Case Law (SC) -- “control and management” under the Income Tax Act, means de facto control and management and not merely the right or power to control and manage i.e where the head and brain is situated or where the central control and management actually abides.

"7.1 On control and management of business, few decisions on interpretation of Section 4A of the erstwhile Income Tax Act, 1922 and interpretation of Section 6(3) of the Income Tax Act, 1961 are required to be referred to, which are as under:

---X ----V.V.R.N.M. Subbayya Chettiar v. CIT, Madras, AIR 1951 SC 101 ----x------ Erin Estate v. CIT, 1959 SCR 573 ---- x ------- Narottan and Pereira Ltd. v. CIT, Bombay City, 1953 23 ITR 454 ------ x ------ CIT v, v. Bank of China, 1985 SCC OnLine Cal. ------ x------ v. Nandlal Gandalal, 1960 40 ITR 1 (SC) ----- x---------

8. The sum and substance of the above decisions of this Court as well as various High Courts would be that where the head and seat and directing power of the affairs of the company and the control and management is must be shown is not merely theoretical control and power, i.e., not de jure control and power, but de facto control and power actually exercised in the course of the conduct and management of the affairs of the firm; that the domicile or the registration of the company is not at all relevant and the determinate test is where the sole right to manage and control of the company lies. 9. Applying the above principles of law to the facts of the case at hand, and the findings recorded by the AO, confirmed by the CIT(A), it is rightly concluded that the control and management of the affairs of the respective assessees were with Rattan Gupta, Chartered Accountant in Delhi. The findings of fact recorded by the AO, confirmed by the CIT(A) that the control and management of the affairs of the assessee companies was with Rattan Gupta are based on the entire material on record. In light of the aforesaid findings, the High Court has not CA 5769/2022 Etc. Page 60 of 67 committed any error in reversing the contrary findings recorded by the ITAT and it is rightly observed and held that service of notice upon Rattan Gupta treating him as the principal officer and/or as a principal officer for and on behalf of the assessee companies were valid notices and the High Court has rightly held that the AO at New Delhi was having the jurisdiction to issue notice under the Income Tax Act, 1961." 

Mansarovar Commercial Pvt. Ltd v. CIT CA No. 5769/2022 dated 10.04.2023

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