Section 36(1)(ii) of the Income Tax Act

Income-tax Act, 2025: ss.29, 30, 31, 32

Section 36(1)(ii) falls under section 36 of the Income-tax Act, 1961, which corresponds to section 29 (Deductions related to employee welfare), section 30 (Deduction on certain premium), section 31 (Deduction for bad debt and provision for bad and doubtful debt) and section 32 (Other deductions) of the Income-tax Act, 2025.

Read section 29 of the 2025 ActRead section 30 of the 2025 ActRead section 31 of the 2025 ActRead section 32 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 36(1)(ii) is Loyal Motor Service Co. Ltd. v. CIT (14 ITR 647), cited in 48 of the 220 judgments on BharatTax that turn on this section.

Leading authorities on Section 36(1)(ii)

Loyal Motor Service Co. Ltd. v. CIT
14 ITR 647 · 1946 · High Court
48
citing judgments

A payment of bonus or commission is allowable as a business deduction under Section 36(1)(ii) unless it constitutes a distribution of profits or dividends, thereby distinguishing payments genuinely for services from those merely intended to escape taxation.

AMD Metplast (P) Ltd. v. DCIT
341 ITR 563 · 2012 · High Court
35
citing judgments

Bonus or commission paid to directors for services rendered as part of their terms of employment is allowable as a deduction, and Section 36(1)(ii) of the Income Tax Act does not apply in such cases.

AMD Metplast (P.) Ltd. v. Dy. CIT
20 Taxmann.com 647 · 2012 · High Court
10
citing judgments

Commission paid to a Managing Director for services rendered is eligible for deduction under section 36(1)(ii) of the Income-tax Act, 1961, provided it is paid as per the terms of employment and not merely to avoid Dividend Distribution Tax (DDT).

Dalal Barocha Stock Broking (P) Ltd. v. Addl. CIT, Range-4(1), Mumbai
11 Taxmann.com 426 · 2011 · Reported
7
citing judgments
Dalal Broacha Stock Broking Pvt. Ltd. v. Addl.CIT
10 ITR (Trib) 357 · 2011 · ITAT
5
citing judgments
Coil Company (P.) Ltd. v. Asst. CIT
8 Taxmann.com 225 · 2010 · ITAT
3
citing judgments

Judgments on Section 36(1)(ii)

Sharada Electors Private Limited, Pune vs. PCIT, Pune-3, Pune

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

ITA 1432/PUN/2025[2020-21]Status: DisposedITAT Pune22 Sept 2025AY 2020-21

Bench: Dr.Manish Borad & Shri Vinay Bhamore

For Appellant: Shri Kishor B. PhadkeFor Respondent: Shri Amit Bobde
Section 142(1)Section 143(1)Section 143(2)Section 14ASection 263

M/S. Patanjali Foods Ltd (Formerly Known As Ruchi Soya Industries Ltd), Mumbai vs. Dy Comm of Income Tax- Central Circle-7(2), Mumbai

In the result the appeal filed by the revenue stands

ITA 321/MUM/2023[2011-12]Status: DisposedITAT Mumbai17 Sept 2025AY 2011-12

Bench: Shri Sandeep Gosain & Shri Prabhash Shankar

Section 132Section 143(3)Section 153ASection 250Section 37(1)

Patanjali Foods Ltd (Formerly Known As Ruchi Soya Industries Ltd), Mumbai vs. Dy Comm of Income Tax-Central Circle-7(2), Mumbai

In the result the appeal filed by the revenue stands

ITA 319/MUM/2023[2007-08]Status: DisposedITAT Mumbai17 Sept 2025AY 2007-08

Bench: Shri Sandeep Gosain & Shri Prabhash Shankar

Section 132Section 143(3)Section 153ASection 250Section 37(1)

DCIT, CC-7(2), Mumbai vs. M/S. Patanjali Foods Ltd., ( Formerly Known As Ruchi Soya Industries Ltd, Mumbai

In the result the appeal filed by the revenue stands dismissed

ITA 1174/MUM/2023[2011-12]Status: DisposedITAT Mumbai17 Sept 2025AY 2011-12

Bench: Shri Sandeep Gosain & Shri Prabhash Shankar

Section 132Section 143(3)Section 153ASection 250Section 37(1)

DCIT, CC-7(2), Mumbai vs. M/S. Patanjali Foods Ltd., ( Formerly Known As Ruchi Soya Industries Ltd, Mumbai

In the result the appeal filed by the revenue stands dismissed

ITA 1173/MUM/2023[2011-12]Status: DisposedITAT Mumbai17 Sept 2025AY 2011-12

Bench: Shri Sandeep Gosain & Shri Prabhash Shankar

Section 132Section 143(3)Section 153ASection 250Section 37(1)

M/S Ram Sukh Chunni Lal, Jaipur vs. ITO, Ward-1(3), Jaipur

In the result, the appeal of the assessee is allowed with above directions

ITA 782/JPR/2025[2018-19]Status: DisposedITAT Jaipur15 Sept 2025AY 2018-19

Bench: Dr. S. Seethalakshmi & Shri Gagan Goyalram Sukh Chunni Lal, A-5, New Grain Mandi, Outside Chandpole, Jaipur 302 001 Pan No. Aabfr 5271M ...... Appellant Vs.

For Appellant: Mr. P. C. Parwal, CA, Ld. ARFor Respondent: Mrs. Alka Gautam, CIT, Ld. DR
Section 250Section 43BSection 68

Prem Chand Singh, Chatra vs. Pr.CIT, Dhanbad

The appeal of the assessee is allowed for statistical purposes

ITA 351/RAN/2024[2017-18]Status: DisposedITAT Ranchi11 Sept 2025AY 2017-18

Bench: Shri Sonjoy Sarma & Shri Ratnesh Nandan Sahayi.T.A. No.107/Ran/2024 Assessment Year: 2018-19 Pravin Engineering Pvt. Ltd.......................…...........................……….……Appellant Plot No.6A, Phase-1, Industrial Area, Adityapur, Jharkhand - 832109. [Pan: Aabcp0358E] Vs. Acit, National E-Assessment Centre, New Delhi.……........……...…..…..Respondent Appearances By: None Appeared On Behalf Of The Appellant. Shri Khubchand T. Pandya, Sr. Dr, Appeared On Behalf Of The Respondent. Date Of Concluding The Hearing : September 10, 2025 Date Of Pronouncing The Order : September 11, 2025 Order Per Sonjoy Sarma: The Present Appeal Has Been Preferred By The Assessee Against An Order Dated 28.02.2024 Of The National Faceless Appeal Centre [Hereinafter Referred To As ‘Cit(A)’] U/S 250 Of The Income Tax Act (Hereinafter Referred To As The ‘Act’). 2. Brief Facts Of The Case Are That The Assessee Is A Company & Filed Its Return Of Income For The Assessment Year 2018-19 Declaring Total Income Of Rs.73,21,980/-. The Case Of The Was Selected For Scrutiny & The Assessing Officer Completed The Assessment U/S 143(3) Of The Act Assessing Total Income Of The Assessee At Rs.84,67,210/-. During The Assessment Proceedings, The Assessing Officer Pointed Out That The Tax Audit Report Has Identified That The Assessee Paid Its Directors A Sum Of Rs.11,36,000/- As Bonus Or Commission Which Was Otherwise Payable As Profits Or Dividend & This Amount Was Covered By Section 36(1)(Ii) Of The Act. The Assessing Officer Disallowed The Claim Of Commission As Claimed By The Assessee.

Section 143(3)Section 250Section 36(1)(ii)

Pravin Engineering Private Limited, Jamshedpur vs. ACIT, National E-Assessment Centre

The appeal of the assessee is allowed for statistical purposes

ITA 107/RAN/2024[2018-2019]Status: DisposedITAT Ranchi11 Sept 2025AY 2018-2019

Bench: Shri Sonjoy Sarma & Shri Ratnesh Nandan Sahayi.T.A. No.107/Ran/2024 Assessment Year: 2018-19 Pravin Engineering Pvt. Ltd.......................…...........................……….……Appellant Plot No.6A, Phase-1, Industrial Area, Adityapur, Jharkhand - 832109. [Pan: Aabcp0358E] Vs. Acit, National E-Assessment Centre, New Delhi.……........……...…..…..Respondent Appearances By: None Appeared On Behalf Of The Appellant. Shri Khubchand T. Pandya, Sr. Dr, Appeared On Behalf Of The Respondent. Date Of Concluding The Hearing : September 10, 2025 Date Of Pronouncing The Order : September 11, 2025 Order Per Sonjoy Sarma: The Present Appeal Has Been Preferred By The Assessee Against An Order Dated 28.02.2024 Of The National Faceless Appeal Centre [Hereinafter Referred To As ‘Cit(A)’] U/S 250 Of The Income Tax Act (Hereinafter Referred To As The ‘Act’). 2. Brief Facts Of The Case Are That The Assessee Is A Company & Filed Its Return Of Income For The Assessment Year 2018-19 Declaring Total Income Of Rs.73,21,980/-. The Case Of The Was Selected For Scrutiny & The Assessing Officer Completed The Assessment U/S 143(3) Of The Act Assessing Total Income Of The Assessee At Rs.84,67,210/-. During The Assessment Proceedings, The Assessing Officer Pointed Out That The Tax Audit Report Has Identified That The Assessee Paid Its Directors A Sum Of Rs.11,36,000/- As Bonus Or Commission Which Was Otherwise Payable As Profits Or Dividend & This Amount Was Covered By Section 36(1)(Ii) Of The Act. The Assessing Officer Disallowed The Claim Of Commission As Claimed By The Assessee.

Section 143(3)Section 250Section 36(1)(ii)

Ponnusamy Raja, Vakkil New Street, Madurai vs. Income Tax Officer, Non-Corporate Ward 1(7), Madurai, Income Tax Office, Cr Building

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

ITA 1677/CHNY/2025[2018-2019]Status: DisposedITAT Chennai02 Sept 2025AY 2018-2019

Bench: Shri S.S. Viswanethra Ravi & Shri S.R. Raghunathaआयकर अपील सं./I.T.A. No.1677/Chny/2025 िनधा"रण वष"/Assessment Year: 2018-19 Ponnusamy Raja, Vs. The Income Tax Officer, No. 176-A, 3Rd Floor, Vakkil New Street, Non Corporate Ward 1(7), Simmakal, Madurai 625 001. Madurai. [Pan:Agepr6307F] (अपीलाथ"/Appellant) (""थ"/Respondent) अपीलाथ" की ओर से / Appellant By : Shri T. Vasudevan, Advocate ""थ" की ओर से/Respondent By : Shri N. Rajakumar, Addl. Cit सुनवाई की तारीख/ Date Of Hearing : 26.08.2025 घोषणा की तारीख /Date Of Pronouncement : 02.09.2025 आदेश /O R D E R Per S.S. Viswanethra Ravi: This Appeal Filed By The Assessee Is Directed Against The Order Dated 04.03.2025 Passed By The Ld. Commissioner Of Income Tax (Appeals), National Faceless Appeal Centre (Nfac), Delhi For The Assessment Year 2018-19. 2. We Find That This Appeal Is Filed With A Delay Of 9 Days. The Assessee Filed An Affidavit For Condonation Of Delay Stating The Reasons. Upon Hearing Both The Parties & On Examination Of The Said Affidavit, We Find The Reasons Stated By The Assessee Are Bonafide, Which Really

For Appellant: Shri T. Vasudevan, AdvocateFor Respondent: Shri N. Rajakumar, Addl. CIT
Section 36(1)(ii)Section 44A

Income Tax Officer, Delhi vs. Rakhee Walech, Delhi

In the result, Appeal of the Revenue is partly allowed for

ITA 5987/DEL/2024[2017-18]Status: DisposedITAT Delhi29 Jul 2025AY 2017-18

Bench: Shri Yogesh Kumar U.S. & Shri Manish Agarwali.T.A. No. 5987/Del//Del/2024 (A.Y 2017-18) Income Tax Officer Vs Rakhee Walecha, Room No. 1210, E-2, Block, Civic 455, Mandakini Enclave, Centre, New Delhi Alaknanda, New Delhi Pan: Aaipw4418J Appellant Respondent Assessee By Sh. Anuj Tiwari, Ca Revenue By Sh. Ajay Kumar Arora, Sr. Dr Date Of Hearing 16/07/2025 Date Of Pronouncement 29/07/2025

Section 36(1)(ii)Section 68

Corona Steel Industry Pvt. Ltd., Kolkata vs. DCIT, Central Circle 3(3), Kolkata

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

ITA 2531/KOL/2024[2021-2022]Status: DisposedITAT Kolkata22 Jul 2025AY 2021-2022

Bench: SHRI DUVVURU RL REDDY (Vice President)

For Appellant: Shri Arvind Agrawal, ARFor Respondent: Shri susanta Saha, Addl. CIT-Sr.DR
Section 143(1)Section 154Section 36(1)(ii)

Morni Sarees Private Limited, Indore vs. Asst. Director of Income Tax, CPC, Bengaluru

In the result, the order of the CIT(A) is set aside, and the appeal of the assessee is partly allowed”

ITA 910/IND/2024[2021-22]Status: DisposedITAT Indore07 Jul 2025AY 2021-22

Bench: Shri B.M. Biyani & Shri Paresh M Joshi

Section 143(1)Section 154Section 246ASection 250Section 253Section 36Section 43B

Deputy Commissioner of Income Tax Circle 1(1)(1), Vadodara vs. Ami Life Science Private Limited, Vadodara

In the result, the appeal of the Department is dismissed

ITA 18/AHD/2025[2017-18]Status: DisposedITAT Ahmedabad22 Apr 2025AY 2017-18

Bench: Dr. Brr Kumar & Shri Siddhartha Nautiyal

For Appellant: Shri Abbas Gulamhusainwala, A.RFor Respondent: Shri Kavam Limbasiya, Sr. DR
Section 36(1)(ii)

Chemvin Industries, Chandigarh vs. DCIT, Circle 1(1), Chandigarh

In the result, appeal of the Assessee is allowed for statistical purposes

ITA 932/CHANDI/2024[2021-22]Status: DisposedITAT Chandigarh27 Mar 2025AY 2021-22

Bench: SHRI. LALIET KUMAR (Judicial Member), SHRI. KRINWANT SAHAY (Accountant Member)

For Appellant: Shri Vineet Krishan, AdvocateFor Respondent: Shri Vivek Vardhan, Addl. CIT, Sr. DR
Section 139(1)Section 143(1)Section 250Section 36(1)Section 36(1)(ii)Section 43B

Kulateghari Ketera Samabay Krishi Unnayan Samity Ltd., Hooghly vs. I.T.O., Ward - 24(1), Hooghly

In the result, both the appeals of the assessee are dismissed

ITA 1847/KOL/2024[2018-2019]Status: DisposedITAT Kolkata20 Mar 2025AY 2018-2019

Bench: Shri George Mathan & Shri Sanjay Awasthi

For Appellant: N o n eFor Respondent: Shri Ankur Goyal, Sr. DR
Section 143(3)Section 250Section 263

Kulateghari Ketera Samabay Krishi Unnayan Smity Ltd., Hooghly vs. P.C.I.T. - 5, Kolkata

In the result, both the appeals of the assessee are dismissed

ITA 1846/KOL/2024[2018-2019]Status: DisposedITAT Kolkata20 Mar 2025AY 2018-2019

Bench: Shri George Mathan & Shri Sanjay Awasthi

For Appellant: N o n eFor Respondent: Shri Ankur Goyal, Sr. DR
Section 143(3)Section 250Section 263

DCIT., Circle 3(1), Hyderabad vs. Rohini Minerals Private Limited, Hyderabad

In the result, all the three appeals filed by the Revenue for the A

ITA 980/HYD/2024[2018-19]Status: DisposedITAT Hyderabad11 Mar 2025AY 2018-19

Bench: Shri Manjunatha G. & Shri K.Narasimha Charyआ.अपी.सं /Ita No.980/Hyd/2024, 1079/Hyd/2024 & 1080/Hyd/2024 (निर्धारण वर्ा/Assessment Year: 2018-19, 2014-15 & 2015-16) Dcit Vs. M/S Rohini Minerals Circle-3(1) Private Limited Hyderabad Hyderabad [Pan :Aaccr0773N] (Appellant) (Respondent) निर्धाररती द्वधरध/Assessee By: Shri S.K.Gupta, Ar रधजस् व द्वधरध/Revenue By: Shri B Bala Krishna, Cit-Dr Shri Srinath Sadanala, Sr.Ar

For Appellant: Shri S.K.Gupta, ARFor Respondent: Shri B Bala Krishna, CIT-DR
Section 131Section 147Section 148Section 148A

DCIT., Circle 3(1), Hyderabad vs. Rohini Minerals Private Limited, Hyderabad

In the result, all the three appeals filed by the Revenue for the A

ITA 1080/HYD/2024[2015-16]Status: DisposedITAT Hyderabad11 Mar 2025AY 2015-16

Bench: Shri Manjunatha G. & Shri K.Narasimha Charyआ.अपी.सं /Ita No.980/Hyd/2024, 1079/Hyd/2024 & 1080/Hyd/2024 (निर्धारण वर्ा/Assessment Year: 2018-19, 2014-15 & 2015-16) Dcit Vs. M/S Rohini Minerals Circle-3(1) Private Limited Hyderabad Hyderabad [Pan :Aaccr0773N] (Appellant) (Respondent) निर्धाररती द्वधरध/Assessee By: Shri S.K.Gupta, Ar रधजस् व द्वधरध/Revenue By: Shri B Bala Krishna, Cit-Dr Shri Srinath Sadanala, Sr.Ar

For Appellant: Shri S.K.Gupta, ARFor Respondent: Shri B Bala Krishna, CIT-DR
Section 131Section 147Section 148Section 148A

DCIT., Circle 3(1), Hyderabad vs. Rohini Minerals Private Limited, Hyderabad

In the result, all the three appeals filed by the Revenue for

ITA 1079/HYD/2024[2014-15]Status: DisposedITAT Hyderabad11 Mar 2025AY 2014-15

Bench: Shri Manjunatha G. & Shri K.Narasimha Chary

For Appellant: Shri S.K.Gupta, ARFor Respondent: Shri B Bala Krishna, CIT-DR
Section 131Section 147Section 148Section 148A

Sampratik News Services P.Ltd., Kolkata vs. ITO, Ward 7(1), Kolkata

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

ITA 949/KOL/2024[2020-21]Status: DisposedITAT Kolkata26 Feb 2025AY 2020-21

Bench: Shri Duvvuru Rl Reddy, Vice-(Kz) I.T.A. No. 949/Kol/2024 Assessment Year: 2020-2021 Sampratik News Service Pvt. Limited,………Appellant C/O. S.N. Ghosh & Associates, Advocates, 2, Garstin Place, 2Nd Floor, Suite No. 2023, Off. Hare Street, Kolkata-700001 [Pan:Aajcs6065R] -Vs.- Income Tax Officer,……………………………....Respondent Ward-7(1), Kolkata, Aayakar Bhawan, 5Th Floor, P-7, Chowringhee Square, Kolkata-700069

Section 139(1)Section 36(1)(ii)