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)

Nadia District Central Co-Operative Bank Ltd., Nadia vs. The Ld. Pr. CIT, Kolkata 1, Kolkata

In the result, appeal of the assessee is allowed

ITA 361/KOL/2025[2020-21]Status: FixedITAT Kolkata01 Jul 2025AY 2020-21

Bench: Shri George Mathancathy Commercial Pvt. Ltd. Vs Ito Ward-5 (2), Kolkata Model House, 3Rd Floor, Room No.10, 40, Strand Road, Kolkata-700001 Aadcc 5211 H (अपीलार्थी /Appellant) .. (प्रत्यर्थी / Respondent) नििााररती की ओर से /Assessee By : Shri Miraz D. Shah, Ar राजस्व की ओर से /Revenue By : Shri S.B.Chakraborthy, Sr. Dr सुनवाई की तारीख / Date Of Hearing : 01/07/2025 घोषणा की तारीख/Date Of Pronouncement : 01.07.2025 आदेश / O R D E R This Is An Appeal Filed By The Assessee Against The Order Of The Ld. Cit(A), National Faceless Appeal Centre (Nfac), Delhi, Dated 28.03.2023, Passed In Din & Order No.Itba/Nfac/S/250/2022-23/1051484765(1) For The Assessment Year 2012-2013. 2. Shri Miraj D. Shah, Ld. Ar Appeared On Behalf Of The Assessee & Shri S.B.Chakraborthy, Ld.Sr. Dr Appeared On Behalf Of The Revenue. 3. It Was Submitted By The Ld.Ar That In The Course Of Assessment The Ao Had Disallowed The Assessee'S Donation Of Rs.7 Lakhs Made To M/S Herbicure Health Care Bio Herbal Research Foundation (Hhbrf) Which Have The Approval U/S.35(1)(Ii) Of The Act. It Was The Submission That Consequently The Disallowance Made Was To An Extent Of Rs.12,25,000/-. It Was The Submission That On Appeal, Ld. Cit(A) Without Considering The Submissions Of The Assessee Nor The Reply To The Remand Report Confirmed

For Appellant: Shri Miraz D. Shah, ARFor Respondent: Shri S.B.Chakraborthy, Sr. DR
Section 35(1)Section 35(1)(ii)Section 35C