Salary TDS under section 192(2B) cannot extend to other income without employee particulars; default and interest failed.

Section 192(2B) permits salary withholding only when an employee furnishes particulars of other income; absent those particulars, an employer cannot deduct tax on non-salary income merely because it is also the employer. On that interpretation, treatment as an assessee in default under section 201(1) was not sustainable, and consequential interest under section 201(1A) also could not stand. The short-deduction demand was set aside.

---

---

Issues: Whether the assessee was rightly treated as an assessee in default under section 201(1) of the Income-tax Act, 1961 for non-deduction of tax at source on consultancy payments, and whether section 192(2B) of the Income-tax Act, 1961 authorised such deduction in the absence of particulars furnished by the recipient.

Analysis: Section 192 of the Income-tax Act, 1961 governs deduction of tax at source from salary payments. The insertion of section 192(2B) permits the employee to furnish particulars of other income to the employer so that tax may be deducted accordingly. The record showed that the relevant teaching staff had not furnished the necessary particulars of other income. In that situation, there was no authority to compel or justify deduction of tax on any head other than salary merely because the payer was also the employer. The interpretation adopted was strict, and the assessee's default finding under section 201(1) could not be sustained.

Conclusion: The assessee was not liable to be treated as an assessee in default under section 201(1) of the Income-tax Act, 1961, and the addition of consequential interest under section 201(1A) also could not stand.

Final Conclusion: The demand raised for short deduction of tax at source was set aside and the appeal succeeded.

Ratio Decidendi: In the absence of particulars of other income furnished by the employee, section 192(2B) does not authorise an employer to deduct tax at source on non-salary income, and a default under section 201(1) cannot be sustained on that basis.

---