Substantial shareholding and managerial control can make company-paid personal expenses taxable as income under the 1922 Act.

A company's spending on the personal necessities of an individual with beneficial ownership of shares carrying not less than twenty per cent of the voting power was taxable as income under section 2(6C)(iii) of the Indian Income-tax Act, 1922. The expression "concerned in the management of the business" was held to be wide enough to cover not only formal directors or employees, but also a person who directly or indirectly controls the company's management, including control exercised through managerial staff or behind the scenes. On the facts stated, the individual's admitted control brought him within the provision, so the amount constituted income.

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Issues: Whether the sum spent by a company on the personal necessities of an individual who held more than 20% of the voting power was taxable as income under section 2(6C)(iii) of the Indian Income-tax Act, 1922, on the ground that he was concerned in the management of the business of the company.

Analysis: The provision applies not only to a director but also to any other person having a substantial interest in the company, which requires both beneficial ownership of shares carrying not less than twenty per cent of the voting power and concern in the management of the business. The expression "concerned in the management" is not confined to a formal office-holder or employee. In context, it is wide enough to include a person who, directly or indirectly, controls the management of the company through the managerial staff or from behind the scenes. The assessee's admitted control over the company brought him within that expression.

Conclusion: The amount constituted income within section 2(6C)(iii) and the question was correctly answered against the assessee.

Ratio Decidendi: A person who beneficially owns shares carrying not less than twenty per cent of the voting power and directly or indirectly controls the management of a company is "concerned in the management of the business" for the purpose of section 2(6C)(iii) of the Indian Income-tax Act, 1922.

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