“Section 36(1)”

Section References (mined)Section 36Section 36(1)3,872 judgments

The decision most relied on for Section 36(1) is CIT v. Reliance Utilities & Power Ltd. (313 ITR 340), cited in 2,118 judgments on BharatTax.

Leading authorities on Section 36(1)

CIT v. Reliance Utilities & Power Ltd.

313 ITR 340 · 2009 · High Court

2,118

citing judgments

Where an assessee claims that investments were made out of own funds, interest disallowance under Section 14A read with Rule 8D may not apply if the assessee demonstrates the availability of sufficient interest-free funds to cover such investments.

CIT v. AIMIL Ltd.

321 ITR 508 · 2010 · High Court

1,629

citing judgments

Employee contributions to PF and ESIC, deposited beyond the due date under the respective Acts but within the due date for filing the income tax return under Section 139(1), are allowable deductions under Section 36(1)(va). Such disallowance cannot be made during processing under Section 143(1).

S.A. Builders Ltd. v. CIT

288 ITR 1 · 2007 · Supreme Court

1,484

citing judgments

Interest paid on borrowed funds cannot be disallowed merely because the assessee made interest-free advances, provided those advances were made for business purposes and commercial expediency. The Revenue cannot dictate a businessman's commercial decisions, but the assessee bears the onus to prove the business expediency.

Checkmate Services Pvt. Ltd. v. CIT

143 Taxmann.com 178 · 2022 · Supreme Court

1,392

citing judgments

Employee contributions to provident fund and ESI deposited by an employer beyond the due dates prescribed under the respective special Acts are not allowable as a deduction under section 36(1)(va) of the Income-tax Act, 1961. Such disallowance can be made during processing under section 143(1).

CIT v. Alom Extrusions Ltd.

319 ITR 306 · 2009 · Supreme Court

1,344

citing judgments

A proviso inserted into a section to remedy unintended consequences, make the section workable, or supply an obvious omission must be read retrospectively in operation to give effect to the section as a whole.

CIT v. HDFC Bank Ltd.

366 ITR 505 · 2014 · High Court

1,261

citing judgments

When an assessee possesses interest-free funds sufficient to cover investments yielding tax-free income, it is presumed that such investments were made from these interest-free funds, precluding disallowance of interest expenditure under Section 14A.

CIT v. Gujarat State Road Transport Corporation

366 ITR 170 · 2014 · High Court

1,158

citing judgments

Employees' contributions to welfare funds, such as provident fund, are not allowable as a deduction under section 36(1)(va) if deposited beyond the due date prescribed under the respective welfare statutes, even by a single day. Such delayed deposits are not cured even if made before the income-tax return filing due date.

TRF Ltd. v. CIT

323 ITR 397 · 2010 · Supreme Court

714

citing judgments

For claiming deduction for bad debts under section 36(1)(vii) of the Income Tax Act, it is sufficient for the assessee to write off the debt as irrecoverable in its accounts, and it is not necessary to prove that the debt has actually become irrecoverable.

Judgments citing Section 36(1)

Diamonds 'R' Us, Mumbai vs. Deputy Commissioner of Income Tax - Central Circle 6(4), Mumbai

In the result, appeal filed by the Revenue is dismissed

ITA 537/MUM/2018[2012-13]Status: DisposedITAT Mumbai12 Oct 2022AY 2012-13

Bench: Shri Amit Shukla, Hon'Ble & Shri S. Rifaur Rahman, Hon'Ble

Section 36Section 36(1)(iii)

Officer. While holding so, the Ld.CIT(A) observed as under: - “6. The second ground of appeal is against the disallowance of interest under section 36(1)(iii) amounting to Rs.9,36,23,619/-. 6.1 During the year, the appellant had made interest-free advances to Mr Nirav Modi ... agree with this argument of the learned counsel. He observed that the principles of allowance of interest on borrowed capital under section 36 (1)(iii) will be allowed only if capital borrowed has been exclusively used for the purpose of business. He placed reliance on the judgements

Diamonds 'R' Us, Mumbai vs. Assistant Commissioner of Income Tax - Central Circle 6(4), Mumbai

In the result, appeal filed by the Revenue is dismissed

ITA 536/MUM/2018[2011-12]Status: DisposedITAT Mumbai12 Oct 2022AY 2011-12

Bench: Shri Amit Shukla, Hon'Ble & Shri S. Rifaur Rahman, Hon'Ble

Section 36Section 36(1)(iii)

Nayara Energy Limited (on Behalf of Merged Entity Vadinar Oil Terminal Limited), Mumbai vs. Asstt. Commissioner of Income -Tax Central Circle 2(1), Mumbai

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

ITA 777/MUM/2022[2016-17]Status: DisposedITAT Mumbai10 Oct 2022AY 2016-17

Bench: Shri Pramod Kumar, Vp & Shri Aby T. Varkey, Jm आयकर अपील सं/ I.T.A. No.777/Mum/2022 (निर्धारण वर्ा / Assessment Year: 2016-17) Nayara Energy Ltd (On Acit, Central Circle-2(1) बिधम/ Behalf Of Merged Entity Room No. 804, Pratishtha Vs. Vadinar Oil Terminal Ltd) Bhavan, Old Cgo 5Th Floor, Jet Airways Annexe, M. K. Road, Godrej Bkc, G- Block, Plot Mumbai-400020. C-68, Bkc, Bandra (E), Mumbai-400051. स्थधयी लेखध सं./जीआइआर सं./Pan/Gir No. : Aabcv2626D (अपीलार्थी /Appellant) .. (प्रत्यर्थी / Respondent) Assessee By: Shri Nitesh Joshi Revenue By: Dr. Mahesh Akhade (Dr) सुनवाई की तारीख / Date Of Hearing: 25/08/2022 घोषणा की तारीख /Date Of Pronouncement: 10/10/2022 आदेश / O R D E R Per Aby T. Varkey, Jm: This Is An Appeal Preferred By Assessee Against The Order Of The Ld. Commissioner Of Income Tax (Appeals)-48, Mumbai Dated 24.02.2022 For Assessment Year 2016-17. 2. The Grounds Of Appeal Preferred By Assessee Are As Under: - “Disallowance Of Interest Under Section 36(1) (Iii) Of The Income-Tax Act The Act - Rs.149.80 Crores 1. The Learned Assessing Officer (Ao) & Learned Cit(A) Erred In Disallowing Interest Of Rs.149.80 Crores Pertaining To Loans Of Rs.1253.53 Crores Granted To Related Parties Contending Them To Be Interest Free Without Appreciating The Fact, That Out Of The Total Amount, Only Security Deposits Of Rs.96.53 Crores Are Interest Free Refundable

For Appellant: Shri Nitesh JoshiFor Respondent: Dr. Mahesh Akhade (DR)

Section 14ASection 36(1)Section 37

Mumbai dated 24.02.2022 for assessment year 2016-17. 2. The grounds of appeal preferred by assessee are as under: - “Disallowance of Interest under section 36(1) (iii) of the income-tax Act the Act - Rs.149.80 crores 1. The learned Assessing officer (AO) and learned CIT(A) erred in disallowing interest ... case of Phalton Sugar Works Limited Vs CIT 208 ITR 989 the operative part of the said judgement is reproduced as under: “Section 36(1) (iii) of the Income-tax Act, 1961, provides for deduction for payment of interest only if the assessee borrows capital for its own business

M/S. Keva Construction Pvt. Ltd, Mumbai vs. ACIT -15(2) (1), Mumbai

In the result, appeal filed by the assessee is fully allowed

ITA 758/MUM/2022[2016-17]Status: DisposedITAT Mumbai10 Oct 2022AY 2016-17

Bench: Shri Kuldip Singh & Shri Gagan Goyal

For Appellant: Sh. Saurabh Bhat, C.AFor Respondent: Sh. Tejinder Pal Singh, Sr. DR

Section 36Section 36(1)(iii)

point of view whether the amount was advanced for earning profits. [2009] 178 Taxman 135 (Bombay) CIT v. Reliance Utilities & Power Ltd. Section 36(1)(iii) of the Income-tax Act, 1961 - Interest on borrowed capital - Assessee-company was engaged in business of generation of power - It had made investments ... concern out of interest-free funds - Commissioner (Appeals) accepted assessee's contention and directed Assessing Officer to allow entire amount of interest under section 36(1)(iii) - Tribunal upheld order of Commissioner (Appeals) - On instant appeal, it was seen that Commissioner (Appeals) as also Tribunal had recorded a clear finding

DCIT 9(2)(2), Mumbai vs. M/S Congenial Hospitality Pvt Ltd., Mumbai

In the result, all the three appeals filed by the revenue are allowed

ITA 544/MUM/2020[2014-15]Status: DisposedITAT Mumbai10 Oct 2022AY 2014-15

Bench: Shri Aby T. Varkey, Jm & Shri Om Prakash Kant, Am आयकर अपील सं/ I.T.A. No. 5961/Mum/2017 (निर्धारण वर्ा / Assessment Year:2012-13) Dcit-9(3)(2) बिधम/ M/S. Gutsiness Hospitality Pvt. 418, 4Th Floor, Aayakar Ltd. Vs. Bhavan, Mumbai-400020. Plot No. 114/T-03, Skm Babrics, Andheri Premises, R. K. Paramhans Marg, Andheri (E), Mumbai-400069. Pan No. Aaica3306L आयकर अपील सं/ I.T.A. No. 5255/Mum/2018 (निर्धारण वर्ा / Assessment Year: 2013-14) Acit, Range-9(1)(1) बिधम/ M/S. Amicable Hospitality Room No. 260A, 2Nd Floor, Pvt. Ltd. Vs. Aayakar Bhavan, M. K. Plot No. 115/It-03, Raj Road, Mumbai-400020. Chambers, R. K. Paramhans Marg, Andheri (E), Mumbai- 400063. Pan No. Aaqcs6307P

For Appellant: Shri Yogesh JoijodeFor Respondent: Shri Ujjawal Chavhan (Sr. AR)

Section 143(1)

profit and loss account is correct. In such circumstances expenditure are revenue expenditure and are allowable as per the as per provisions of Section 36(1) (iii) of the Income Tax Act 1961.” 6. Aggrieved, the revenue is before us. 7. We have heard both the parties and perused

ACIT, RG- 9 (1)(1), Mumba vs. Amicable Hospitality Pvt. Ltd., Mumbai

In the result, all the three appeals filed by the revenue are allowed

ITA 5255/MUM/2018[2013-14]Status: DisposedITAT Mumbai10 Oct 2022AY 2013-14

For Appellant: Shri Yogesh JoijodeFor Respondent: Shri Ujjawal Chavhan (Sr. AR)

Section 143(1)

DCIT-9(3)(2), Mumbai vs. M/S.Gutsiness Hospitality Private Limited (Formerly Known As Fortitude Hospitality Private Limited), Mumbai

In the result, all the three appeals filed by the revenue are allowed

ITA 5961/MUM/2017[2012-13]Status: DisposedITAT Mumbai10 Oct 2022AY 2012-13

For Appellant: Shri Yogesh JoijodeFor Respondent: Shri Ujjawal Chavhan (Sr. AR)

Section 143(1)

Sri Rajanikanth Reddy, Bengaluru vs. The Income Tax Officer, Ward-4(2)(2), Bangalore

In the result, the appeal filed by the assessee is allowed

ITA 774/BANG/2022[2019-20]Status: DisposedITAT Bangalore10 Oct 2022AY 2019-20

Bench: Shri George George K, Jm & Shri Laxmi Prasad Sahu, Am

For Appellant: Miss. Sunaina Bhatia, CAFor Respondent: Sri.K.Sankar Ganesh, JCIT-DR

Section 139(1)Section 143Section 143(1)Section 154Section 234BSection 36Section 43B

learned CIT[A] / NFAC is not justified in holding that the amendment made by insertion of Explanation 2 to the provisions of section 36[1][va] of the Act and the insertion of Explanation 5 to section 43B of the Act by the Finance Act, 2021 with effect from 01/04/2021 ... case of CIT Vs. Gold Coin Health Food Pvt. Ltd., reported in 304 ITR 308 (SC), the CIT(A) concluded that amendment to section 36(1)(va) and 43B of the I.T.Act by Finance Act, 2021, is clarificatory and has got retrospective operation. 4 Sri Rajanikanth Reddy. 5. Aggrieved, assessee

Khosla Profil Pvt. Ltd, Mumbai vs. Comm of Income Tax (Appeasl ), Delhi

In the result, appeal filed by the assessee is allowed

ITA 550/MUM/2022[2017-18]Status: DisposedITAT Mumbai07 Oct 2022AY 2017-18

Bench: Shri Kuldip Singh & Shri Gagan Goyalkhosla Profil Private Ltd. 2, Laxmi Tower, A-Wing, 6Th Floor, Bandra Kurla Complex, Bandra (East)-400051 Pan: Aaack1791K ...... Appellant Vs. Commissioner Of Income Tax (Appeals) Mumbai. ..... Respondent Appellant By : Sh. Rahul Hakani, Adv. Respondent By : Sh. Tejinder Pal Singh, Sr. Dr Date Of Hearing : 11/07/2022 Date Of Pronouncement : 07/10/2022 Order Per Gagan Goyal, A.M:

For Appellant: Sh. Rahul Hakani, AdvFor Respondent: Sh. Tejinder Pal Singh, Sr. DR

Section 115JSection 139(1)Section 143(1)Section 143(1)(a)Section 250Section 36(1)

Patil Transport and CIT Vs. AIMIL Ltd. (supra): Details of contributions received from employees for various funds as referred to in 20. b section 36(1)(va): Sr.No. Nature of Fund Sum Due date for The actual The actual received payment amount date of from the paid payment to employees ... jurisdictional High court is a mistake. 10. Further both the lower authorities relied upon the amendment made by Finance Act, 2021 to section 36(1)(va) and 43B as per Ld. CIT(A) this amendment is curative in nature and retrospective in application. 11. On this issue jurisdictional ITAT

Muthyala Suryababu, Bangalore vs. Income Tax Officer, Ward-1(2)(1), Bangalore

In the result, both the appeals filed by the assessee stands allowed

ITA 771/BANG/2022[2019-20]Status: DisposedITAT Bangalore06 Oct 2022AY 2019-20

Bench: Smt. Beena Pillai & Shri Laxmi Prasad Sahu

For Appellant: Shri Guruswamy H, ITP

Section 139(1)Section 143(1)Section 250Section 36(1)(va)Section 43B

respective Acts. The CIT(A) also relied on the Page 3 of 8 ITA Nos. 770 & 771/Bang/2022 amendment brought about to section 36(1)(va) and 43B of the I.T.Act. 4. Aggrieved, the assessee has filed this appeal before the Tribunal. 4.1 The Ld.AR submitted that an identical issue ... 1312/Del/2020 by order dated 26/08/2021 has considered similar issue and has held as under: “12. The language of newly proposed explanation 2 to section 36(1)(va) and explanation 5 to section 43B makes it clear that the amendment is retrospective.” 5.2 He submitted that the amendment brought

Muthyala Suryababu, Bangalore vs. Income Tax Officer, Ward-1(2)(1), Bangalore

In the result, both the appeals filed by the assessee stands allowed

ITA 770/BANG/2022[2018-19]Status: DisposedITAT Bangalore06 Oct 2022AY 2018-19

Bench: Smt. Beena Pillai & Shri Laxmi Prasad Sahu

For Appellant: Shri Guruswamy H, ITP

Section 139(1)Section 143(1)Section 250Section 36(1)(va)Section 43B

Kokan Mercantila Co Op Bank Ltd, Mumbai vs. ACIT Circle-20(2), Mumbai

In the result we set aside the orders of authorities below and direct to allow the deduction u/s

ITA 651/MUM/2022[2017-18]Status: DisposedITAT Mumbai04 Oct 2022AY 2017-18

Bench: Shri Kuldip Singh & Shri Gagan Goyalkokan Mercantile Co-Operative Bank Ltd. Harbour Crest, 1St Floor, Mazagaon, Mumbai-400010. Pan: Aaaak2527P ...... Appellant Vs. Acit, Circle-20(2), Room No. 217, 2Nd Floor, Piramal Chambers, Lalbaug, Parel, Mumbai-400012 ..... Respondent Appellant By : Sh. M. Subramanian, Adv. Respondent By : Sh. Tejinder Pal Singh, Sr.Dr Date Of Hearing : 12/07/2022 Date Of Pronouncement : 04/10/2022 Order Per Gagan Goyal, A.M: This Appeal By The Assessee Is Directed Against The Order Of National Faceless Appeal Centre, Delhi [Hereinafter Referred To As [‘Nfac’] Dated 21.12.2021 Passed Under Section 250 Of The Income Tax Act, 1961 (Hereinafter Referred To As [‘The Act’] For The Assessment Year (Ay) 2017-18. The Assessee Has Raised The Following Grounds Of Appeal:

For Appellant: Sh. M. Subramanian, AdvFor Respondent: Sh. Tejinder Pal Singh, Sr.DR

Section 142(1)Section 143(2)Section 234BSection 234CSection 250Section 36(1)

doubtful debts. Therefore, claim that the provision for standard assets also has to be considered for applying the condition set out under Section 36(1) (viia) is not in accordance with law. This is clearly decided in the case of Bharat Overseas Bank Ltd. Vs CIT IT APPEAL ... Rs.50,00,000/- on account of provision on standard assets as per provisions of 5 ITA No. 651/Mum/2022-Kokan Mercantile Co-operative Bank Ltd. section 36(1)(viia) of the Act. The fact of the case that the AO noticed that the assessee has debited an amount of Rs.50

Asst CIT Cir 2(2)(1), Mumbai vs. Mahindra & Mahindra Ltd, Mumbai

In the result, appeal filed by the Revenue is dismissed

ITA 1739/MUM/2015[2010-11]Status: DisposedITAT Mumbai04 Oct 2022AY 2010-11

Bench: Shri M. Balaganesh () & Smt. Kavitha Rajagopal () Mahindra & Mahindra Limited Vs Asst.Commissioner Of Income-Tax, Corporation Taxation, P.K. Kurne Circle-2(2)(1), Mumbai Chowk, Worli, Mumbai-400 018 Aayakar Bhavan, M.K. Road Pan : Aaacm3025E Mumbai-400 020 Appellant Respondent Asst.Commissioner Of Income-Tax, Vs 020Mahindra & Mahindra Limited Circle-2(2)(1), Mumbai Corporation Taxation, P.K. Kurne Aayakar Bhavan, M.K. Road Chowk, Worli, Mumbai-400 018 Mumbai-400 Pan : Aaacm3025E Appellant Respondent

Section 143(3)Section 144CSection 14ASection 35Section 40Section 80I

capitalised till the asset is put to use. This is supported by Explanation 8 to Section 43(1) and proviso to Section 36(1)(iii) of the Act. Any cost incurred beyond that period should be charged off as revenue expenditure. Accordingly, he argued that irrespective of the accounting treatment

Mahindra & Mahindra Limited, Mumbai vs. ACIT, Cir -2(2)(1), Mumbai

In the result, appeal filed by the Revenue is dismissed

ITA 1676/MUM/2015[2010-11]Status: DisposedITAT Mumbai04 Oct 2022AY 2010-11

Section 143(3)Section 144CSection 14ASection 35Section 40Section 80I

Shri Umesh Raosaheb Pawar, Mumbai vs. Dy Commissioner of Income Tax, Circle-3, Thane

In the result, Ground No.2

ITA 1901/MUM/2022[2018-19]Status: DisposedITAT Mumbai30 Sept 2022AY 2018-19

Bench: Shri Amit Shukla, Hon'Ble & Shri S. Rifaur Rahman, Hon'Ble

For Appellant: NoneFor Respondent: Shri Manoj Sinha

Section 139(1)Section 143(1)(a)Section 36(1)(va)Section 43B

Bangalore, hereinafter referred to as the "CPC", on account of employees' contribution to Provident Fund and ESIC by wrongly applying the provisions of section 36(1)(va) of the Income-tax Act as applicable at the relevant point of time. 2. The NFAC has failed to appreciate the fact that ... made within the due date for filing the Return of Income. 4. The NFAC has erred in interpreting that the amendments made to section 36(1)(va) and section 43B of the Act by the Finance Act, 2021 will also apply to the earlier years and thereby holding that

Ashokkumar Bhanwarlal Chhajer, Sanpada vs. Pr. CIT - (Central), Pune

In the result, the appeal filed by the assessee is allowed

ITA 1361/MUM/2022[2017-18]Status: DisposedITAT Mumbai30 Sept 2022AY 2017-18

Section 142(1)Section 143(3)Section 263Section 263(1)

crores only. Since own funds available with the assessee far exceeds amount of interest free loan, no interest disallowance under section 36(1)(iii) is called for, as per the decision rendered by Hon'ble Jurisdictional Bombay High Court in the case of Reliance Utilities and Power Ltd. (supra). Admittedly

DCIT-2(2)(1), Mumbai vs. M/S State Bank of India (Successor to State Bank of Bikaner and Jaipur), Mumbai

In the result, the appeal of the Revenue is dismissed, whereas the appeal of the assessee is allowed partly for statistical purposes

ITA 3033/MUM/2019[2015-16]Status: DisposedITAT Mumbai29 Sept 2022AY 2015-16

Bench: Shri Om Prakash Kant (Account Member) & Ms. Kavitha Rajagopal () I.T.A. No. 3033/Mum/2019 (A.Y. 2015-16) I.T.A. No. 2873/Mum/2019 (A.Y. 2015-16) Dcit-2(2)(1), Vs. M/S State Bank Of India Mumbai (Successor To State Room No. 545, Bank Of Bikaner & 5Th Floor, Ayakar Jaipur) Bhavan Financial Reporting & Mumbai-400020 Taxation, 3Rd Floor, Corporate Centre, Madam Cama Road Nariman Point, Mumbai- 400021 (Appellant) (Respondent)

Section 14A

case of State Bank of Mysore. In the case of State Bank of Mysore (supra), the assessee had claimed deduction under section 36(1)(viia) of the Act and not under section 36(1)(vii) of the Act. Accordingly, the Bangalore Tribunal has held that section ... India ITA No. 3033/2873/Mum/2019 have been claimed by the assessee in respect of a loss, expenditure or trading liability. A deduction under section 36(1)(viia) of the Act is not for a loss, expenditure or trading liability, but for a provision for bad and doubtful debts. We noted that

State Bank of India (Successor to State Bank of Bikaner & Jaipur), Mumbai vs. ACIT -Circle 2(2)(1), Mumbai

In the result, the appeal of the Revenue is dismissed, whereas the appeal of the assessee is allowed partly for statistical purposes

ITA 2873/MUM/2019[2015-16]Status: DisposedITAT Mumbai29 Sept 2022AY 2015-16

Section 14A

Waterfield Technologies Pvt. Ltd., Mumbai vs. NFAC, Delhi

In the result, all the appeals are allowed in the terms indicated above

ITA 2102/MUM/2022[2018-19]Status: DisposedITAT Mumbai28 Sept 2022AY 2018-19

Section 143(1)Section 36(1)(va)Section 44A

disallowance on account of delay in making the payment towards the employees’ contribution for the provident fund and ESI dues, under section 36(1)(va) r.w.s. 2(24)(x) of the Act, particularly when there are judgments of Hon’ble jurisdictional High Court permitting such a deduction. 2. When these ... delayed payment in column 20(b) were delayed payments of contributions received from the employees for various funds, as referred to in Section 36(1)(va) vis-à-vis the respective statute, but not vis-à-vis the provisions of the Income Tax Act. The judicial precedents in support

M/S. Ani Integrated Services Limited, Thane vs. DCIT, CC- 15 (1)(1), Mumbai

In the result, the appeals are allowed in the terms indicated above

ITA 2067/MUM/2022[2020-21]Status: DisposedITAT Mumbai28 Sept 2022AY 2020-21

Section 143(1)Section 143(1)(a)Section 154Section 36(1)(va)Section 44A

delayed payment in column 20(b) were delayed payments of contributions received from the employees for various funds, as referred to in Section 36(1)(va) vis-à-vis the respective statute, but not vis-à-vis the provisions of the Income Tax Act. The judicial precedents in support ... jurisdictional High Courts. Such conduct, according to the learned counsel, is impermissible. Finally, his next plea is that the insertion of Explanations to Section 36(1)(va) and 43B, by the Finance Bill 2021, is prospective in nature, and, accordingly, so far as the period prior to 1st April