Provisions of section 192(1) ,201(1A),Income Tax Act. - Income Tax - 1027/CBDT

INSTRUCTION NO. 1027/CBDT Dated : November 23, 1976 Section(s) Referred: 192(1) ,201(1A) Statute: Income - Tax Act, 1961 In a case which has come to the notice of the Board, an assessee had employed a foreign technician under an agreement by which the foreign technician was to receive tax free salary and the tax on his income chargeable under the head "salary" was to be paid by the company to the Central Government. The agreement was approved by the Central Government u/s 10(6) (vii) (a) (ii) of the Income-tax Act, 1961. The tax due on the "salary" for the period from 5th December 1965 to 4th December 1970 was paid only in financial year 1971-72 by the assessee after a demand was raised by the Income-tax Officer. The question for consideration was whether the company should have paid the tax so due as at source u/s 192(1) and whether failure to so pay the tax due attracted the provisions of section 201(1A) of the Act. 2. The Board are of the view that section 192(1) imposes a statutory obligation on every person responsible for paying any income chargeable under the head 'salary' to deduct income-tax on the amount paid by him. The liability of the employer to deduct and pay tax is absolute. Therefore, provisions of section 192(1) were attracted in the above referred case and it was the liability of the employer to have deducted and paid the tax regularly. Failure to do so would attract liability to pay interest u/s 201(!A) of the Act as well as other penal provisions under the Act. 3. All the officers of each charge may be informed of this position in law. The officers may also be directed to carry out a review of similar cases for necessary remedial action. The result of the review may be reported to the Board by 31st March 1977.