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Whether a Company is a Citizen of India or Not? Explanation

Is a company a citizen of India?

• No. A company is not a citizen of India.

A company is an artificial person / legal person / juristic person.

• A company is also called an artificial person or a legal person because it is registered under the company laws of India and is given a distinctive identity separate from the promoters or shareholders who own it.

• Artificial person means its man-made or made through operation of law.

• As a juristic person, a company is entitled to the rights and obligations to the duties similar to  that of natural persons i.e. humans, with certain exceptions to such rights and duties.


Why a company can not be a citizen?

Citizenship Act, 1955

• In accordance with the Citizenship Act, 1955, Indian citizenship can be granted only to certain persons who fulfill the criteria specified under the said Act.

• As per the definition of "Person" as given in Section 2(1)(f) of the Citizenship Act, 1955, “person” does not include any company or association or body of individuals, whether incorporated or not.

• Therefore, it is quite clear from the above definition that a company can not be a citizen of India.

Constitution of India

• As per Part II of the Constitution (Article 5 to 11), it can be clearly noticed that the constitution talks about the grant of citizenship only to the persons (i.e. natural persons). 

• There is no mention of grant of citizenship to any company or body of association (i.e. juristic persons).


Case Law

In State Trading Corporation vs. Commercial Tax Officer, A.I.R. 1963 S.C. 1811, it was held that the word "Citizen" is intended to refer only to natural persons. Therefore, a juristic person like a company can not claim the status of citizenship for the purpose of invoking fundamental rights under Part III under the Constitution.


Nationality of a Company

The meaning of the terms "Nationality" and "Citizenship" are different from each other.

A company cannot claim citizenship. A company does not have to claim its nationality.

The nationality of a company depends on the country where it is incorporated and registered under the laws.

All companies incorporated in India have Indian nationality.


Resident Status of a Company

Resident status of a company is decided under the Income-tax Act for assessment of income and determination of tax purposes.

To know more about residential status of a company: check here.

Comments

  1. The nationality identification of a company is enough. Citizenship is not required. Apart from that there is already a distinction of Indian and Foreign companies under the Companies Act. The registration of foreign companies operating in India is also mandated and these companies data is maintained by MCA.

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