Section 234D of the Income Tax Act

Income-tax Act, 2025: s.426

Section 234D of the Income-tax Act, 1961 corresponds to section 426 (Interest on excess refund) of the Income-tax Act, 2025.

Read section 426 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 234D is CIT v. Tata Elxsi Ltd. (349 ITR 98), cited in 818 of the 2,105 judgments on BharatTax that turn on this section.

Leading authorities on Section 234D

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.

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.

CIT v. Reliance Industries Ltd.
339 ITR 632 · 2011 · High Court
218
citing judgments

No substantial question of law arises regarding a subsidy granted for setting up a new industrial unit in a backward area for employment generation, as held by the Bombay High Court. This decision was subsequently set aside by the Supreme Court.

Calcutta in CIT v. Vijay Shree Ltd.
43 Taxmann.com 396 · 2014 · High Court
214
citing judgments

Employees' contribution to provident fund and ESI, if paid by the assessee before the due date for filing the return of income under section 139(1), is an allowable deduction under section 43B. No distinction is drawn between employer's and employee's contributions for the purpose of section 43B.

DIT v. Guy Carpenter & Co Ltd.
346 ITR 504 · 2012 · High Court
171
citing judgments

For fees for technical services to be taxable under a tax treaty's 'make available' clause, a transfer of technology enabling the recipient to independently perform the service in the future is necessary, beyond mere service rendition. The case also clarifies that re-insurance services do not constitute 'imparting' of information taxable as royalty.

Chowringhee Sales Bureau (P.) Ltd. v. CIT
87 ITR 542 · 1973 · Supreme Court
155
citing judgments

Indirect tax components, such as sales tax, are included when calculating gross turnover or sales receipts for determining business income. Deductions relating to these taxes are subject to the provisions of Section 43B, requiring actual payment for deductibility.

Techno Shares and Stocks Ltd. v. CIT
327 ITR 323 · 2010 · Supreme Court
130
citing judgments

Membership rights and business contracts, as 'business or commercial rights of similar nature' to a license or franchise, qualify as intangible assets eligible for depreciation under Section 32(1)(ii) of the Income-tax Act.

CIT v. Lever India Exports Ltd.
78 Taxmann.com 88 · 2017 · High Court
111
citing judgments

A Transfer Pricing Officer (TPO) must adhere to prescribed methods under Section 92C for determining Arm's Length Price (ALP); an ALP determination at Nil or an adjustment using the 'Other Method' is unsustainable without proper comparability analysis. The TPO's jurisdiction is confined to ALP determination, respecting the commercial expediency of the assessee's business strategy, such as shared advertisement expenditure.

Areva T&D India Ltd. v. DCIT
345 ITR 421 · 2012 · High Court
97
citing judgments

Business contracts and commercial rights of similar nature qualify as intangible assets under Section 32(1)(ii) and are eligible for depreciation. The decision also affirms that goodwill is an intangible asset eligible for depreciation.

Steria (India) Ltd. v. CIT
386 ITR 390 · 2016 · High Court
83
citing judgments

Managerial services are not considered 'fees for included services' under Article 13(4) of the India-UK Double Taxation Avoidance Agreement, thus payments for such services are not taxable as FTS under the treaty.

Judgments on Section 234D

The Tinplate Company of India Limited, Kolkata vs. DCIT, Circle - 3, Kolkata

In the result, appeals of assessee for AYs 2006-07 and 2007-08 are disposed off

ITA 555/KOL/2018[2011-12]Status: DisposedITAT Kolkata08 Feb 2019AY 2011-12

Bench: Shri P.M. Jagtap & Shri S.S. Viswanethra Ravi] I.T.A. No. 555/Kol/2018 Assessment Year: 2011-12 The Tinplate Company Of India Ltd..................................…………………………............Appellant 4, Bankshall Street, Kolkata – 700 001. [Pan: Aabct 0129 P] Dcit, Circle – 3 Kolkata....................……………………………………..............................Respondent P-7, Chowringhee Square, Kolkata – 700 069. Appearances By: Shri Rajesh Sharma, Ca Appearing On Behalf Of The Assessee. Shri Shankar Halder, Sr. Dr (Jcit) Appearing On Behalf Of The Revenue Date Of Concluding The Hearing : January 31, 2019 Date Of Pronouncing The Order : February 08, 2019 Order Per P.M. Jagtapthis Appeal Filed By The Assessee Is Directed Against The Order Of Ld. Cit(A) – 1Kolkata Dated 25.01.2018 & The Grounds Raised By The Assessee Therein Read As Under: “1(A). That On The Facts & In The Circumstances Of The Case, The Learned Cit(Appeals) Erred In Upholding The Action Of The Assessing Officer In Invoking The Provisions Of Section 43B(F) Of The Act In Disallowing A Sum Of Rs. 2,69,68,179/- On Account Of Provision For Leave Encashment. 1(B). That On The Facts & In The Circumstances Of The Case, The Learned Cit(Appeals) Erred In Upholding The Disallowance Of Rs. 2,69,68,179/- Disregarding A Binding Decision Of The Hon’Ble High Court Of Jurisdiction. 2. That On The Facts & Under The Circumstances Of The Case, The Learned Cit(Appeals) Erred In Confirming The Action Of The Assessing Officer In Invoking The Provisions Of Rule 8D Without Satisfying Pre-Condition For Invoking The Provisions Of Rule 8D. 3. That On The Facts & Under The Circumstances Of The Case, The Learned Cit(Appeals) Erred In Confirming The Action Of The Assessing Officer In Charging Interest U/S 234D Of The Act.’’

Section 234DSection 43B

Ibm Daksh Business Process Services Pvt. Ltd., New Delhi vs. DCIT, New Delhi

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

ITA 6471/DEL/2012[2008-09]Status: DisposedITAT Delhi06 Feb 2019AY 2008-09

Bench: Sh. N. S. Saini & Sh. Sudhanshu Srivastavaita No. 6471/Del/2012 : Asstt. Year : 2008-09 Ibm Daksh Business Process Services Vs Deputy Commissioner Of Pvt. Ltd., Birla Tower, 1St Floor, 25 Income Tax, Circle-11(1), Barakhamba Road, Connaught Place, New Delhi New Delhi-110001 (Appellant) (Respondent) Pan No. Aabcd4187D Assessee By : Sh. G. C. Srivastava, Adv., Sh. Suvinay Kr. Dash, Adv. & Sh. Parichay Solanki, Ca Revenue By : Sh. Sanjay I. Bara, Cit Dr Date Of Hearing :24.01.2019 Date Of Pronouncement : 06.02.2019 Order Per N. S. Saini, Am: This Is An Appeal Filed By The Assessee Against The Order Of Drp-I, New Delhi Dated 03.09.2012 For Assessment Year 2008-09. 2. Ground No. 1 Of The Appeal Of The Assessee Reads As Under: “1. Assessment & Reference To Transfer Pricing Officer Are Bad In Law A) The Learned Deputy Commissioner Of Income-Tax — 11(1) [‘Dcit” Or 'Ao’ / Additional Commissioner Of Income-Tax [Tpo-I (2)], New Delhi ['Acit' Or Tpo'] Erred In Law & On Facts In Making Addition Of Inr 314,525,713 To The Total Income Of The Appellant On 2 Ibm Daksh Business Process Services India Pvt. Ltd. Account Of Adjustment To The Arm'S Length Price With Respect To Information Technology (‘It’) Enabled Services Of The Appellant With Its Associated Enterprises Other Than Ibm World Trade Corporation (‘Ibm Wtc’). B) The Ao/Tpo Erred In Law & On Facts As He Failed To Establish That The Appellant Shifted Profits Outside India.” 3. This Ground Of Appeal Is General In Nature & Hence Does Not Require Separate Adjudication By Us.

For Appellant: Sh. G. C. Srivastava, AdvFor Respondent: Sh. Sanjay I. Bara, CIT DR
Section 133(6)Section 920(2)