Section 234C of the Income Tax Act

Income-tax Act, 2025: s.425

Section 234C of the Income-tax Act, 1961 corresponds to section 425 (Interest for deferment of advance tax) of the Income-tax Act, 2025.

Read section 425 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 234C is CIT v. Tata Elxsi Ltd. (349 ITR 98), cited in 818 of the 6,043 judgments on BharatTax that turn on this section.

Leading authorities on Section 234C

CIT v. Tata Elxsi Ltd.
349 ITR 98 · 2012 · High Court
818
citing judgments

When computing deduction under Section 10A, if communication or telecommunication expenses are excluded from export turnover, they must also be excluded from total turnover to maintain consistency and apply the ordinary meaning of 'turnover' in context.

Rotork Controls India Pvt. Ltd. v. CIT
314 ITR 62 · 2009 · Supreme Court
739
citing judgments

A provision for expenses, such as warranty, is a deductible liability for income tax purposes if it constitutes a present obligation arising from past events, and a reliable estimate of the amount of obligation is possible.

CIT v. State Bank of Bikaner & Jaipur
43 Taxmann.com 411 · 2014 · High Court
524
citing judgments

Employee contributions to provident fund, ESI, and other welfare funds, if deposited by the due date for furnishing the return of income under Section 139(1), are allowable as a deduction and cannot be disallowed under Section 36(1)(va) read with Section 2(24)(x) or Section 43B, even if deposited after the due date prescribed by the respective welfare Acts.

Essae Teraoka Pvt. Ltd. v. DCIT
366 ITR 408 · 2014 · High Court
519
citing judgments

An employer's delayed remittance of employees' contributions to provident fund (PF) or Employees' State Insurance (ESI) is deductible if the payment is made before the due date for filing the income tax return under section 139(1), applying the provisions of section 43B and notwithstanding section 36(1)(va).

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.

CIT v. EKL Appliances Ltd.
345 ITR 241 · 2012 · High Court
422
citing judgments

Transfer pricing adjustments for outstanding receivables are permissible only if the Tax Officer establishes, through analysis over a period, a pattern indicating an international transaction intended to benefit an associated enterprise. The Tax Officer cannot question purely business decisions like royalty payments or exceed jurisdiction by applying cost-benefit analysis to determine the arm's length price of services.

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.

CIT v. Cotton Naturals (I) (P.) Ltd.
55 Taxmann.com 523 · 2015 · High Court
273
citing judgments

The interest rate for benchmarking foreign currency loans advanced to Associated Enterprises should be the market-determined rate applicable to the currency of the loan, such as LIBOR for US Dollar loans, rather than a domestic lending rate like the Indian PLR.

DIT v. Infrasoft Ltd.
39 Taxmann.com 88 · 2013 · High Court
269
citing judgments

Payments for the use of copyrighted software, without the transfer of any rights in the underlying copyright itself, do not constitute 'royalty' under the Income-tax Act or tax treaties. Such payments are often treated as business income, taxable only if a permanent establishment exists.

M/s Mahadev Cold Storage v. Jurisdictional AO
43 Taxmann.com 33 · 2014 · High Court
262
citing judgments

Employees' contributions to welfare funds are an allowable deduction if paid before the due date for filing the income-tax return under section 139(1), even if the payment is made beyond the due date specified by the respective welfare fund Acts, as per the provisions of section 43B.

Judgments on Section 234C

Summit Sports Pvt Ltd, Pune vs. Additional Director of Income Tax CPC, Banglore

In the result, the appeal of the assessee stands partly allowed for statistical purposes

ITA 620/PUN/2024[2019-20]Status: DisposedITAT Pune20 Aug 2024AY 2019-20

Bench: Shri Inturi Rama Rao & Shri Vinay Bhamoreआयकर अपील सं. / Ita No.620/Pun/2024 िनधा"रण वष" / Assessment Year : 2019-20 Summit Sports Pvt. Ltd., Vs. Addl. Dit, Cpc, T-170, Midc, Bhosari, Banglore. Pune- 411026. Pan : Aatcs8122M Appellant Respondent Assessee By : Shri Akshay Shivaji Revenue By : Shri Akhilesh Srivastava Date Of Hearing : 04.07.2024 Date Of Pronouncement : 20.08.2024 आदेश / Order Per Vinay Bhamore, Jm: This Appeal Filed By The Assessee Is Directed Against The Order Dated 15.02.2024 Passed By Ld Addl./Jcit(A), Jodhpur For The Assessment Year 2019-20. 2. The Appellant Raised The Following Grounds Of Appeal :- “1. At The Time Of Assessment, Learned Assessing Authority Passed Assessment Order & Disallowed Claim Of Tds On Account Of Mismatch With 26As. 2. The Learned Assessing Authority Levied Excess Interest U/S 2234B & 234C Without Considering Tax Payment Which Is Unjustified. 3. At The First Hearing Of An Appeal, The Appellant Authority Dismissed The Appeal On Account Of Appeal Is Not Maintainable As There Is Inordinate Delay In Filing An Appeal Which Cannot Be Condoned Without Considering The Facts Of The Case Which Is Unjustified.”

For Appellant: Shri Akshay ShivajiFor Respondent: Shri Akhilesh Srivastava
Section 143(1)Section 223