TMI Blog1996 (3) TMI 162X X X X Extracts X X X X X X X X Extracts X X X X ..... tled to receive various amounts of compensation in accordance with the terms of settlement. The said workmen were immediately prior to their separation were said to be employed by the assessee to carry out the work of a manual, unskilled, skilled, technical, operational, clerical or supervisory nature. It was stated that no workmen was employed by the assessee company in the managerial or administrative capacity. 4. In computing the income chargeable under the head " salaries " for the purpose of deduction of Income-tax at source under section 192 of the Income-tax Act, 1961 (hereinafter referred as " the Act "), the assessee-company allowed each workmen covered by the Scheme, the benefit of exemption of Rs. 50,000 as per the provisions of section 10(10B) of the Act. The assessee-company also filed annual returns of salaries under section 206 of the Act, read with Rule 37. The factum of exemption made under section 10(10B) of the Act was reflected in the said returns. 5. The Assessing Officer in his order passed under section 201 of the Act, took the view that assessee had wrongly allowed exemption under section 10(10B) of the Act. He was of the opinion that the scheme of Vol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e employee. While framing the estimate, the employer is expected to act honestly and fairly. If, there is no mala fide on the part of the assessee, then no action can be taken under section 201 for short deduction of the tax. For this proposition the ld. counsel relied on the decision of the Tribunal in Procter Gamble India Ltd v. ITO [IT Appeal Nos. 781 to 784 (Bom.) of 1990 dated 18-9-1995]. 10. Shri A.P. Pawar, learned D.R. appeared before us. It was vehemently contended that assessee did not comply with the prescription of law. Default was committed in making the short deduction of tax. Voluntary Separation Scheme was different from retrenchment Scheme. The compensation was not given to the 'workmen'. As such, conditions contained under section 10(10B) were not satisfied. 11. The ld. D.R. stated that the said compensation was paid on the basis of Voluntary Separation Scheme. This scheme was arrived at by the company after entering into settlement with various Trade Unions and Employees Association. The Voluntary Separation Scheme of the assessee-company was open to management staff also. Under this scheme, an employee was required to make request for voluntary retiremen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6. The liability that is cast upon the person under section 201 of the Act, is not because of any notice of demand, but because of the operation of the statute itself. Once the liability is attached no further demand is needed to recover the tax and interest due thereon. But where the tax is not deductible at source under the relevant provision, the further questions of paying such tax to Central Government within any period of time and the payment of interest under section 201(1)(1A) do not arise. 17. In the case of Y.R. Rege, the Tribunal held that the assessee was a workman and compensation awarded to him under the Voluntary Separation Scheme was a compensation to the workman for there trenchment of the services under the provisions of the Industrial Disputes Act. In this case, the Tribunal relied on the decision of the Labour Court Madras rendered on identical facts. 18. In the case of G.S.I., the assessee was an employee with I.B.M.W.T. Corporation, Bombay. Under the Voluntary Separation Scheme, the assessee was to receive an amount in three equal instalments. The first instalment was received during the year. Assessing Officer included the entire sum ignoring the conditi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... six hundred rupees per mensum or exercises, either by the nature of the duties attached to the office or by reason of the powers vested in him, functions mainly of a managerial nature.' 22. Adverting now to the requirement of section 10(10B) we find that exemption is available in respect of any compensation received by a workman (as defined in aforesaid para)--- (i) under the Industrial Disputes Act, 1947 (14 of 1947) ; or (ii) under any other Act or Rules, orders or Notifications issued thereunder, or (iii) under any standing orders ; or (iv) under any award ; contract of service or otherwise, at the time of his retrenchment. 23. Under section 192 of the Act, person responsible for paying income chargeable under the head 'salaries', is required to make TDS on the Estimated income of the assessee. The word estimate connotes approximate calculation or judgment. It stress the element of uncertainty in venturing an opinion. It involves a personal appraisal or a value judgment. An estimate is based on the pertinent facts available at the time, the implication, being that other unknown factors might enter at a later stage. An estimate also involves a consideration of the d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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