TMI Blog1971 (7) TMI 22X X X X Extracts X X X X X X X X Extracts X X X X ..... is 1955-56. The previous year ended on September 30, 1954. Bharat Union Agencies P. Ltd., a private limited company, had spent a sum of Rs. 53,398 to meet the personal necessities of the assessee during the previous year without charging for the same. The assessee was not a director of the company although he was the beneficial owner of 1,800 equity shares out of the total of 5,000 equity shares in the said company during the previous year. Similarly, Allen Berry and Co. P. Ltd. had spent a sum of Rs. 4,406 after the personal necessities of the assessee without charging the same. The assessee was neither a director of the said company nor was he the beneficial owner of any share in the said company. The Income-tax Officer, holding that section 2(6C)(iii) of the Income-tax Act, 1922, applied to the assessment year in question, whatever may be the relevant previous year, held that the total amount of Rs. 57,804 was the assessee's income and charged it to tax along with several other items of income. The assessee preferred an appeal against the above decision before the Appellate Assistant Commissioner wherein he contended : (a) that as section 2(6C)(iii) came into force wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... further contended that even if the benefit received by the assessee cannot be treated as his income by virtue of section 2(6C)(iii) for any reason, it should nonetheless be treated as his income in its normal and grammatical sense. It was also argued that the assessee was repeatedly receiving such benefits year after year. Such benefits, therefore, deserved to be treated as his income. The Tribunal held that, as the assessee was not a director in either of the two companies, the first part of section 2(6C)(iii) was clearly inapplicable. But, since the expression " a person who has a substantial interest in the company " as used in section 2(6C)(iii) has been equated by the use of the words " that is " with a person who is " concerned in the management of the business of the company " being the beneficial owner of shares other than preference shares carrying not less than 20 per cent. of the voting power ", two conditions must be satisfied. He should, firstly, be concerned in the management of the company and, secondly, he should be the beneficial owner of shares other than preference shares carrying not less than 20 per cent. of the voting power. The question for consideration, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Finance Act, 1955, specifically suggests the time when the amendments referred to in sections 3 to 19 would have effect. The amendment in section 3 of the Finance Act refers to the amendment of section 2 including clause (6C) of the Income-tax Act, 1922. Section 20 also specifically gives the period for which it would be applicable to different types of income as mentioned in section 20(2), section 20(3) and section 20(4). Further, it is well-recognised that the specific dates which are mentioned in the Income-tax Act have reference to the assessment years and have nothing- to do with the accounting years of an assessee which may differ from person to person. The amendment contained in the Finance Act, 1955, in respect of section 2(6C)(iii) was thus applicable to the assessment year 1955-56 and was rightly invoked by the Income-tax Officer. Counsel for the assessee next referred to section 2(6C)(iii) and urged that the asssessee was neither a director of the two companies nor was he " a person who was concerned in the management of the business of either company ". The value of any benefit or perquisite received by him from the companies would, therefore, not come within the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he pendency of any appeal, no employer shall--(a) alter, to the prejudice of the workmen concerned in such appeal, the conditions of service applicable to them immediately before the filing of such appeal, or (b) discharge or punish, whether by dismissal or otherwise, any workmen concerned ......... " The question whether a particular workman is or is not a " workman concerned " in an appeal came up for consideration in some cases to which we shall presently refer. Similarly, the words " workman not concerned " with the pending industrial dispute, occur in sections 33(1)(a) and 33-A of the Industrial Disputes Act, 1947, and have been considered in some decisions and will be referred to hereafter. The word " concerned " also occurred in the Sea Customs Act, 1878. In section 167(8) the person who was " in any way concerned " in the commission of the offence of bringing into India or taking out of the country goods with respect to which certain prohibition or restriction existed was penalised. The word has also been used in certain restrictive covenants relating to business. A person selling to another person a running business may enter into a covenant with him that he would no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e City of Sheffield. By section 341 of the Merchant Shipping Act, 1894, a " passage broker " was definde as " any person who sells or lets, or agrees to sell or let or is in any wise concerned in the sale or letting of steerage passages in any ship proceeding from the British Islands to any place out of Europe not within the Mediterranean Sea," and by section 342, " a person shall not act directly or indirectly as a passage broker " unless he holds the prescribed licence. The respondent in consideration of 22 l., paid to him by C agreed to place C's son as a farm pupil in Canada and out of 22 l., to procure a steamship passage from Liverpool to Quebec. Subsequently, the respondent obtained for about pound 9 from shipowners a contract ticket for a voyage from Liverpool to Quebec and sent it to the son. The respondent made no profit or commission out of the latter transaction. It was held that he had not been " concerned in the sale or letting of a passage within the meaning of section 341. Bruce J., who wrote the judgment of the court, observed : " To be concerned in a sale or letting means, I think, to have a part or share in the sale or letting--to have something to do with th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ations." We have already said that in sections 33(1)(a) and 33A of the Industrial Disputes Act, 1947, the words " workmen concerned in such dispute " occur. In New India Motors (P.) Ltd. v. K. T. Morris it was held that : " The expression ' workmen concerned in such dispute ' occurring in section 33(1)(a) of the Industrial Disputes Act, 1947, as amended by Act 36 of 1956, includes not merely such workmen as are directly or immediately concerned with the dispute, but also those on whose behalf the dispute is raised as well as those who, when the award is made, will be bound by it." In Arya Bhawan v. V. S. Nayayana Rao P. V. Rajamannar C.J., while dealing with the word " concerned as used in section 22 of the Industrial Disputes (Appellate Tribunal) Act 48 of 1950, observed that the question whether a particular workman is or is not a " workman concerned " in an appeal pending before the labour appellate tribunal was a question of fact. But, obviously, there is a difference in the meaning of the two words " concerned " and " interested ". " Concerned " connotes a more intimate and direct relation to the matter than the word " interested ". The distinction can well be brought ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffairs is situated wholly without the taxable territories." It was said: " The expression " control and management " under section 4A(b) signifies controlling and directive power, ' the head and brain ' as it is sometimes called. Furthermore, it is settled, we think, that the expres sion 'control and management ' means de facto control and management and not merely the right or power to control and manage." When the assessee was controlling both the companies having already invested over 33 per cent. capital in Bharat Union Agencies Private Ltd. without holding any office therein, the power exercised by him was one of de facto control unaccompanied by any right or power to control. Counsel for the assessee however contended that the control is not to manage the business of the company. According to him only a managing agent or managing director or a manager or a secretary of a company can be said to be the persons concerned in the management of the business of the company. But if the assessee was in de facto control of the companies, the part taken by him in the management of the business of the companies was more to be felt than to be seen. Whoever was the managing directo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. One who carried on the management indirectly and imperceptibly through the persons who outwardly and ostensibly carry on the management is covered by this 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." The above appears to be in consonance with the underlying intention of the legislature in introducing the clause in question and if we take, into account the meaning attributed to the word " concerned ", it cannot be limited to " concerned " in the sense of being an employee of the business or holding an office in the companies. Counsel for the assessee finally referred to sub-clause (iv) of clause (24) of section 2 of the Income-tax Act, 1961, which reads as under: (24) ' income ' includes- (i) profits and gains ; (ii) dividend : (iii) the value of any perquisite or profit in lieu of salary taxable under clauses (2) and (3) of section 17 : (iv) the value of any benefit or perquisite, convertible into money or not, obtained from a coimpany either by a director or by a person who has a substantial interest in the company, or by a relative of the director or such pe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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