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

Amway India Enterprises Pvt. Ltd., New Delhi vs. Addi. Natioanl E- Assessment Centre, New Delhi

In the result, the appeal filed by the assessee is partly allowed

ITA 804/DEL/2021[2016-17]Status: DisposedITAT Delhi30 Mar 2022AY 2016-17

Bench: Shri R.K. Panda & Shri Challa Nagendra Prasadassessment Year: 2016-17 Amway India Enterprises Pvt. Ltd., Vs Addl. National E-Assessment 1St Floor, Elegance Tower, Centre, Plot No.8, Non Heirarchial New Delhi. Commercial Centre, Jasola Vihar, New Delhi – 110 025. Pan: Aaaca5603Q (Appellant) (Respondent) Assessee By : Shri Sudesh Kumar Garg, Advocate Ms Bhavya Garg, Ca & Shri Prince Bansal, Ca Revenue By : Shri Surender Pal, Cit, Dr Date Of Hearing : 08.02.2022 Date Of Pronouncement : 30.03.2022 Order Per R.K. Panda, Am: This Appeal Filed By The Assessee Is Directed Against The Order Dated 30Th April, 2021 Passed By The Ao U/S 143(3)/144C(13) R.W.S. 144B Of The It Act, 1961 For The Assessment Year 2016-17. 2. Facts Of The Case, In Brief, Are That The Assessee Is A Wholly Owned Subsidiary Of Amway Corporation Engaged In The Business Of Direct Selling Of Consumer Products. It Sells Its Products Through Multi-Level Marketing (Mlm). Mlm Marketing Allows Direct Sellers To Build A Business Through Their Own Sales Efforts & Inviting Others To Become Direct Sellers. The Assessee Filed Its Return Of Income On 30.11.2016 Declaring A Loss Of Rs.113,69,23,009/-. Since The Assessee Had Entered Into Certain International Transactions With Its Ae, The Ao Referred The Matter To The Tpo For Determination Of The Alp Of The International Transaction Entered Into By It.

For Appellant: Shri Sudesh Kumar Garg, AdvocateFor Respondent: Shri Surender Pal, CIT, DR
Section 143(3)