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

M/S Belgacom International Carrier Services Sa, Bangalore vs. Deputy Commissioner of Income Tax Circle-1(1) International Taxation, Bangalore

In the result, the appeal filed by assessee stands allowed for statistical purposes

ITA 2884/BANG/2017[2008-09]Status: DisposedITAT Bangalore26 Apr 2022AY 2008-09

Bench: Shri. B.R. Baskaran & Smt. Beena Pillaiit(It)A No. 2884/Bang/2017 Assessment Year : 2008-09 M/S. Belgacom The Deputy International Carrier Commissioner Of Services Sa, Income Tax, Rue Lebeau 4, Circle -1(1), 1000 Brussels, International Taxation, Vs. Belgium. Bangalore. Appellant Respondent : Shri V. Sridharan, Senior Assessee By Advocate : Shri Pradeep Kumar, Cit-Dr & Revenue By Smt. Vandana Sagar, Cit-Dr Date Of Hearing : 16-03-2022 Date Of Pronouncement : 26-04-2022 Order Per Beena Pillaipresent Appeal Is Filed By Non Resident Assessee Against Order Dated 30.10.2017 Passed By Dcit (It), Circle -1(1), Bangalore On Following Grounds Of Appeal: “Being Aggrieved By The Order Of The Learned Dcit, Circle - 1(1), International Taxation, Bengaluru ('A0'), Read With The Order Of The Learned Dispute Resolution Panel ('Drp*), Bengaluru, The Assessee Begs To Prefer The Present Appeal On The Following Grounds: 1. The Learned Ao Erred In Exercising, Jurisdiction U/S 147 Of The Act In The Case Of The Appellant. 2. The Lower Authorities Erred In Holding That A Sum Of Rs. 6,87,13,119/- Received By The Appellant From Its Customer In India Is In The Nature Of 'Royalty' Within The Meaning Of Section 9(1)(Vi) Of The It Act & Accordingly Taxable In India Under The It Act.

For Respondent: Shri V. Sridharan, Senior
Section 143(3)Section 147Section 148Section 234ASection 234BSection 234CSection 9(1)(v)Section 9(1)(vi)Section 9(1)(vii)

M/S Parthiv Enterprises, Mumbai vs. ITO 17(2)(5), Mumbai

In the result, the appeal filed by the assessee is hereby ordered to be dismissed

ITA 4505/MUM/2019[2014-15]Status: DisposedITAT Mumbai25 Apr 2022AY 2014-15

Bench: Shri Amar Jit Singh & Shri S. Rifaur Rahmanassessment Year: 2014-15 M/S. Parthiv Enterprises, Ito-17(2)(5), 83 Ramesh Bhuvan Nakhoda Room No.123-A, 1St Floor, Street, Vs. Pydhonie, Aayakar Bhavan, Mumbai – 400 003 Mumbai – 400 020 Pan: Aaefp8201A (Appellant) (Respondent) Present For: Assessee By : None Revenue By : Shri R.A. Dhyani, Sr. A.R. Date Of Hearing : 22.03.2022 Date Of Pronouncement : 25.04.2022 O R D E R Per Amar Jit Singh: The Assessee Has Filed The Above Mentioned Appeal Against The Order Dated 11.03.2019 Passed By The Commissioner Of Income Tax (Appeals) [Hereinafter Referred To As The Ld. Cit(A)] For The Assessment Year 2014-15. 2. The Assessee Has Raised The Following Grounds: “1. The Ld. Cit(A) Erred In Disallowing The Interest Free Loans Of Rs.3,35,23,178/- Out Of Rs.12,19,54,637/- & Thereby Erred In Treating The Same As Loans Taken For Non-Business Purposes. 2. The Ld.Cit(A) Erred In Disallowing & Adding The Proportionate Interest Paid Of Rs.22,24,357/- Out Of The Total Interest Paid Of Rs.80,92,036/- To The Total Income Of The Assessee & Thereby Added The Same To The Total Income Of The Assessee & Thereby Erred In Treating The Same For Non Business Purpose. 3. The Ld. Cit(A) Erred In Confirming The Addition Of The Genuine Loan Received From The Mis K.C. Kapadia & Sons(P) Ltd Of Rs.39,34,639/- To The Total Income Of The Assessee & Thereby Erred In Treating The Same For Non-Business Purpose.

For Appellant: NoneFor Respondent: Shri R.A. Dhyani, Sr. A.R
Section 10(34)Section 143(1)Section 143(2)Section 2(22)(e)Section 234ASection 271(1)(c)Section 36(1)(iii)