Section 197A of the Income Tax Act
Income-tax Act, 2025: s.400
Section 197A of the Income-tax Act, 1961 corresponds to section 400 (Power of Central Government to relax provisions of this Chapter) of the Income-tax Act, 2025.
Read section 400 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 197A is Jagaran Prakashan Ltd. v. DCIT (345 ITR 288), cited in 164 of the 142 judgments on BharatTax that turn on this section.
Leading authorities on Section 197A
A deductor cannot be treated as an assessee in default for failure to deduct tax at source if the recipient has already paid the income tax directly. The onus is on the deductor to prove that the recipient has paid the tax.
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.
For the purpose of disallowance under section 40(a)(ia), the word 'payable' includes amounts already 'paid' without deduction or deposit of tax. The benefit of the second proviso to section 40(a)(ia) is not available if the prescribed certificate is not filed.
The second proviso to section 40(a)(ia) of the Income-tax Act, 1961, introduced by the Finance Act, 2012, applies prospectively and does not have retrospective effect.
The Kerala High Court decision in Prudential Logistics & Transports v. ITO held that the second proviso to Section 40(a)(ia) of the Income-tax Act, 1961, was not retrospective in effect for earlier assessment years.
Disallowance under section 40(a)(ia) applies to amounts payable at any time during the financial year, not just those payable on March 31st. The Gujarat High Court in CIT v. Sikandarkhan N. Tunvar (33 taxmann.com 133) held this interpretation.
Assurances in law flowing from statutory provisions cannot be denied to an assessee. Receipts not taxable under one section cannot be taxed under another.
