Section 234A of the Income Tax Act

Income-tax Act, 2025: s.423

Section 234A of the Income-tax Act, 1961 corresponds to section 423 (Interest for defaults in furnishing return of income) of the Income-tax Act, 2025.

Read section 423 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 234A is Empire Jute Co. Ltd. v. CIT (124 ITR 1), cited in 622 of the 5,126 judgments on BharatTax that turn on this section.

Leading authorities on Section 234A

Empire Jute Co. Ltd. v. CIT
124 ITR 1 · 1980 · Supreme Court
622
citing judgments

Expenditure is classified as revenue or capital based on its practical business effect, necessity, or expediency, rather than solely on the juristic classification of rights; an enduring benefit does not automatically make an expenditure capital if it facilitates trading operations or business efficiency.

Olari Little Flower Kuries (P.) Ltd. v. UOI
440 ITR 26 · 2022 · High Court
614
citing judgments

The fee under Section 234E of the Income-tax Act cannot be levied for defaults in filing TDS statements committed prior to June 1, 2015, as the provision for its levy became effective only from that date.

CIT v. Anjum M.H. Ghaswala
252 ITR 1 · 2001 · Supreme Court
452
citing judgments

Levy of interest under sections 234A, 234B, and 234C of the Income Tax Act is mandatory. Tax statutes are to be interpreted strictly, allowing no room for purposive interpretation.

Ishikawajima Harima Heavy Industries Ltd. v. DIT
288 ITR 408 · 2007 · Supreme Court
394
citing judgments

Income from offshore supply of goods and services is not taxable in India if the entire transaction, including transfer of ownership and payments, occurs outside India.

DIT v. Morgan Stanley & Co.
292 ITR 416 · 2007 · Supreme Court
360
citing judgments

A Permanent Establishment (PE) signifies a foreign enterprise's virtual projection into another country, with a fixed place PE existing where an MNE's business is wholly or partly carried on. A dependent agent PE requires the agent to act as such and/or have the authority to conclude contracts for the foreign enterprise under DTAA provisions.

India Vs. Azadi Bachao Andolan 263 ITR 706 (SC); and Vodafone International Holdings B.V v. Union of India
341 ITR 1 · 2012 · Supreme Court
295
citing judgments

Legitimate tax planning is permissible, allowing taxpayers to arrange their affairs to minimize tax liabilities while respecting the "look at test" for transaction genuineness and the separate entity principle in corporate taxation. The source of funds for treaty-beneficial structures does not automatically invalidate the transaction.

DIT v. Ericsson A.B
343 ITR 470 · 2012 · High Court
256
citing judgments

Payments for the use of copyrighted software or reimbursement of data processing costs do not constitute 'royalty' under Section 9(1)(vi) of the Income-tax Act or Article 12(3) of a DTAA where there is no transfer of copyright or rendering of services that "make available" technical knowledge. This position was later upheld by the Supreme Court.

III v. HCL Technologies Ltd.
93 Taxmann.com 33 · 2018 · Supreme Court
245
citing judgments

When computing the deduction available under Section 10A of the Income-tax Act, communication expenses must be excluded from the total turnover for the purpose of calculating the eligible relief.

Mysore Minerals Ltd. v. CIT
239 ITR 775 · 1999 · Supreme Court
215
citing judgments

For income tax purposes, the 'owner' of a property is the person who is entitled to receive income in their own right, bears the risks incidental to ownership, and utilizes the asset, even if the sale deed is not formally registered. This beneficial ownership is sufficient for claiming depreciation or capital gains exemption under relevant sections.

(i) Formula One World Championship Ltd. v. CIT
394 ITR 80 · 2017 · Supreme Court
200
citing judgments

This case provides foundational principles that illuminate the contours of the concept of 'Permanent Establishment' (PE) under tax treaties, especially regarding a 'fixed place' PE.

Judgments on Section 234A

Iljin Automotive Private Limited, Kanchipuram Cheenai vs. DCIT Dc 2(3), Chennnai

The appeal stand allowed in terms of our above order

ITA 523/CHNY/2023[2018-19]Status: DisposedITAT Chennai01 Jun 2023AY 2018-19

Bench: Hon’Ble Shri V. Durga Rao, Jm & Hon’Ble Shri Manoj Kumar Aggarwal, Am आयकरअपीलसं./Ita No.523/Chny/2023 (िनधा1रणवष1 / Assessment Year: 2018-19) M/S.Iljin Automotive Pvt.Ltd. Dcit बनाम/ Plot No.B1 & B2, Sipcot Industrial Park Dc Ii (3) Irungattukottai, Sriperumbudur Chennai. Vs. Kanchipuram-602 105. "थायीलेखासं./जीआइआरसं./Pan/Gir No.Aaaci-2641-E (अपीलाथ"/Appellant) : ("#थ" / Respondent) अपीलाथ"कीओरसे/ Appellant By : None "#थ"कीओरसे/Respondent By : Shri P. Sajit Kumar (Jcit) – Ld. Sr. Dr सुनवाईकीतारीख/Date Of Hearing : 31-05-2023 घोषणाकीतारीख/Date Of Pronouncement : 01-06-2023 आदेश / O R D E R Manoj Kumar Aggarwal () 1. At The Time Of Hearing, None Appeared For Assessee. However, Ld. Sr. Dr Submitted That The Returned Income Has Been Accepted & The Assessee Is Merely Assailing Charging Of Interest U/S 234A To 234D Which Is Consequential In Nature. 2. We Find That Though The Return Of Income Was Accepted U/S 143(3) R.W.S. 144B Vide Order Dated 13-09-2021, The Amount Of Total Income Was Wrongly Picked Up In The Computation Sheet. Upon Further Appeal, Ld.

For Appellant: NoneFor Respondent: Shri P. Sajit Kumar (JCIT) – Ld. Sr. DR
Section 143(3)Section 234A

Tdk Electronics Ag (Formerly Known As Epcos Ag), Nashik vs. Assistant Commissioner of Income Tax(International Taxation), Circle-2, Pune

In the result, appeal of the assessee stands allowed

ITA 174/PUN/2023[2020-21]Status: DisposedITAT Pune23 May 2023AY 2020-21

Bench: Shri R.S. Syal, Hon. Vice- & Shri Partha Sarathi Chaudhury, Hon.Tdk Electronics Ag Vs Acit (International (Formerly Known As Epcos Taxation), Circle-2, Ag), C/O Epcos India Pvt. Ltd., Pune. E 22-25, Midc Satpur, Nashik. Pan: Aaace 9787 H Appellant/Assessee Respondent /Revenue Assessee By : Shri Siddhesh Chaugule, Ar Revenue By : Shri M.M. Chate, Cit-Dr Date Of Hearing : 22/05/2023 Date Of Pronouncement : 23/05/2023 O R D E R Per Partha Sarathi Chaudhury, Jm: This Appeal Preferred By The Assessee Emanates From The Findings Of Ld. Drp-3, Mumbai-2, Dated 20.12.2022 For A.Y. 2020-21 As Per The Following Grounds Of Appeal: “Ground No.1 - Erroneous Levy Of Income Tax & Interest Thereon 1.1. The Assistant Commissioner Of Income-Tax (International Taxation) - Circle 2, Pune ('The Learned. Ao') Has Erred In Law & On Facts In: A. Holding That The Appellant Has A Permanent Establishment (Pe) In India & Its Income From Royalty & Fees For Technical Services (Fts) Is Taxable Under Section 115A R.W.S. 44Da Of The Income Tax Act, 196 I ('The Act'); B. Levying Income Tax Including Interest Under Section 234A & Section 234B Of The Act & Raising A Net Demand Payable Of Rs.7,22,18,080 Upon The Appellant. Ground No.2 - Non-Constitution Of Permanent Establishment ('Pe') Of The Appellant In India Tdk Electronics Ag

For Appellant: Shri Siddhesh Chaugule, ARFor Respondent: Shri M.M. Chate, CIT-DR
Section 115ASection 234ASection 234BSection 9(1)(i)