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

M/S. Penam Laboratories Ltd., New Delhi vs. DCIT, New Delhi

In the result, the appeal of the assessee is partly allowed

ITA 527/DEL/2014[2010-11]Status: DisposedITAT Delhi16 Nov 2016AY 2010-11

Bench: Sh. H.S. Sidhu & Sh. O.P. Kantassessment Year: 2010-11 Vs. Deputy M/S. Penam Laboratories Ltd., Commissioner Of F-223, New Rajinder Nagar, Income Tax, Circle-14(1), New New Delhi Delhi Pan : Aaacp0362M (Appellant) (Respondent) Appellant By Sh. Rajesh Jain, Ca Respondent By Sh. F.R. Meena, Sr.Dr Date Of Hearing 23.08.2016 Date Of Pronouncement 16.11.2016 Order Per O.P. Kant, A.M.: This Appeal By The Assessee Is Directed Against The Order Dated 11/11/2013 Passed By The Ld. Commissioner Of Income-Tax (Appeals)- Xvii, Laxmi Nagar , Delhi For Assessment Year 2010-11 Raising Following Grounds: “1. That The Learned Cit (A) Erred In Upholding The Levy Of Interest U/S 234A & 234B Of The Act Without Considering The Amount Of Income Tax Paid On Various Dates During The Period April 2010 To March 2011, Totaling To Rs. 1,20,00,000/- As Per Details Submitted During The Course Of Hearing, Without Appreciating The Spirit Of Various Judgement Of Honourable Supreme Court & High Court, Specially The Case Of Pranoy Roy 309 Itr 231 (Sc) Where In It Was Held That Interest Is Compensatory In Nature. 2. That The Learned Cit (A) Erred In Upholding That Interest U/S 234A Amounting To Rs. 9,45,492/- Been Rightly Charged, In Spite Of 2 Ay: 2010-11 Holding That Interest Will Not Be Chargeable On The Amount Of Tax Paid Before Filing The Income Tax Return. 3. That The Learned Cit (A) Erred In Not Directing Of Assessing Officer Categorically That Interest U/S 234B Of The Act Should Be Calculated After Giving Due Credit Of Taxes Paid By The Appellant On Various Dates During The Period April 2010 To March 2011, Amounting Rs. 1,20,00,000/-. 4. That The Order Of Cit (A) Is Not Based On Correct Facts & Judicial Precedents Relied Upon By The Appellant & Therefore Deserve To Be Set Aside.”

Section 140ASection 143(2)Section 143(3)Section 234ASection 234BSection 234C