelps department
  My company is registered outside the taxable territory but run from Delhi. Where is it resident?
  Where it is actually run. The Supreme Court held that the residence of a company turns on de facto control and management, not on the place of registration: five companies incorporated under the Registration of Companies (Sikkim) Act, 1961 were resident in India because the management and control of all five was wholly situated in Delhi, at the office of a chartered accountant. The appeals were dismissed and the Delhi High Court's decision affirmed.
• Madhumilan Syntex Ltd v Union of India Supreme CourtHelps department
  I deposited the TDS late but with interest. Can the company and its directors still be prosecuted?
  Yes. The offence under s.276B is complete once deducted tax is not credited to the Government within the prescribed time; depositing it later with interest is a civil consequence and does not wipe out the default. Directors identified as principal officers under s.2(35) were properly arrayed with the company under s.278B.
• Dr. Manoj Khanna v ITO High CourtHelps departmentNo later treatment found
  You have now paid the TDS. Does that end the prosecution under s.276B?
  Not by itself. Belated deposit does not extinguish criminal liability unless the statute says so. The s.278E presumption of a culpable mental state attaches to a person in managerial charge and can only be rebutted at trial.
• Income-Tax Department v Vishweshwara Rao Chava High CourtHelps departmentNo later treatment found
  The complaint under s.276B names me as a director and says nothing more than that I was in charge of the company. The trial court discharged me. Can the Department get that set aside?
  Yes, if the complaint carries the specific averment that the director was in charge of and responsible to the company for the conduct of its business, and the s.2(35) notices treating him as principal officer are on the record as exhibits. Whether he really was at the helm is a matter of evidence for the trial, not a ground for discharge, and non-production of the record behind the notices does not make the complaint bad at that stage.
• Homi Phiroz Ranina v State of Maharashtra High CourtHelps taxpayer
  I am a non-executive director. The complaint under s.276B read with s.278B says only that I was in charge of and responsible to the company for the conduct of its business. Is that enough to put me on trial?
  No. The Bombay High Court held that a bare averment reciting the words of s.278B, with no material showing that the director was in fact in charge of the company's affairs and responsible for the conduct of its day to day business, does not disclose a prima facie case, and process should not have issued against such a director. The applicants, who were non-executive directors and two of whom were practising advocates who could not in law act as full-time directors, were discharged.

Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.