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

Jai Prakash Virmani, Faridabad vs. Dc ACIT Cent Faridabad 2 New, Faridabad

In the result, the appeal of the assessee is allowed

ITA 4764/DEL/2024[2019-20]Status: DisposedITAT Delhi29 Aug 2025AY 2019-20

Bench: Shri Sudhir Kumar & Shri Manish Agarwaljai Prakash Virmani, Dcit/Acit, Shop No.7, Sector 58, Central Circle, Faridabad, Haryana-121004 Vs. Faridabad. Pan-Ahrpp4614R (Appellant) (Respondent) Assessee By Shri M.K. Gupta, Ca Department By Shri Om Prakash, Sr. Dr Date Of Hearing 21/08/2025 Date Of Pronouncement 29/08/2025 O R D E R [ Per Manish Agarwal, Am: This Appeal Is Filed By The Assessee Against The Order Of The Ld. Commissioner Of Income Tax (Appeals)-3, Gurgaon [Cit(A) In Short], Dated 04.09.2024 In Appeal No.10863/2018-19 Passed U/S 250 Of The Income Tax Act, 1961 (The Act, In Short) For Asst. Year 2019-20. 2. Brief Facts Of The Case Are That The Survey U/S 133A Was Carried Out At The Business Premises Of The Assessee On 23.01.2019. During The Course Of Survey Certain Loos Papers Were Found & Impounded Having Entries Of Cash Withdrawals & The Undisclosed Expenditure On Constructions Of House, Besides Other Documents Were Also Found Jai Prakash Virmani Vs. Dcit /Acit & Impounded. Based On These Entries Assessee Had Offered Additional Income In The Statements Recorded During The Course Of Survey Of Rs.1,28,34,958/-. Thereafter, Vide Letter Dated 20.01.2020, The Assessee Retracted Partly From The Additional Income So Offered During The Survey. The Case Of The Assessee Was Taken Up For Scrutiny & Assessment Was Completed Wherein The Ao Observed That Income Offered By The Assessee Towards Unexplained Investment In The Construction Of House Is Taxable U/S 69 Of The Act. The Ao Further Observed That The Provisions Of Section 115Bbe Are Applicable On The Income Of Rs.17,66,380/- Offered By The Assessee On Account Of Undisclosed Investment In Constructions House.

Section 115BSection 133ASection 234BSection 250Section 69