PAC's 78th report for 1977-78. - Income Tax - 1220/CBDT

INSTRUCTION NO. 1220/CBDT Dated : November 30, 1978 The PAC in its 78th report for 1977-78 have observed as under- It is no secret that private sector has larger number of employees than employees under the Central Government. Not only that it is common knowledge that the salaries and perquisites in the case of private sector are far higher than those under Central Government. According to a recent study made by the Reserve Bank of the distribution of highly paid employees in the organised private sector, in some industries like non-ferrous metals basic, tobacco, dyes and dye-stuffs and aluminium the highest annual remuneration per executive ranges well above Rs. 60,000 per annum Again according to this study the highest paid executives are in the tobacco industry getting over Rs.60,000, 24 getting over Rs.80000 and 19 getting over Rs.1,00,000 per annum. This is followed by aluminium and by and dyestuffs in which the number of employees getting over Rs.60,000 per annum is 45 and 36, those getting over Rs.80,000 per annum is 26 and 17 and those getting over 1,00,000 is 14 and 13 respectively. The Committee recommended that in the context of RBI Study, the CBDT should undertake a review at least in the case of selected industries and in respect of their top executives to see if the assessment of salaries and perquisites in the hands of the employees and the employers is being made with the care and attention that it deserves. The Committee would like to be assured that there is no evasion of tax whatsoever in these cases. 2. The Board desire that the cases of the top executives of the industries referred to by the PAC may be reviewed with a view to ascertaining that the assessments of salaries and perquisities in their hands are Properly made. The cases of the companies engaged in these industries may also be reviewed with particular reference to the application of the provisions of sec.40(a)(v) and 40A(5) of the I.T.Act 1961. Further, ITO's while completing the pending cases, may keep this while finalising the assessments. 3. A report regarding the review of the cases of the top executives may kindly be sent by 31-12-78 in the enclosed proformae.