| Case ID |
2e765596-14c8-4390-a730-ced347213d59 |
| Body |
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| Case Number |
CIVIL APPEAL No. 327 OF 1959 |
| Decision Date |
Nov 29, 1960 |
| Hearing Date |
|
| Decision |
The Supreme Court ruled that the liability to deduct income tax arises only when the amount is due and payable as salary. In this case, no tax had been assessed against the respondent at the time the Income Tax Officer issued a notice. Therefore, the ITO had no authority to issue the notice under section 46(5) of the Income-tax Act, 1922, and could not recover any tax from the judgment debt payable by the appellant company to the respondent. The Court emphasized that the compensation awarded for wrongful termination of employment does not qualify as salary for tax deduction purposes, hence the appeal by the appellant company was dismissed. |
| Summary |
This case revolves around the issue of tax deduction at source under the Income-tax Act, 1961, and the Indian Income-Tax Act, 1922. The Supreme Court of India addressed whether an employer could deduct income tax from a compensation payment awarded for wrongful termination of an employee. The court determined that since no tax had been assessed against the respondent at the time of payment, the Income Tax Officer had no authority to mandate a deduction. This decision underscores the legal distinction between salary and judgment debt, emphasizing that payments deemed as compensation do not fall under the purview of salary for tax deduction purposes. Keywords such as 'Income Tax Act', 'deduction at source', 'wrongful termination', and 'judgment debt' highlight the essence of the case, making it relevant for legal professionals and taxpayers alike, while also being SEO optimized for legal research. |
| Court |
Supreme Court of India
|
| Entities Involved |
Appellant Company,
Respondent Employee
|
| Judges |
J.L. Kapur,
M. Hidayatullah,
J.C. Shah
|
| Lawyers |
A.V. Viswanatha Sastri,
Shankar Anand,
A.G. Ratnaparkhi,
K.N. Rajagopal Sastri
|
| Petitioners |
Not available
|
| Respondents |
Ramchandra D. Datar
|
| Citations |
1961 SLD 133 = (1961) 41 ITR 446
|
| Other Citations |
Westminster Bank Ltd. v. Riches [1947] 28 Tax Cas. 159,
Manickam Chettiar v. ITO [1938] 6 ITR 180 (Mad.)
|
| Laws Involved |
Income-tax Act, 1961,
Indian Income-Tax Act, 1922
|
| Sections |
192,
226,
46(5),
18,
46(5)
|