Section 194H of the Income Tax Act

Income-tax Act, 2025: s.393

Section 194H 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 194H is CIT v. Nagri Mills Co. Ltd. (33 ITR 681), cited in 165 of the 1,314 judgments on BharatTax that turn on this section.

Leading authorities on Section 194H

CIT v. Nagri Mills Co. Ltd.
33 ITR 681 · 1958 · High Court
165
citing judgments

An addition to income is revenue neutral if its tax impact remains the same regardless of the year in which it is assessed. Assessments should not dispute the year of addition when the tax rate and impact are consistent, to avoid unnecessary disputes and potential loss to revenue.

CIT v. Idea Cellular Ltd.
325 ITR 148 · 2010 · High Court
155
citing judgments

Discounts offered to distributors under a tightly controlled relationship constitute commission and are subject to tax deduction at source under Section 194H of the Income-tax Act.

CIT v. Bharti Cellular Ltd.
330 ITR 239 · 2011 · Supreme Court
147
citing judgments

The Supreme Court holds that for a service to qualify as 'fees for technical services' under Section 9(1)(vii) of the Income-tax Act or Article 12 of a DTAA, direct human involvement or intervention in rendering the service is essential. This principle applies to telecommunication services like interconnect charges and roaming charges, and also to services related to software use.

Bharti Airtel Ltd. v. DCIT
372 ITR 33 · 2015 · High Court
139
citing judgments

Section 194H of the Income Tax Act, 1961, is not applicable on the discount extended to distributors of pre-paid services, as the distributor does not earn income at the time of purchasing pre-paid cards from the assessee. The assessee is not in possession of any income belonging to the distributor at that point.

Merilyn Shipping & Transports v. Addl. CIT
136 ITD 23 · 2012 · ITAT
139
citing judgments

Section 40(a)(ia) disallowance applies only to expenses that remain payable at the end of the financial year, not to expenses that have been actually paid during the previous year without deduction of tax at source.

State Lotteries & Ors. (2001) 249 ITR 186 and Ahmedabad Stamp Vendors Association v. Union of India
257 ITR 202 · 2002 · High Court
121
citing judgments

Supplementary commission forional or extra services does not fall within the ambit of Section 194H of the Income Tax Act, 1961. This may affect the applicability of certificates issued under Section 197.

CIT v. HCL Comnet Systems & Services Ltd.
305 ITR 409 · 2008 · Supreme Court
118
citing judgments

For computing book profits under Section 115JB, an Assessing Officer's power is limited to examining duly certified books and making adjustments only as per the Explanation. A provision for bad and doubtful debts, being a diminution in the value of an asset (receivable), does not constitute a 'provision for liability' under Clause (c) of the Explanation and therefore cannot be added back.

Southern Switchgear Ltd. v. CIT
232 ITR 359 · 1998 · Supreme Court
99
citing judgments

Expenditure on technical aid fees for factory setup and rights to sell products under a collaboration agreement is capital in nature, not revenue, as it provides an enduring benefit.

Hindustan Coca Cola v. CIT
402 ITR 539 · 2018 · High Court
73
citing judgments

Discounts allowed by a business to grow its operations in a competitive market are acceptable and cannot be disallowed. Expenses incurred for business growth in a competitive world are not to be disallowed.

Nabha Investments Pvt. ltd. v. UOI
248 ITR 292 · 2001 · High Court
65
citing judgments

An assessment order is considered erroneous and prejudicial to the interest of the revenue, warranting revision under Section 263, if there is an inadequate inquiry or non-application of mind by the Assessing Officer, satisfying the two cumulative conditions required for revisional powers.

Judgments on Section 194H

Mahanadi Metal and Chemicals Private Limited, Rourkela vs. ITO, Ward-1, Rourkela

In the result, appeal of the assessee is allowed for statistical purposes

ITA 496/CTK/2017[2010-11]Status: DisposedITAT Cuttack18 Mar 2020AY 2010-11

Bench: Shri C.M. Garg, Jm & Shri L.P. Sahu, Am आयकर अपीऱ सं./Ita No.496/Ctk/2017 (नििाारण वषा / Assessment Year : 2010 - 2011) M/S Mahanadi Metal & Vs. Ito, Ward-1, Rourkela Chemicals Private Limited, T/4/26/Civil Township, Rourkela-769004 स्थायी ऱेखा सं./Pan No. : Aaccm 4844 R (अऩीऱाथी /Appellant) (प्रत्यथी / Respondent) .. यनधागररती की ओर से /Assessee By : Shri Parimal Kumar Jain, Ca राजस्व की ओर से /Revenue By : Shri Subhendu Dutta, Dr सुनवाई की तारीख / Date Of Hearing : 16/01/2020 घोषणा की तारीख/Date Of Pronouncement : 18/03/2020 आदेश / O R D E R Per L.P.Sahu, Am : This Is An Appeal Filed By The Assessee Against Order Of Cit(A), Sambalpur, Dated 04.09.2017 For The Assessment Year 2010-2011, On The Following Grounds Of Appeal :- 1. On The Fact & Under Circumstances Of The Case The Commissioner (Appeals) Was Not Justified In Holding The Nature Of Expenses Of S/ 957144 Under The Head Commission Instead Of Contract Work. (Para 4). 2. On The Fact & Under Circumstances Of The Case The Commissioner (Appeals) Erred In Understanding The Accounting Entry Of Discount Of Rs. 16,91,687 & Wrongly Treated The Bogus Sundry Creditor. (Para8) 3. On The Fact & Under Circumstances Of The Case The Commissioner (Appeals) Was Not Justified In Rejection Of Additional Evidence & Confirming The Disallowance Of Rs. 999390 For Non-Submission Of Vat Return, (Para-9) 4. On The Fact & Under Circumstances Of The Case The Commissioner (Appeals) Was Unjustified For Not Sending For Remand The Case & Confirming The Addition Of Rs.2799978. 2 2. Brief Facts Of The Case Are That The Assessee Filed Return Of Income

For Appellant: Shri Parimal Kumar Jain, CAFor Respondent: Shri Subhendu Dutta, DR
Section 115JSection 194CSection 194HSection 40Section 40A(3)

ITO Corporate Ward 4(1), Chennai vs. Malar Energy & Infrastructure Pvt Ltd., Chennai

In the result, the appeal filed by the Revenue is allowed for statistical purposes

ITA 1417/CHNY/2019[2013-14]Status: DisposedITAT Chennai13 Mar 2020AY 2013-14

Bench: Shri Duvvuru Rl Reddy & Shri S. Jayaramanआयकर अपील सं./I.T.A.No.1417/Chny/2019 िनधा"रण वष"/Assessment Year:2013-14 The Income Tax Officer, M/S. Malar Energy & Infrastructure Corporate Ward 4(1), Vs. Pvt. Ltd., No. 57, Pantheon Road, Chennai 600 034. Egmore, Chennai 600 008. [Pan:Aagcm5674F] (अपीलाथ" /Appellant) (""थ"/Respondent) अपीलाथ" की ओर से / Appellant By : Shri A. Sundararajan, Addl. Cit ""थ" की ओर से/Respondent By : None सुनवाई की तारीख/ Date Of Hearing : 03.03.2020 घोषणा की तारीख /Date Of Pronouncement : 13.03.2020 आदेश /O R D E R Per Duvvuru Rl Reddy: This Appeal Filed By The Revenue Is Directed Against The Order Of The Ld. Commissioner Of Income Tax (Appeals) 8, Chennai Dated 30.01.2019 Relevant To The Assessment Year 2013-14. The Effective Ground Raised By The Revenue Is That The Ld. Cit(A) Has Erred In Restricting The Addition/Disallowance Made Under Section 40(A)(Ia) Of The Income Tax Act, 1961 [“Act” In Short] With Respect To The Tds Default Under Section 194C & 194H Of The Act To ₹.7,29,898/- Instead Of ₹.3,03,28,445/- By Considering Fresh Evidence In Violation Of Rule 46A Of The It Rules.

For Appellant: Shri A. Sundararajan, Addl. CITFor Respondent: None
Section 143(3)Section 194CSection 194HSection 40

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