651/CBDT. - Income Tax - 651/CBDT

INSTRUCTION NO. 651/CBDT Dated : January 17, 1974 Section(s) Referred: 197(1)(a) Statute: Income - Tax Act, 1961 Applications u/s 197(1)(a) should be disposed of promptly. While considering applications under section 197(1)(a) for issue of certificate for deduction of tax at source at lower rate or no deduction as the case may be from insurance commission the Income-tax Officer should keep in mind and examine whether the applicant is a real agent or is a benami or fictitious agent. The certificate should not be issued where he has evidence to believe that the applicant is not the real agent. This point should be verified at the stage of issue of certificate under section 197(1)(a) itself particularly in the cases of lady agents and agents who are on the staff of the insurance companies or their relations. In order to determine whether the applicant is a real or benami agent, it may be examined whether the insurance business was procured by the applicant and the cheque for commission was received and encashed by him or by someone else on his behalf. Normally, the benami agents do not give correct address either to the L.I.C OR TO OTHER Government Department. It would, therefore, be worthwhile to verify the address furnished by them. Benami agents many a time do not come forward either with a claim of refund of tax deducted at source or for an exemption certificate under section 197(1)(c) for fear of being detected. A list of such cases may be prepared and enquiries may be made in these cases which would help in locating the real agent who should be assessed for the commission earned in the fictitious name.