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TMI Blog1960 (11) TMI 21X X X X Extracts X X X X X X X X Extracts X X X X ..... , in the first instance and was renewable at the option of the respondent for such period as he desired. By notice dated April 19, 1948, served on the respondent on April 22, 1948, the appellant company terminated the employment of the respondent. The respondent then filed a civil suit in the court of the Fifth Additional District Judge, Nagpur, for a decree for Rs. 1,30,000 being the amount of compensation for wrongful termination of employment, arrears of salary and interest. On July 17, 1953, the court, after giving credit for the amount received by the respondent, passed a decree for Rs. 42,359 (which was inclusive of Rs. 36,000 as compensation for termination of employment and Rs. 6,000 as salary in lieu of six months' notice and inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me-tax Act, in so far as it is material, provides that any person paying any amount chargeable under the head " salaries " shall at the time of payment deduct income-tax and super-tax at the rate representing the average of the rates applicable to the estimated total income of the assessee under the head " salary ". Sub-section (7) declares that a person failing to deduct the taxes required by the section shall be deemed to be an assessee in default in respect of such tax. The Legislature has, it is manifest, imposed upon the employer the duty to deduct tax at the appropriate rate on salary payable to the employee and if he fails to do so, the tax not deducted may be recovered from him. But the liability to deduct arises in law, if the amou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It may have been open to the appellant company in the suit to apply to the court for making a provision in the decree for payment of income-tax due by the respondent, but no such provision was made. We are not concerned to decide in this appeal whether in the hands of the respondent the amount due to him under the decree, when paid, will be liable to tax ; that question does not fall to be determined in this appeal. The question to be determined is whether as between the appellant company and the respondent the amount decreed is due as salary payment which attracts the statutory liability imposed by section 18. The claim decreed by the civil court was for compensation, for wrongful termination of employment, arrears of salary, salary due ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... balance. The rule that the decree must be executed according to its tenor may be modified by a statutory provision. But there is nothing in the Income-tax Act which supports the plea that in respect of the amount payable under a judgment debt of the nature sought to be enforced, the debtor is entitled to deduct income-tax which may become due and payable by the judgment creditor on the plea that the cause of action on which the decree was passed was the contract of employment and a part of the claim decreed represented amount due to the employee as salary or damages in lieu of salary. Counsel for the appellant company strongly relied upon the decision of the House of Lords in Westminster Bank Ltd. v. Riches. That was a case in which in an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se before us, there is a decree passed in favour of the respondent ; under the scheme of the Civil Procedure Code, that decree has to be executed as it stands, subject to such deductions or adjustments as are permissible under the Code. There was no tax liability which the respondent was assessed to pay in respect of this amount till the date on which the appellant company sought to satisfy the alleged tax liability of the respondent. As between the appellant company and the respondent, the amount did not represent salary ; it represented a judgment debt and for payment of income-tax thereon, no provision was made in the decree. The Civil Procedure Code bars an action of the nature which was filed in Westminster Bank's case. The defence to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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