ALL INDIA REPORTER LTD., NAGPUR vs RAMACHANDRA DHONDO DATAR

The Supreme Court held that under Section 46(5) of the Indian Income Tax Act, 1922, the Income Tax Officer could not issue a notice requiring the appellant company to deduct income tax from the decretal amount awarded to the respondent, as no tax had been assessed against him. The Court clarified that a significant portion of the awarded amount constituted compensation for wrongful termination and not salary, thus exempting it from tax deduction under Section 18(2). The High Court's order was reversed, allowing the execution of the decree as claimed by the respondent without tax deduction.