Section 194J of the Income Tax Act

Income-tax Act, 2025: s.393

Section 194J 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 194J is CIT v. Kotak Securities Ltd. (383 ITR 1), cited in 203 of the 1,434 judgments on BharatTax that turn on this section.

Leading authorities on Section 194J

CIT v. Kotak Securities Ltd.
383 ITR 1 · 2016 · Supreme Court
203
citing judgments

Fees for technical services under Section 9(1)(vii) can include payments for fully automated services even without direct human interface, as modern technological developments blur the specific human element in such processes.

254 ITR 121 (Guj) ITO v. Gujarat Narmada Valley Fertilizers Co. Ltd.
243 ITR 435 · 2000 · High Court
173
citing judgments
CIT v. Bharti Cellular Ltd.
319 ITR 139 · 2009 · High Court
167
citing judgments

Technical services under Section 9(1)(vii) read with Explanation 2 require human intervention at the time of service delivery. Consequently, payments for telecom services like roaming, mobile data, connectivity, or interconnect/port access do not constitute 'fees for technical services' and are not liable for TDS under Section 194J.

CIT v. Kotak Securities Ltd.
340 ITR 333 · 2012 · High Court
161
citing judgments

A deductor's bonafide belief or reliance on a Tax Residency Certificate (TRC) can influence whether they are deemed an 'assessee in default' under Section 195 for failing to deduct tax at source on payments to non-residents. The decision clarifies the due diligence required when interpreting tax treaties and TRCs for TDS compliance.

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.

East India Pharmaceutical Works Ltd. v. CIT
224 ITR 627 · 1997 · Supreme Court
146
citing judgments

Where an assessee has mixed funds (both interest-bearing and interest-free funds) and makes an interest-free advance or investment, it is presumed that the interest-free funds were utilized first if they are sufficient to cover such advances or investments. This prevents disallowance of interest on borrowed funds under Section 36(1)(iii).

CIT v. Bharati Cellular Ltd.
392 ITR 186 · 2017 · Supreme Court
125
citing judgments

For a payment to qualify as "fees for technical services" under Section 9(1)(vii) of the Income Tax Act, direct human intervention in rendering the service is essential. Payments for automated software systems, online platforms, or database access without human involvement in delivering the service are not considered fees for technical services.

CIT v. IBM India Ltd.
357 ITR 88 · 2013 · High Court
88
citing judgments

Expenditure on application software, which enhances business efficiency and requires a computer system to function, constitutes revenue expenditure rather than acquisition of a capital asset, even if it provides an enduring benefit.

Union Public Service Commission v. Bibhu Prasad Sarangi and Ors.
4 SCC 516 · 2021 · Reported
87
citing judgments

Reasons constitute the soul of any judicial or quasi-judicial decision. Assessing Officers, including the CPC, must pass reasoned orders and not act arbitrarily or summarily when issuing intimations under Section 143(1) of the Income-tax Act.

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 194J

DCIT, Cir-10(1), Kolkata vs. M/S Champion Commercial Co. Ltd., Kolkata

In the result, Revenue’s appeal stands dismissed

ITA 1421/KOL/2016[2013-14]Status: DisposedITAT Kolkata27 Apr 2018AY 2013-14

Bench: Shri N.V.Vasudevan & Shri Waseem Ahmedassessment Year :2013-14 Dcit, Circle-10(1), V/S. M/S Champion P-7, Chowringhee Commercial Co. Ltd., Square, 3Rd Floor, P-15, Cit Road, Kolkata-69 Kolkata-73 [Pan No.Aabcc 2373 G] .. अपीलाथ" /Appellant ""यथ"/Respondent Shri Saurabh Kumar, Addl. Cit-Sr-Dr अपीलाथ" क" ओर से/By Appellant Shri Manoj Kataruka, Advocate ""यथ" क" ओर से/By Respondent 26-02-2018 सुनवाई क" तार"ख/Date Of Hearing 27-04-2018 घोषणा क" तार"ख/Date Of Pronouncement आदेश /O R D E R Per Waseem Ahmed:- This Appeal By The Revenue Is Directed Against The Order Of Commissioner Of Income Tax (Appeals)-4, Kolkata Dated 04.04.2016. Assessment Was Framed By Dcit, Circle-10(1), Kolkata U/S 143(3) Of The Income Tax Act, 1961 (Hereinafter Referred To As ‘The Act’) Vide His Order Dated 10.02.2016 For Assessment Year 2013-14. The Revenue Has Raised The Following Grounds:- “I. That On The Facts Of The Case Ld. Cit(A) Has Erred In Deleting The Addition Of Rs.2,50,938/- On A Wrong Appreciation Of Facts Ignoring The Provisions Of Section 37(1) Overrule The Judicial Pronouncement Of Cit Vs. Calcutta Agency Limited (1951) (191) Itr (Sc) Ii. That On The Facts & Circumstances Of The Case Ld. Cit(A) Has Erred In Deleting The Addition Of Rs.13,91,404/- On A Wrong Appreciation Of Facts Ignoring The Provisions Of Section 37 Of The It Act, 1961. Iii. That On The Facts Of The Case Ld. Cit(A) Has Erred In Deleting The Addition Of Rs.20,25,329/- On Wrong Appreciation Of Facts Ignoring The

Section 14Section 143(3)Section 194JSection 195Section 2(24)(x)Section 36(1)(va)Section 37Section 37(1)Section 44A