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

Amit Sureshbhai Masrani, Bhavnagar vs. The Income Tax Officer, Ward-1(1), Bhavnagar

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

ITA 330/AHD/2017[2012-13]Status: DisposedITAT Ahmedabad01 Oct 2019AY 2012-13

Bench: Shri Kul Bharat & Shri Waseem Ahmedआयकर अपील सं./Ita No.330/Ahd/2017 ("नधा"रण वष"/Assessment Year : 2012-13) बनाम/ Amit Sureshbhai Masrani The Ito Ward-1(1) Old Lig-566 Bhavnagar Vs. Anandnagar Bhavnagar-364 005 "थायी लेखा सं./जीआइआर सं./Pan/Gir No. : Avdpm0160B (अपीलाथ"/Appellant) (""यथ" / Respondent) .. अपीलाथ" ओर से/ Appellant By : Smt. Aditi Sheth, Ar ""यथ" क" ओर से/Respondent By: Shri Nilabhra Dasgupta, Sr.Dr सुनवाई क" तार"ख/ Date Of Hearing 29/08/2019 घोषणा क" तार"ख /Date Of Pronouncement 01/10/2019 आदेश / O R D E R Per Bench: The Captioned Appeal Has Been Filed At The Instance Of The Assessee Against The Order Of The Commissioner Of Income Tax (Appeals)–6, Ahmedabad [Cit(A) In Short] Vide Appeal No.Cit(A)-6/40/15-16 Dated 28/11/2016 Arising In The Assessment Order Passed Under S.143(3) Of The Income Tax Act, 1961(Hereinafter Referred To As "The Act") Dated 18/03/2015 Relevant To Assessment Year (Ay) 2012-13. 2. The Assessee Has Raised The Following Grounds Of Appeal:- The Learned Cit(A) Has Erred Both In Law & On The Facts Of The Case In Confirming The Action Of Ao Of Disallowing An Amount Of Rs.17,59,085/- U/S.40(A)(Ia) R.W.S. 194H Of The Act. Amit Sureshbhai Masrani Vs. Ito Asst.Year - 2012-13 2. The Learned Cit(A) Has Erred Both In Law & On The Facts Of The Case In Confirming The Action Of Ao Of Disallowing Rs.16,22,125/- Out Of Retailer Support Incentive Expenses U/S.40(A)(Ia) Of The Act.

For Appellant: Smt. Aditi Sheth, ARFor Respondent: Shri Nilabhra Dasgupta, Sr.DR
Section 194HSection 234ASection 271(1)Section 40

Bimetal Bearings Limited, Chennai vs. DCIT, Chennai

In the result, the appeal filed by the assessee for the assessment year

ITA 671/CHNY/2015[2010-11]Status: DisposedITAT Chennai29 Aug 2019AY 2010-11

Bench: Shri Duvvuru Rl Reddy & Shri S. Jayaramanआयकर अपील सं./I.T.A. Nos. 668, 669, 670 & 671/Chny/2015 िनधा"रण वष"/Assessment Years:2007-08 To 2010-11 M/S. Bimetal Bearings Limited, The Deputy Commissioner Of 18, Race Course Road, Vs. Income Tax, Large Taxpayer Unit, Coimbatore 641 018. 1775, Jawaharlal Nehru Inner Ring Road, Anna Nagar Western Extension, [Pan:Aaacb2036Q] Chennai 600 101. (अपीलाथ" /Appellant) (""थ"/Respondent) अपीलाथ" की ओर से / Appellant By : Shri R. Vijayaraghavan, Advocate ""थ" की ओर से/Respondent By : Shri Ar.V. Sreenivasan, Jcit सुनवाई की तारीख/ Date Of Hearing : 02.07.2019 घोषणा की तारीख /Date Of Pronouncement : 29.08.2019 आदेश /O R D E R Per Duvvuru Rl Reddy: These Four Appeals Filed By The Same Assessee Are Directed Against Different Orders Of The Ld. Commissioner Of Income Tax (Appeals) 17, Chennai All Dated 30.01.2015 Relevant To The Assessment Years 2007-08, 2008-09, 2009-10 & 2010-11. Since Common Issues Have Been Raised In These Appeals, Heard Together & Are Being Disposed Of By This Common Order For The Sake Of Brevity.

For Appellant: Shri R. Vijayaraghavan, AdvocateFor Respondent: Shri AR.V. Sreenivasan, JCIT
Section 14ASection 40

Bimetal Bearings Limited, Chennai vs. DCIT, Chennai

In the result, the appeal filed by the assessee for the assessment year

ITA 670/CHNY/2015[2009-10]Status: DisposedITAT Chennai29 Aug 2019AY 2009-10

Bench: Shri Duvvuru Rl Reddy & Shri S. Jayaramanआयकर अपील सं./I.T.A. Nos. 668, 669, 670 & 671/Chny/2015 िनधा"रण वष"/Assessment Years:2007-08 To 2010-11 M/S. Bimetal Bearings Limited, The Deputy Commissioner Of 18, Race Course Road, Vs. Income Tax, Large Taxpayer Unit, Coimbatore 641 018. 1775, Jawaharlal Nehru Inner Ring Road, Anna Nagar Western Extension, [Pan:Aaacb2036Q] Chennai 600 101. (अपीलाथ" /Appellant) (""थ"/Respondent) अपीलाथ" की ओर से / Appellant By : Shri R. Vijayaraghavan, Advocate ""थ" की ओर से/Respondent By : Shri Ar.V. Sreenivasan, Jcit सुनवाई की तारीख/ Date Of Hearing : 02.07.2019 घोषणा की तारीख /Date Of Pronouncement : 29.08.2019 आदेश /O R D E R Per Duvvuru Rl Reddy: These Four Appeals Filed By The Same Assessee Are Directed Against Different Orders Of The Ld. Commissioner Of Income Tax (Appeals) 17, Chennai All Dated 30.01.2015 Relevant To The Assessment Years 2007-08, 2008-09, 2009-10 & 2010-11. Since Common Issues Have Been Raised In These Appeals, Heard Together & Are Being Disposed Of By This Common Order For The Sake Of Brevity.

For Appellant: Shri R. Vijayaraghavan, AdvocateFor Respondent: Shri AR.V. Sreenivasan, JCIT
Section 14ASection 40

Bimetal Bearings Limited, Chennai vs. DCIT, Chennai

In the result, the appeal filed by the assessee for the assessment year

ITA 669/CHNY/2015[2008-09]Status: DisposedITAT Chennai29 Aug 2019AY 2008-09

Bench: Shri Duvvuru Rl Reddy & Shri S. Jayaramanआयकर अपील सं./I.T.A. Nos. 668, 669, 670 & 671/Chny/2015 िनधा"रण वष"/Assessment Years:2007-08 To 2010-11 M/S. Bimetal Bearings Limited, The Deputy Commissioner Of 18, Race Course Road, Vs. Income Tax, Large Taxpayer Unit, Coimbatore 641 018. 1775, Jawaharlal Nehru Inner Ring Road, Anna Nagar Western Extension, [Pan:Aaacb2036Q] Chennai 600 101. (अपीलाथ" /Appellant) (""थ"/Respondent) अपीलाथ" की ओर से / Appellant By : Shri R. Vijayaraghavan, Advocate ""थ" की ओर से/Respondent By : Shri Ar.V. Sreenivasan, Jcit सुनवाई की तारीख/ Date Of Hearing : 02.07.2019 घोषणा की तारीख /Date Of Pronouncement : 29.08.2019 आदेश /O R D E R Per Duvvuru Rl Reddy: These Four Appeals Filed By The Same Assessee Are Directed Against Different Orders Of The Ld. Commissioner Of Income Tax (Appeals) 17, Chennai All Dated 30.01.2015 Relevant To The Assessment Years 2007-08, 2008-09, 2009-10 & 2010-11. Since Common Issues Have Been Raised In These Appeals, Heard Together & Are Being Disposed Of By This Common Order For The Sake Of Brevity.

For Appellant: Shri R. Vijayaraghavan, AdvocateFor Respondent: Shri AR.V. Sreenivasan, JCIT
Section 14ASection 40

Bimetal Bearings Limited, Chennai vs. DCIT, Chennai

In the result, the appeal filed by the assessee for the assessment year

ITA 668/CHNY/2015[2007-08]Status: DisposedITAT Chennai29 Aug 2019AY 2007-08

Bench: Shri Duvvuru Rl Reddy & Shri S. Jayaramanआयकर अपील सं./I.T.A. Nos. 668, 669, 670 & 671/Chny/2015 िनधा"रण वष"/Assessment Years:2007-08 To 2010-11 M/S. Bimetal Bearings Limited, The Deputy Commissioner Of 18, Race Course Road, Vs. Income Tax, Large Taxpayer Unit, Coimbatore 641 018. 1775, Jawaharlal Nehru Inner Ring Road, Anna Nagar Western Extension, [Pan:Aaacb2036Q] Chennai 600 101. (अपीलाथ" /Appellant) (""थ"/Respondent) अपीलाथ" की ओर से / Appellant By : Shri R. Vijayaraghavan, Advocate ""थ" की ओर से/Respondent By : Shri Ar.V. Sreenivasan, Jcit सुनवाई की तारीख/ Date Of Hearing : 02.07.2019 घोषणा की तारीख /Date Of Pronouncement : 29.08.2019 आदेश /O R D E R Per Duvvuru Rl Reddy: These Four Appeals Filed By The Same Assessee Are Directed Against Different Orders Of The Ld. Commissioner Of Income Tax (Appeals) 17, Chennai All Dated 30.01.2015 Relevant To The Assessment Years 2007-08, 2008-09, 2009-10 & 2010-11. Since Common Issues Have Been Raised In These Appeals, Heard Together & Are Being Disposed Of By This Common Order For The Sake Of Brevity.

For Appellant: Shri R. Vijayaraghavan, AdvocateFor Respondent: Shri AR.V. Sreenivasan, JCIT
Section 14ASection 40