Place of Effective Management governs corporate residence; active business abroad and real control determine tax residency. The Place of Effective Management (POEM) defines corporate residence by locating where key management and commercial decisions are substantially made. Companies engaged in active business outside India satisfy a multi-limb test on passive income, asset location, employee distribution and payroll; if satisfied and majority board meetings occur abroad, POEM is presumed outside India unless management powers are exercised from India. Where the active-business test fails, POEM is determined by identifying who actually makes key decisions and where those decisions are made, with emphasis on substance over form and consideration of head office, delegation, technology, and shareholder influence.
Cases where this provision is explicitly mentioned in the judgment/order text; may not be exhaustive. To view the complete list of cases mentioning this section, Click here.
Provisions expressly mentioned in the judgment/order text.
Place of Effective Management governs corporate residence; active business abroad and real control determine tax residency.
The Place of Effective Management (POEM) defines corporate residence by locating where key management and commercial decisions are substantially made. Companies engaged in active business outside India satisfy a multi-limb test on passive income, asset location, employee distribution and payroll; if satisfied and majority board meetings occur abroad, POEM is presumed outside India unless management powers are exercised from India. Where the active-business test fails, POEM is determined by identifying who actually makes key decisions and where those decisions are made, with emphasis on substance over form and consideration of head office, delegation, technology, and shareholder influence.
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