Section 194C of the Income Tax Act
Income-tax Act, 2025: s.393
Section 194C of the Income-tax Act, 1961 corresponds to section 393 (Tax to be deducted at source) of the Income-tax Act, 2025.
Read section 393 of the 2025 Act
Correspondence checked against the ICAI tabular mapping of the two Acts and the BharatTax.co section commentary.
The decision most relied on for Section 194C is Hindustan Coca Cola Beverage Pvt. Ltd. v. CIT (293 ITR 226), cited in 576 of the 2,696 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.
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.
Section 195 of the Income Tax Act, which mandates tax withholding on payments to non-residents, applies only to sums that are otherwise chargeable to tax under the Act. Tax withholding provisions are not charging provisions.
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 reasonable construction of a taxing statute should be followed, and a literal construction should be avoided if it defeats the manifest purpose and object of the Act.
The onus is on the revenue to establish the nexus between expenses incurred and exempt income before making a disallowance under section 14A.
Section 40(a)(ia) of the Income-tax Act, 1961, applies only when an amount is payable (accrued) and not when the amount has already been disbursed or paid.
A statutory provision is not construed to have retrospective operation unless such a construction is explicitly stated in the Act or arises by necessary and distinct implication.