Section 194C of the Income Tax Act
The decision most relied on for Section 194C is Hindustan Coca Cola Beverage Pvt. Ltd. v. CIT (293 ITR 226), cited in 484 of the 504 judgments on BharatTax that turn on this section.
Leading authorities on Section 194C
The deductor cannot be treated as an assessee-in-default under Section 201(1) if the deductee has already paid the tax or offered the impugned receipts in their return of income. However, interest under Section 201(1A) for delayed deposit of tax can still be levied up to the date of filing of the return of income by the deductee.
Amendments to the Income-tax Act that are curative, clarificatory, or beneficial in nature apply retrospectively from the date the original statutory provision was introduced, even if not explicitly stated.
Employees' contributions to provident fund or ESI are allowable as a deduction if deposited by the due date for filing the return of income, even if paid beyond the due date prescribed under the respective fund laws. This applies retrospectively due to the amendment to Section 43B.
Purchases may be treated as genuine even if the purchase parties are untraceable or not available for verification, as long as there is no specific evidence from the parties themselves denying the transactions or proving them to be bogus.
Withholding tax provisions, being machinery provisions, are not independent of the charging provisions determining an assessee's tax liability, and the taxability of foreign salary payments depends on specific facts. Additionally, penalty provisions under sections 271C and 271D are not automatic, and an assessee can be exonerated by a reasonable cause under section 273B, particularly if acting under a bona fide belief or in unsettled legal situations.
The obligation to deduct tax at source under Section 195 arises only when the payment to a non-resident is a sum chargeable to tax under the Income-tax Act (Sections 4, 5, and 9), considering Sections 90, 91, and applicable DTAA. TDS is not automatically triggered by a mere remittance if the income is not taxable in India.
The Supreme Court affirmed that lower authorities are bound by decisions of higher authorities due to judicial discipline. It also clarified that the Commissioner, in exercising revisional power under Section 263, can conduct necessary inquiries to determine if an assessment is prejudicial to the Revenue.
A deductor cannot be treated as an 'assessee in default' under Section 201 of the Income Tax Act if the payee has already included the income in their return and paid tax on it. This principle applies due to the proviso to Section 201.
The rule of reasonable construction must be applied while interpreting a statute, avoiding literal construction if it defeats the manifest object and purpose of the Act. Statutes have a purpose and object whose sympathetic and imaginative discovery is the surest guide to their meaning.
Interest received by an assessee on loans and advances provided to its employees is assessable as 'business income' under the Income Tax Act.
Judgments on Section 194C
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