The Supreme Court in ITC LIMITED GURGAON vs. COMMISSIONER OF I.T. (TDS) DELHI, has categorically held that ‘tips’ received by Hotel employees does not amount to ‘salary’ from their employer and hence the employer need not deduct the tax at source under Section 192 of the Income Tax Act, though the same would be chargeable in the hands of the employees as“income from other sources”. Section 192 of the Income Tax Act states that any person responsible for paying any income chargeable under the head “Salaries” shall, at the time of payment, deduct income-tax on the amount payable at the average rate of income-tax computed on the basis of the [rates in force] for the financial year in which the payment is made, on the estimated income of the assessee under this head for that financial year. Receipt of the tips by Hotel employees was treated by the Assessing officer as income under the head “salary” in the hands of the various employees and held that the assessee were liable to deduct t...