TMI Blog1977 (1) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... ivered by SARKARIA J.-- This appeal by special leave is directed against a judgment dated July 12, 1971, of the High Court of Delhi. It arises out of these facts : The appellant (hereinafter referred to as the assessee) is an individual. The assessment year is 1955-56. Bharat Union Agencies Pvt. Ltd. had spent Rs. 53,398 after the personal necessities of the assessee during the previous year ending September 30, 1954, without charging for the same. The assessee was not a director of the said company. He, however, was the beneficial owner of 1,800 shares out of the total of 3,000 equity shares of the said company during the previous year. Similarly, Allen Berry and Co. Pvt. Ltd. had spent a sum of Rs. 4,406 after the personal neces ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 2(6C) of the Indian Income-tax Act, 1922. On this reasoning the Tribunal dismissed the assessee's appeal in regard to the item of Rs. 53,398. However, it allowed, on a different ground, his appeal with regard to the item of Rs. 4,406 received from Allen Berry and Co. Pvt. Ltd. In this appeal we are not concerned with that item any more. At the instance of the assessee, the Tribunal stated the case and referred the following question under section 66(1) of the Indian Income-tax Act, 1922, to the High Court : " Whether, on the facts and in the circumstances of the case, the sum of Rs. 53,398 spent by Bharat Union Agencies Pvt. Ltd. after the personal necessities of the assessee is income within the meaning of section 2(6C)(iii) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... item of Rs. 53,398 involves a question of fact. We, therefore, did not permit the counsel to raise this plea for the first time at the time of arguments before us. Counsel next contended that the expression " concerned in the management of the business of the company " takes in only that person who by virtue of a position or office held by him in the company, legally and actually participates in the management of its business and not he who holds no such position or office but is in remote control of the company and its affairs merely on account of being in ownership of a certain number of shares, carrying more than 20 per cent. or even the majority of the voting power. In support of this restricted construction of the term " concerned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e (iii), it is clear that it falls in two distinct parts. The first part is confined to the obtaining of the value of any benefit or perquisite from a company by a director, even if he has no substantial interest in the company. The second part applies to a person who may not be a director but has a substantial interest in the company. What is " substantial interest " is further equated by the succeeding expression, " that is to say ", with the co-existence of two elements, namely, (i) concern in the management of the business of the company, and (ii) beneficial ownership of shares (not being shares entitled to a fixed rate of dividend) carrying not less than twenty per cent. of the voting power. There is no dispute before us that the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtain position is, in our opinion, certainly a person covered by this expression. It is also not necessary...that the management should be carried on in an ostensible manner. One who carried on the management indirectly and imperceptibly through the persons who outwardly and ostensibly carry on the management is covered by the expression. It is not necessary, in our opinion, that the management should be both seen and felt ; it is sufficient if it is felt, without being seen. " In our opinion, the above is a correct exposition of the law on the point. The word " concern " is not a term of art, having a precise, fixed meaning. It has several nuances, and is used to convey diverse shades of meaning over a wide spectrum. It may mean " to ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... admission of his being " concerned in the management of the business of the company ". We, therefore, agree with the High Court, that the ambit of the term " concerned " in section 2(6C)(iii) cannot be restricted to a person who is an employee of the business or an office-holder of the company. In the context of " management " it is wide enough to include every person interested in the management, in the sense of having the direction and control of the managerial staff. On the facts of the case, the assessee was such a person. We are, therefore, of opinion that the High Court was right in answering the question referred to it, against the assessee. The appeal fails and is dismissed with costs. Appeal dismissed. - - TaxTMI - TM ..... X X X X Extracts X X X X X X X X Extracts X X X X
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