Salary income subject to TDS under Section 192 is not liable to advance tax interest under Sections 234B and 234C.

Where income is assessed as salary and tax is required to be deducted at source by the employer under Section 192 of the Income-tax Act, 1961, liability to pay advance tax does not arise. On that basis, interest for default or deferment of advance tax under Sections 234B and 234C is not leviable on such salary receipts. The Court therefore set aside the interest levy, noting that the nature of the receipt as salary had already been concluded and the scrutiny was confined to the interest demand.

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Issues: Whether interest under Sections 234B and 234C of the Income-tax Act, 1961 was leviable on the amount received under the non-compete agreement, the receipt having been treated as salary.

Analysis: The limited notice confined scrutiny to the correctness of the levy of interest, and the nature of the receipt as salary stood concluded. In the case of salary income, tax is required to be deducted by the employer under Section 192 of the Income-tax Act, 1961. Since salary receipts are not subject to advance tax in the manner contemplated under Chapter VII of the Act, the provisions governing interest for default in payment of advance tax and interest for deferment of advance tax do not apply to such receipts.

Conclusion: Interest under Sections 234B and 234C was not leviable on the salary receipt, and the levy was set aside.

Ratio Decidendi: Where income is assessed as salary and is subject to deduction at source under Section 192 of the Income-tax Act, 1961, liability to advance tax and consequential interest under Sections 234B and 234C does not arise.

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