Section 35(1)(ii) of the Income Tax Act

Income-tax Act, 2025: s.45

Section 35(1)(ii) falls under section 35 of the Income-tax Act, 1961, which corresponds to section 45 (Expenditure on scientific research) of the Income-tax Act, 2025.

Read section 45 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 35(1)(ii) is ACIT v. ICICI Securities Primary Dealership Ltd. (348 ITR 299), cited in 76 of the 329 judgments on BharatTax that turn on this section.

Leading authorities on Section 35(1)(ii)

ACIT v. ICICI Securities Primary Dealership Ltd.
348 ITR 299 · 2012 · Supreme Court
76
citing judgments

Reopening assessment based on a mere re-look of accounts already furnished and assessed under section 143(3) is not permissible if there was no failure on the part of the assessee to make a true and full disclosure. The assessment cannot be reopened on the ground that income has escaped assessment merely by re-examining previously filed accounts.

Madras Industrial Investment Corpn. Ltd. v. CIT
91 Taxmann 340 · 1997 · Supreme Court
73
citing judgments

The Supreme Court held that discount on the issue of debentures is a deductible expenditure that can be spread proportionately over the period for which the debentures remain outstanding, rather than being claimed entirely in the year of issue. This treatment acknowledges the enduring benefit derived from the funds raised through debentures.

S.R.M.M.C.T.M Tiruppani Trust v. CIT
230 ITR 636 · 1998 · Supreme Court
54
citing judgments

Capital expenditure incurred by a trust from its own funds is considered an application of income, entitling the trust to claim exemption under Section 11(1) of the Income-tax Act.

Industrial Infrastructure Development Corporation (Gwalior) M.P. Ltd. v. CIT, Gwalior
403 ITR 1 · 2018 · Supreme Court
39
citing judgments

The power to cancel registration granted to a trust is not an implied power under the General Clauses Act and requires express legislative provision. An express power to cancel registration was introduced later via amendment.

CIT v. Natraj Stationery Products (P) Ltd.
312 ITR 22 · 2009 · High Court
39
citing judgments

Fresh legal claims can be made during assessment or appellate proceedings, and the Assessing Officer should consider these claims for correct deductions after verification.

Commissioner of Income Tax v. Chotatingrai Tea & Ors.
258 ITR 529 · 2002 · Supreme Court
30
citing judgments

A donor cannot be held responsible for the utilization of their donation by a donee institution once the statutory conditions for claiming a deduction are met. Subsequent withdrawal of approval for the donee institution cannot retrospectively deny the donor the deduction.

CIT v. Jindal Saw Pipes Ltd.
328 ITR 338 · 2010 · High Court
27
citing judgments

The Tribunal has comprehensive jurisdiction to deal with issues in an appeal and can allow a new ground to be raised, assimilating issues from the CIT (Appeals) order.

CIT v. V.S. Dempo & Co. Pvt. Ltd.
336 ITR 209 · 2011 · High Court
27
citing judgments

Disallowance under Section 40A(2)(b) is not maintainable when both the payer and payee are assessed at the maximum marginal rate, as it results in a revenue-neutral situation.

B.P.Agarwalls & Sons Ltd. v. CIT
208 ITR 863 · 1994 · High Court
27
citing judgments

A High Court cannot cancel the registration of a scientific research association retrospectively. Therefore, a deduction claimed under section 35(1)(ii) based on such a cancelled registration must be allowed.

Velankani Information Systems Ltd. v. DCIT
97 Taxmann.com 599 · 2018 · ITAT
24
citing judgments

Interest paid on delayed remittances of service tax is compensatory in nature and not a penalty hit by the Explanation to Section 37(1) of the Income Tax Act, 1961, making it a allowable business expenditure.

Judgments on Section 35(1)(ii)

Santosh Suresh Kumar Agarwal, Kolkata vs. ACIT, Circle - 36, Kolkata

In the result this issue is decided in favour of the assessee

ITA 1162/KOL/2018[2014-15]Status: DisposedITAT Kolkata05 Sept 2018AY 2014-15

Bench: Sri J. Sudhakar Reddy) Assessment Year: 2011-12 Santosh Suresh Kumar Agarwal...........…………….………………………………………..……….……..Appellant C/O M.C. Jagwayan & Co. 46, Kali Krishna Tagore Street 2Nd Floor Kolkata – 700 007 [Pan : Adhpa 0744 M] Assistant Commissioner Of Income Tax, Circle-36, Kolkata......…........……….…..……...Respondent Appearances By: Shri Nitin Jagwayan, Fca, Appeared On Behalf Of The Assessee. Shri Sital Chandra Das, Addl. Cit, D/R. Appearing On Behalf Of The Revenue. Date Of Concluding The Hearing : August 28Th, 2018 Date Of Pronouncing The Order : September 5Th , 2018 Order Per J. Sudhakar Reddy, Am :- This Is An Appeal Filed By The Assessee Directed Against The Order Of The Commissioner Of Income Tax (Appeals) - 10 Kolkata, (Hereinafter The ‘Ld. Cit(A)’), Dt. 01/03/2018, Passed U/S 250 Of The Income Tax Act, 1961 (Hereinafter The ‘Act’), Relating To Assessment Year 2014-15. 2. The Sole Issue That Arises For My Consideration Is The Disallowance Of Rs.11 Lakhs, Made By The Assessing Officer In Respect Of A Donation Of Rs.11 Lakhs Made By The Assessee To “The School Of Human Genetics & Population Health”, An Institute Approved By The Central Government Vide Notification No. 4/2010 Dated 28Th January, 2009. The Assessing Officer As Well As The Ld. Cit(A), Did Not Allow This Claim Of The Assessee For The Various Reasons Given At Pages 24 To 31 Of The Ld. Cit(A)’S Order. The Reasons Given By The Revenue Authorities In This Case Is The Same As In The Case Of The Narbheram Vishram Vs. Dcit In Ita No. 42 & 43/Kol/2018; Assessment Year 2013-14 & 2014-15, Orderdt. 27/07/2018

Section 12ASection 250Section 35Section 35(1)Section 35(1)(ii)