Here is gist of some important judgments on the subject of deduction of Tax at Source, which I particularly found educative enough or which need to be bookmarked to be referred For making understanding simple, I am also giving along with the impact that the judgment could have.

PAYMENTS TO PART-TIME STAFF/CONSULANTS - Where an employer has on its rolls not only employees on regular basis but also others like consultants, the question whether the remuneration paid to such consultants will fall under ‘salaries’ or under ‘fees for professional services’ will depend upon the nature of contact entered into with the consultants on contract entered into with the consultants. Where a hospital deployed consultants on contract basis and paid them remuneration in the form of share in the fees charged by it from the patients subject to a minimum agreed amount and the hospital treated the payment as fees for professional services and deducted tax under section 194J at the flat rate of 5 per cent, the Tribunal held, on due examination of the terms of the contract, that the consultants had to be treated as ‘employees’, and payment made to them was liable to deduction of tax at source under section 192 of the Act- St. Stephen’s Hospital v.Dy. CIT.

However, in another case, where a non-resident company had set up a liaison office in India and appointed six individuals as consultants and the Tribunal found that the service agreement disclosed that the contract was not one of service but was one for service, it was held that payments to such consultants attracted deduction of tax at source only under section 194J and not under section 192-DY. CIT v. Coastal Power Co.
So, the essence lies in that unless you have very clear terms of employment as whole time employee, you should always work out your tax liability either way and accordingly ask for terms of employment to save on income tax. Remember, if you are working as professional, for one depending on your remuneration your TDS could be lower and second you could get deduction of operating expenses from the income.

ADJUSTMENT OF EXCESS/DEFICIENCY MUST BE EMPLOYEE-WISE- The adjustment of excess/deficiency permitted to be made by an employer under section 192(3) must be with reference to the estimated income of one employee and not all employees taken together. It is legally not permissible for the employer to deduct tax from one employee and refund it to another employee- Shriram Pistons & Rings v. ITO.
Some employers who resort to adjusting tax as above to oblige employees need to take note of this.

MONTHLY DEDUCTIONS NEED NOT BE OF IDENTICAL AMOUNT- Section 91(1) nowhere mandates that each monthly installment should be exactly 1/12th of the total tax deductible at source, since otherwise the permission given to the employer to make adjustments under section 192(30 will have no meaning. The employer cannot be penalised on the monthly shortfalls in deduction when the total tax deducted for the year is not less than the total tax deductible-Vinsons v. Third ITO[2004] / ITOv. Cadilla Laboratories (P.) Ltd. /ITOv. Asian Hotels Ltd.
Good judgment to be bookmarked. There are many instances where assessing officers have not taken into account specific difficulties in deducting TDS in equal installments and levied penalty.

WHEN EMPLOYEE MAKES ASSURANCE/DECLARATION FOR EFFECTING SAVINGS- The employer is generally not competent to reduce the tax deductible at source proportionately merely on the basis of any assurance given in writing by any employee to the effect that he will be effecting savings which qualify for tax relief-Major General Vinay Kumar Singh v. Union of India. If the employer takes into account such assurance and estimates the taxable salary, it is the duty of the employer to ensure that the employee has actually affected the savings within the financial year by making inquiries. In case the employee has not affected any savings as per his assurance, the employer must recalculate and deduct the tax at source by ignoring the assurance before the close of the financial year.

Employers need to insist on actual receipt of proof of savings by employees before allowing them relief. Employers who tend to rely only on declaration by employees as proof of investment need to be careful.

REIMBURSEMENT TOWARDS TRANSPORT EXPENSES IS NOT LIABLE TO TDS- Where the agreement with the consultant provided for payment of fees for professional service and in addition reimbursement of transport expenses based on actual (for which the consultant raised a separate bill), tax is to be deducted only on the ‘fee’ component and not on the ‘reimbursement’ component in respect of which there is no element of profit involved-ITOv.Dr. Willmar Schwabe India (P.) Ltd.

If you are a professional insist on terms of appointment that allow reimbursement of Local Conveyance expenses separately.

INTERST CANNOT BE REDUCED OR WAIVED- There is no discretion vested in any authority to waive or reduce the quantum of interest livable under section 201(1A)

Hmmm. Be carful while deducting and depositing TDS, you can not escape interest where you commit mistake.
 
MENS REA NEED NOT BE ESTABLISHED- Before levying interest under section 201 (1A), the element of mens rea need not be established- ITOv. Das Biri Mfg. Co. (P.) Ltd.

This is a surprise judgment, as there are great number of judgments that insisting on establishing Mens Rea before levy of penalty. This can be misused by Assessing Officer, so be careful