ALL INDIA REPORTER LTD., NAGPUR versus RAMACHANDRA DHONDO DATAR

ALL INDIA REPORTER LTD., NAGPUR versus RAMACHANDRA DHONDO DATAR

No tax was assessed against the respondent at the material time, so the Income Tax Officer had no authority to issue a notice under s. 46(5). The employer’s liability to deduct tax under s. 18(2) arises only if the amount payable is salary. The decretal amount consisted substantially of compensation, salary in lieu of notice, interest, and costs, forming a judgment-debt. There was no provision in the decree for income-tax deduction. Therefore, the appellant company was not entitled or bound to deduct income-tax under s. 18(2), and the decree was to be executed as awarded.

Parties
Appellant: All India Reporter Ltd., Nagpur; Respondent: Ramachandra Dhondo Datar
Jurisdiction
India
Judgment Date
29 November 1960
Procedural Posture
Civil Appeal / Supreme Court Appeal Against High Court Order
Outcome
Appeal dismissed.
Legal Topics
Wrongful Termination, Compensation, Arrears of Salary, Income Tax Deduction at Source, Execution of Decree
Income Tax Employment Law Civil Procedure Wrongful Termination Compensation Arrears of Salary Income Tax Deduction at Source Execution of Decree

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Parties

All India Reporter Ltd., Nagpur

Appellant

Ramachandra Dhondo Datar

Respondent

Procedural Posture

Civil Appeal / Supreme Court Appeal Against High Court Order

Legal Issues

  1. 1 Whether employer is entitled or bound to deduct income-tax under s. 18(2) of the Indian Income Tax Act, 1922, from a decretal amount including compensation for wrongful termination, arrears of salary, interest, and costs.
  2. 2 Whether the Income Tax Officer could serve notice under s. 46(5) to deduct tax from the decretal amount in execution proceedings.

Ratio Decidendi

No tax was assessed against the respondent at the material time, so the Income Tax Officer had no authority to issue a notice under s. 46(5). The employer’s liability to deduct tax under s. 18(2) arises only if the amount payable is salary. The decretal amount consisted substantially of compensation, salary in lieu of notice, interest, and costs, forming a judgment-debt. There was no provision in the decree for income-tax deduction. Therefore, the appellant company was not entitled or bound to deduct income-tax under s. 18(2), and the decree was to be executed as awarded.

Court Disposition

Appeal dismissed.

Orders

  • No order for costs as respondent did not appear.