Section 6(3) of the Income Tax Act
Income-tax Act, 2025: s.6
Section 6(3) falls under section 6 of the Income-tax Act, 1961, which corresponds to section 6 (Residence in India) of the Income-tax Act, 2025.
Read section 6 of the 2025 Act
Correspondence checked against the ICAI tabular mapping of the two Acts and the BharatTax.co section commentary.
The decision most relied on for Section 6(3) is State of Orissa v. Sudhanshu Sekhar Misra (2 SCR 154), cited in 47 of the 53 judgments on BharatTax that turn on this section.
Leading authorities on Section 6(3)
A judicial decision is authority only for what it actually decides, which is its ratio decidendi, and not for every observation or what logically follows from general expressions. A decision must be read as applicable to the facts proved, with general expressions qualified by the specific context in which they are found.
Double Taxation Avoidance Agreements (DTAAs) operate in deviation from the general principles of taxation. If a DTAA recognizes taxing power with a foreign country, it implicitly takes away India's corresponding power to tax, acting as a bar on Sections 4 and 5 of the Income Tax Act.
A company is considered a resident of India only when its control and management are "wholly" situated in India. If any part of the control and management is located outside India, the company cannot be deemed a resident.
A judicial decision is only authority for what it directly decides; the ratio decidendi is paramount, not every observation or logical deduction from observations.
The central control and management of a company is considered to be situated at the place where its board of directors holds its meetings.
