Law: Income Tax Act, 1922

Section: 10,10(4)(d),10(2)(x)(b)

[Income Tax Act, 1922 (Xl of 1922)].......Section 10(4)(d)-Perquisite Tax on Tax-Non-resident Banking company-Tax-free salary paid to foreign employees Tax paid by Banking company on betray of such employees-Tax on Tax-Whether perquisite-Held no. An employer under Section 18 of the Income Tax Act is required to deduct the tax at source and it is the net salary after deduction of the tax that is paid to the employees. Here too the position is that the employees are paid the net salaries and the appellant having undertaken to pay the h re fact that the employees are in terms of their service agreement paid tax free salaries would not really change the character of the behalf of the tax since to all intents and purposes this is the tax paid on behalf employees and thus a part of their salary notwithstanding that the tax calculated in this manner is higher than the tax which the employees would have paid had they not been paid tax free salaries and the taxes were deducted from their salaries at source. The tax on tax cannot, therefore, be properly regarded as a perquisite but a part of the salary of the employees. Case relied on:- Hartland v. Giggines (H. M. Inspector of Taxes (K.B.D. (1924) S.K.B. 168. .A. B. Income Tax Act, 1922 (Xl of (1922)-Section 10(2)(x)(b)-Bonus -Non-resident company having branch in Pakistan Loss sustained by the Pakistani branch-Payment of bonus to the employees in Pakistan keeping in view over all financial condition of the company disclosing substantial profits-Whether admissible deduction Held yes. Although loss was incurred in Pakistani Branch the overall financial condition of the company disclosed substantial profits which fully justified the grant of bonus to the employees of the Pakistani Branch. The bonus paid to the employees was, therefore, an admissible deduction. Case relied on: Commissioner of income Tax V. United Commercial Bank Ltd., Karachi (1969) 20 Taxation 216; JUDGMENT [The order was passed by K. SALAHUDDIN, Accountant Member]- The appellant is a branch of at non-resident banking company with head office at T and branches all over the world including one at K , and assessment for the year 1968-69 is the subject matter…

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