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

Hindustan Coca Cola Beverage Pvt. Ltd. v. CIT
293 ITR 226 · 2007 · Supreme Court
576
citing judgments

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.

Allied Motors (P) Ltd. v. CIT
224 ITR 677 · 1997 · Supreme Court
398
citing judgments

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.

Nikunj Eximp Enterprises v. CIT
216 Taxmann 171 · 2013 · High Court
325
citing judgments

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.

CIT v. Eli Lily & Co.
312 ITR 225 · 2009 · Supreme Court
221
citing judgments

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.

CIT v. Ralson Industries Ltd. 5
288 ITR 322 · 2007 · Supreme Court
153
citing judgments

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.

Goodyear v. State of Haryana
188 ITR 402 · 1991 · Supreme Court
94
citing judgments

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.

Maruti Udyog v. DCIT
92 ITD 119 · 2005 · ITAT
87
citing judgments

The onus is on the revenue to establish the nexus between expenses incurred and exempt income before making a disallowance under section 14A.

CIT v. Vector Shipping Services (P) Ltd.
357 ITR 642 · 2013 · High Court
87
citing judgments

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.

Carborandum Co. v. CIT
108 ITR 335 · 1977 · Supreme Court
87
citing judgments
Sodex SVC India (P) Ltd. v. DCIT (TDS) 2(2)
92 Taxmann.com 260 · 2018 · ITAT
86
citing judgments

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.

Judgments on Section 194C

Hemraj Agarwal, Paschim Medinipur vs. DCIT, Circle - 2, Medinipur

In the result, appeal of the assessee is allowed in part

ITA 1825/KOL/2019[2009-10]Status: DisposedITAT Kolkata26 Feb 2020AY 2009-10

Bench: Shri J. Sudhakar Reddy, Hon’Ble] I.T.A. No. 1825/Kol/2019 Assessment Year: 2009-10 Hemraj Agarwal…............................…………...……………....……..…………..………………....……Appellant 187, Chandni Chowk Golebazar, Kharagpur Paschim Medinipur West Bengal – 721 301 [Pan: Afqpa 4712 G] Vs. Deputy Commissioner Of Income Tax, Circle-2, Midnapur…..............….....….…......Respondent Appearances By: Shri Miraj D. Shah, A/R, Appeared On Behalf Of The Assessee. Shri Jayanta Khanra, Jcit, Sr. D/R, Appearing On Behalf Of The Revenue Date Of Concluding The Hearing : February 24Th, 2020 Date Of Pronouncing The Order : February 26Th, 2020 O R D E R Per J. Sudhakar Reddy, Am :- This Appeal Filed By The Assessee Is Directed Against The Order Of The Learned Commissioner Of Income Tax (Appeals) – 11, Kolkata, (Hereinafter The “Ld.Cit(A)”), Passed U/S. 250 Of The Income Tax Act, 1961 (The ‘Act’), Dt. 28/06/2019, For The Assessment Year 2009-10. 2. The Assessee Is An Individual & Is Engaged In The Business Of Wholesale Of Pulses, M. Seeds Etc. The Assessing Officer While Passing An Order U/S 143(3) Of The Act On 16/12/2011, Disallowed An Amount U/S 40(A)(Ia) Of The Act, On The Ground That The Assessee Violated The Provisions Of Section 194C Of The Act, With Respect To Payment To Transporters. The Assessee Carried The Matter In Appeal. The Ld. First Appellate Authority, Accepted The Contention Of The Assessee That There Is No Contractual Relationship Between The Assessee & Truck Drivers/Transporters & Hence The Provisions Of Section 194C Of The Act, Will Not Apply. While Holding So, The Ld. Cit(A) Came To The Conclusion That Section 194H Of The Act, Applies As The Trucks Were Obtained On Payment Of Commission. As No Tds U/S 194H Of The Act, Was Made On These Commission Payments, He Confirmed The Disallowance U/S 40(A)(Ia) Of The Act. 3. Aggrieved The Assessee Is In Appeal Before Me.

Section 143(3)Section 19Section 194CSection 194HSection 250Section 40