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)

Shree Dhain Auto Logistics Pvt. Ltd., Vadodara vs. The Income Tax Officer, Ward-2(1)(1) (Previously the DCIT- Cicle-2(1)(1)), Vadodara

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

ITA 392/AHD/2024[2015-16]Status: DisposedITAT Ahmedabad25 Feb 2025AY 2015-16

Bench: DR. BRR KUMAR (Vice President), Shri T.R. SENTHIL KUMAR (Judicial Member)

Section 143(3)Section 271DSection 40A(2)(b)Section 43B

DCIT, Central Circle-2(1), Chennai vs. M/S Cavincare Pvt Ltd., Chennai

The appeals stand allowed for statistical purposes

ITA 768/CHNY/2023[2012-13]Status: DisposedITAT Chennai24 Feb 2025AY 2012-13

Bench: Hon’Ble Shri Manoj Kumar Aggarwal, Am & Hon’Ble Shri Manu Kumar Giri, Jm 1. आयकरअपील सं. / Ita No.765/Chny/2023 (िनधा)रण वष) / Assessment Year: 2009-10) & 2. आयकरअपील सं. / Ita No.766/Chny/2023 (िनधा)रण वष) / Assessment Year: 2010-11) & 3. आयकरअपील सं. / Ita No.767/Chny/2023 (िनधा)रण वष) / Assessment Year: 2011-12) & 4. आयकरअपील सं. / Ita No.768/Chny/2023 (िनधा)रण वष) / Assessment Year: 2012-13) Dcit M/S Cavinkare Private Limited बनाम/ 12, Cavin Ville, Cenotaph Road Central Circle-2(1) Vs. Teynampet, Chennai-600 018. Chennai "थायीलेखासं./जीआइआरसं./Pan/Tan No. Aaacb-3754-B (अपीलाथ"/Appellant) : (""थ" / Respondent) अपीलाथ"कीओरसे/ Appellant By : Shri A. Sasikumar (Cit) - Ld. Dr ""थ"कीओरसे/Respondent By : Shri T. Banusekar (Advocate) – Ld.Ar सुनवाईकीतारीख/Date Of Hearing : 15-01-2025 घोषणाकीतारीख /Date Of Pronouncement : 24-02-2025 आदेश / O R D E R Manoj Kumar Aggarwal ()

For Appellant: Shri A. Sasikumar (CIT) - Ld. DRFor Respondent: Shri T. Banusekar (Advocate) – Ld.AR
Section 133ASection 143(3)Section 35Section 36(1)(ii)Section 40aSection 80Section 80I

DCIT, Central Circle-2(1), Chennai vs. M/S Cavincare Pvt Ltd., Chennai

The appeals stand allowed for statistical purposes

ITA 767/CHNY/2023[2011-12]Status: DisposedITAT Chennai24 Feb 2025AY 2011-12

Bench: Hon’Ble Shri Manoj Kumar Aggarwal, Am & Hon’Ble Shri Manu Kumar Giri, Jm 1. आयकरअपील सं. / Ita No.765/Chny/2023 (िनधा)रण वष) / Assessment Year: 2009-10) & 2. आयकरअपील सं. / Ita No.766/Chny/2023 (िनधा)रण वष) / Assessment Year: 2010-11) & 3. आयकरअपील सं. / Ita No.767/Chny/2023 (िनधा)रण वष) / Assessment Year: 2011-12) & 4. आयकरअपील सं. / Ita No.768/Chny/2023 (िनधा)रण वष) / Assessment Year: 2012-13) Dcit M/S Cavinkare Private Limited बनाम/ 12, Cavin Ville, Cenotaph Road Central Circle-2(1) Vs. Teynampet, Chennai-600 018. Chennai "थायीलेखासं./जीआइआरसं./Pan/Tan No. Aaacb-3754-B (अपीलाथ"/Appellant) : (""थ" / Respondent) अपीलाथ"कीओरसे/ Appellant By : Shri A. Sasikumar (Cit) - Ld. Dr ""थ"कीओरसे/Respondent By : Shri T. Banusekar (Advocate) – Ld.Ar सुनवाईकीतारीख/Date Of Hearing : 15-01-2025 घोषणाकीतारीख /Date Of Pronouncement : 24-02-2025 आदेश / O R D E R Manoj Kumar Aggarwal ()

For Appellant: Shri A. Sasikumar (CIT) - Ld. DRFor Respondent: Shri T. Banusekar (Advocate) – Ld.AR
Section 133ASection 143(3)Section 35Section 36(1)(ii)Section 40aSection 80Section 80I

DCIT, Central Circle-2(1), Chennai vs. M/S Cavincare Pvt Ltd., Chennai

The appeals stand allowed for statistical purposes

ITA 766/CHNY/2023[2010-11]Status: DisposedITAT Chennai24 Feb 2025AY 2010-11

Bench: Hon’Ble Shri Manoj Kumar Aggarwal, Am & Hon’Ble Shri Manu Kumar Giri, Jm 1. आयकरअपील सं. / Ita No.765/Chny/2023 (िनधा)रण वष) / Assessment Year: 2009-10) & 2. आयकरअपील सं. / Ita No.766/Chny/2023 (िनधा)रण वष) / Assessment Year: 2010-11) & 3. आयकरअपील सं. / Ita No.767/Chny/2023 (िनधा)रण वष) / Assessment Year: 2011-12) & 4. आयकरअपील सं. / Ita No.768/Chny/2023 (िनधा)रण वष) / Assessment Year: 2012-13) Dcit M/S Cavinkare Private Limited बनाम/ 12, Cavin Ville, Cenotaph Road Central Circle-2(1) Vs. Teynampet, Chennai-600 018. Chennai "थायीलेखासं./जीआइआरसं./Pan/Tan No. Aaacb-3754-B (अपीलाथ"/Appellant) : (""थ" / Respondent) अपीलाथ"कीओरसे/ Appellant By : Shri A. Sasikumar (Cit) - Ld. Dr ""थ"कीओरसे/Respondent By : Shri T. Banusekar (Advocate) – Ld.Ar सुनवाईकीतारीख/Date Of Hearing : 15-01-2025 घोषणाकीतारीख /Date Of Pronouncement : 24-02-2025 आदेश / O R D E R Manoj Kumar Aggarwal ()

For Appellant: Shri A. Sasikumar (CIT) - Ld. DRFor Respondent: Shri T. Banusekar (Advocate) – Ld.AR
Section 133ASection 143(3)Section 35Section 36(1)(ii)Section 40aSection 80Section 80I

DCIT, Central Circle-2(1), Chennai vs. M/S Cavincare Pvt Ltd., Chennai

The appeals stand allowed for statistical purposes

ITA 765/CHNY/2023[2009-10]Status: DisposedITAT Chennai24 Feb 2025AY 2009-10

Bench: Hon’Ble Shri Manoj Kumar Aggarwal, Am & Hon’Ble Shri Manu Kumar Giri, Jm 1. आयकरअपील सं. / Ita No.765/Chny/2023 (िनधा)रण वष) / Assessment Year: 2009-10) & 2. आयकरअपील सं. / Ita No.766/Chny/2023 (िनधा)रण वष) / Assessment Year: 2010-11) & 3. आयकरअपील सं. / Ita No.767/Chny/2023 (िनधा)रण वष) / Assessment Year: 2011-12) & 4. आयकरअपील सं. / Ita No.768/Chny/2023 (िनधा)रण वष) / Assessment Year: 2012-13) Dcit M/S Cavinkare Private Limited बनाम/ 12, Cavin Ville, Cenotaph Road Central Circle-2(1) Vs. Teynampet, Chennai-600 018. Chennai "थायीलेखासं./जीआइआरसं./Pan/Tan No. Aaacb-3754-B (अपीलाथ"/Appellant) : (""थ" / Respondent) अपीलाथ"कीओरसे/ Appellant By : Shri A. Sasikumar (Cit) - Ld. Dr ""थ"कीओरसे/Respondent By : Shri T. Banusekar (Advocate) – Ld.Ar सुनवाईकीतारीख/Date Of Hearing : 15-01-2025 घोषणाकीतारीख /Date Of Pronouncement : 24-02-2025 आदेश / O R D E R Manoj Kumar Aggarwal ()

For Appellant: Shri A. Sasikumar (CIT) - Ld. DRFor Respondent: Shri T. Banusekar (Advocate) – Ld.AR
Section 133ASection 143(3)Section 35Section 36(1)(ii)Section 40aSection 80Section 80I

Makson Health Care Pvt Ltd Makson Industries Pvt Ltd Before Merger, Mandideep Raisen vs. The DCIT -10-2 (2), Mumbai

Appeal is allowed for statistical purpose

ITA 213/IND/2024[2012-13]Status: DisposedITAT Indore31 Jan 2025AY 2012-13

Bench: Shri B.M. Biyani & Shri Udayan Das Guptaassessment Year:2012-13 Makson Health Care Pvt. Dcit 10(2)(2) Ltd. Mumbai Plot No.6A, Akvn Industrial Area, बनाम/ Mandideep, Vs. Raisen (M.P.)

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

Arun Tech Industrial Services Pvt. Ltd., Chennai vs. ITO, Corporate Ward, Chennai

In the result, appeal filed by the assessee is allowed

ITA 1788/CHNY/2024[2018-19]Status: DisposedITAT Chennai08 Jan 2025AY 2018-19

Bench: Shri Aby T. Varkey & Shri Amitabh Shukla

For Appellant: Mr. J. Vignesh, CAFor Respondent: Ms. Gouthami Manivasagam
Section 143(1)Section 234BSection 36(1)(ii)

Gp Spira Duct Private Limited, Hyderabad vs. DCIT., Circle-2(1), Hyderabad

In the result, appeal filed by the assessee is allowed for statistical purpose

ITA 957/HYD/2024[2020-21]Status: DisposedITAT Hyderabad04 Dec 2024AY 2020-21

Bench: Shri Vijay Pal Rao & Shri Manjunatha G.आ.अपी.सं /Ita No.957/Hyd/2024 (निर्धारण वर्ा/Assessment Year: 2020-21) Gp Spira Duct Private Vs. Deputy Commissioner Limited Of Income Tax Hyderabad Circle-2(1) [Pan : Aaccg2696M] Hyderabad (Appellant) (Respondent) निर्धाररती द्वधरध/Assessee By: Shri A.V.Raghuram, Ar रधजस् व द्वधरध/Revenue By: Shri Srinath Sadanala, Dr सुिवधई की तधरीख/Date Of Hearing: 04/12/2024 घोर्णध की तधरीख/Date Of 04/12/2024 Pronouncement: आदेश / Order Per. Manjunatha G., A.M: This Appeal Filed By The Assessee Is Directed Against The Order Passed By The Learned Commissioner Of Income Tax (Appeals) [Learned Cit(A)] Dated 06.08.2024 & Pertains To A.Y.2020-21. 2. The Brief Facts Of The Case Are That The Appellant Company Filed Its Return Of Income For The A.Y.2020-21 On 22.12.2020, Admitting Total Income Of Rs.1,69,65,640/-. The Return Of Income Filed By The Assessee Has Been Processed By The 2 Ao(Cpc), Issued Intimation U/S 143(1) Of The Income Tax Act, 1961 (“The Act”) & Determined Total Income At Rs.1,85,36,790/-, By Disallowing Bonus Expenditure Of Rs.13,87,250/- & Addition Towards Esi & Pf At Rs.1,83,903/-.

For Appellant: Shri A.V.Raghuram, ARFor Respondent: Shri Srinath Sadanala, DR
Section 139Section 139(1)Section 143(1)Section 36(1)(va)

D H Polymer Pvt. Ltd., Kanpur vs. CIT, Kanpur

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

ITA 554/LKW/2024[2018-19]Status: DisposedITAT Lucknow14 Nov 2024AY 2018-19

Bench: Shri. Sudhanshu Srivastavaassessment Year: 2018-19 Dh Polymers Pvt. Ltd. V. The Cit(A) F-37, Site-2, Panki Kanpur Industrial Area Kanpur Tan/Pan:Aabcd0681J (Appellant) (Respondent) Appellant By: None Respondent By: Shri Sanjeev Krishna Sharma, D.R. Date Of Hearing: 10 10 2024 Date Of Pronouncement: 14 11 2024 O R D E R

For Appellant: NoneFor Respondent: Shri Sanjeev Krishna Sharma, D.R
Section 143(1)Section 143(3)Section 36(1)(ii)

The DCIT, Circle-3(1)(2), Ahmedabad vs. M/S. Om Land Reality Pvt.Ltd., Ahmedabad

In the result, the appeal of the Revenue and the Cross Objection filed by the assessee are partly allowed for statistical purpose

ITA 1572/AHD/2019[2014-15]Status: DisposedITAT Ahmedabad23 Sept 2024AY 2014-15

Bench: Ms. Suchitra Kamble & Shri Narendra Prasad Sinhaआयकर अपील सं./Ita No. 1572/Ahd/2019 With C.O No.24/Ahd/2022 िनधा"रण वष"/Asstt. Year: 2014-2015 The Dcit, M/S. Om Land Reality Pvt. Ltd., Circle-3(1)(2), बनाम 302, 3Rd Floor, Vs. Ahmedabad. Abhiship Complex Nr. Keshav Baug Party Plot, Satellite, Ahmedabad-380015. Pan: Aaaco9406D ( ""यथ" /Respondent) (अपीलाथ" /Appellant Revenue By : Shri Sudhendu Das, Dr Assessee By : Ms Amoli Gusani, Ar

For Appellant: Ms Amoli Gusani, ARFor Respondent: Shri Sudhendu Das, DR
Section 142(1)Section 143(2)Section 144Section 36(1)Section 36(1)(iii)Section 40Section 40A(2)(b)Section 45Section 68

A-Kal Televerse Private Limited, Bangalore vs. Deputy Commissioner of Income Tax, Circle-7(1)(1), Bangalore

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

ITA 538/BANG/2024[2014-15]Status: DisposedITAT Bangalore30 Jul 2024AY 2014-15

Bench: Shri Chandra Poojari & Shri Keshav Dubey

For Appellant: Sri. Navaneeth N Kini, CAFor Respondent: Sri. Guru Kumar S, Addl. CIT-DR
Section 143(2)Section 14ASection 250Section 36(1)(ii)

Ami Life Sciences Pvt. Ltd., Vadodara vs. The ACIT, Circle-1(1)(1), Vadodara

Accordingly, the disallowance made by the AO and confirmed by the Ld.CIT(A) is deleted, and the assessee's claim is allowed in full

ITA 544/AHD/2023[2016-17]Status: DisposedITAT Ahmedabad15 Jul 2024AY 2016-17

Bench: Ms. Suchitra Kamble & Shri Makarand V. Mahadeokar, Accountnat Member आयकर अपील सं /Ita No.544/Ahd/2023 "नधा"रण वष" /Assessment Year : 2016-17 Ami Life Sciences Pvt.Ltd. The Acit बनाम/ 701 To 710 Lilleria 1038 Circle-1(1)(1) Next To Zydex Office Vadodara V/S. Gotri Sevasi Road Vadodara – 390 020 (Gujarat) "थायी लेखा सं./Pan: अपीलाथ"/ (Appellant) ….. "" यथ"/ (Respondent) Assessee By : Shri S.N. Soparkar, Sr.Advocate Revenue By : Shri Sudhakar Verma, Sr.Dr सुनवाई क" तार"ख/Date Of Hearing : 04/07/2024 घोषणा क" तार"ख /Date Of Pronouncement: 15/07/2024 आदेश/O R D E R Per Shri Makarand V. Mahadeokar, Am: This Appeal Is Filed By The Assessee As Against The Order Dated 12/06/2023 Passed By The Ld.Commissioner Of Income-Tax(Appeals) - National Faceless Appeal Centre (Nfac), Delhi [Hereinafter Referred To As “The Ld.Cit(A)” In Short], Arising Out Of The Assessment Order Dated 21/12/2018 Passed By The Assessing Officer (Ao) Under Section 143(3) Of The Income Tax Act, 1961 (Hereinafter Referred To As "The Act") Relevant To The Assessment Year (Ay) 2016-17. Ami Life Sciences Pvt.Ltd. Vs. Acit Asst. Year : 2016-17 2 Facts Of The Case:

For Appellant: Shri S.N. Soparkar, Sr.AdvocateFor Respondent: Shri Sudhakar Verma, Sr.DR
Section 143(2)Section 143(3)Section 36Section 36(1)(ii)

Manoranjan Sahu, Balasore vs. Income Tax Officer, Ward-1, Balasore

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

ITA 95/CTK/2024[2017-18]Status: DisposedITAT Cuttack26 Jun 2024AY 2017-18
For Appellant: Shri P.K.Mishra, AdvocateFor Respondent: Shri Charan Dass, Sr. DR
Section 143(1)Section 36(1)(ii)

Intarvo Technologies .Ltd, Noida vs. DCIT, Circle-12(2), New Delhi

In the result, the appeal is partly allowed with consequence to follow as above

ITA 3588/DEL/2019[2013-14]Status: DisposedITAT Delhi10 Jun 2024AY 2013-14

Bench: Shri G.S. Pannu, Vice- & Shri Anubhav Sharmaassessment Year: 2013-14 Intarvo Technologies Ltd., Vs. Dcit, Ward 12(2), Regency Tower, C-69, New Delhi Sec.58, Noida (Up) Pin: 201 307 Pan: Aabcr7753B (Appellant) (Respondent)

Section 143(3)Section 36(1)(ii)Section 58

Renault Nissan Automotive India Private Limited, Kancheepuram vs. DCIT, Corpoate Circle-5(3), Chennai

The appeal stand partly allowed

ITA 206/CHNY/2018[2010-11]Status: DisposedITAT Chennai03 Jun 2024AY 2010-11

Bench: Hon’Ble Shri Mahavir Singh, Vp & Hon’Ble Shri Manoj Kumar Aggarwal, Am आयकरअपीलसं./ Ita No.206/Chny/2018 (िनधा*रणवष* / Assessment Year: 2010-11) M/S.Renault Nissan Automotive India Dcit Private Limited Company Circle-V(3), बनाम Plot No.1, Sipcot Industrial Park, Chennai. / Vs. Oragadam, Mattur Post, Sriperumbudur-602 015. "थायीलेखासं./जीआइआरसं./Pan/Gir No.Aadcr-7965-B (अपीलाथ"/Appellant) : (" थ" / Respondent) अपीलाथ"कीओरसे/ Appellant By : Shri N.V.Balaji (Advocate)-Ld.Ar " थ"कीओरसे/Respondent By : Shri V.Nandakumar (Cit) -Ld.Dr सुनवाईकीतारीख/Date Of Hearing : 25-04-2024 घोषणाकीतारीख /Date Of Pronouncement : 03-06-2024 आदेश / O R D E R

For Appellant: Shri N.V.Balaji (Advocate)-Ld.ARFor Respondent: Shri V.Nandakumar (CIT) -Ld.DR
Section 143(3)Section 250

Micropoint Computers Private Limited, Mumbai vs. Deputy Commissioner of Income Tax 10(2)(2), Mumbai

In the result, the appeal by the assessee is allowed

ITA 3414/MUM/2023[2015-16]Status: DisposedITAT Mumbai22 Apr 2024AY 2015-16

Bench: Shri Prashant Maharishi & Shri Sandeep Singh Karhail

For Appellant: Shri Bhupendra ShahFor Respondent: Smt. Mahita Nair
Section 143(3)Section 234ASection 250Section 271(1)(c)Section 36Section 36(1)(ii)Section 40ASection 40A(2)(b)

Sushmita Sahoo Seth, Kolkata vs. ACIT, Cir-26(1), Kolkata.

In the result, appeal of the assessee is allowed

ITA 1196/KOL/2023[2009-10]Status: DisposedITAT Kolkata15 Apr 2024AY 2009-10

Bench: Shri Rajpal Yadav, Hon’Ble & Dr. Manish Borad, Hon’Ble

For Appellant: Shri Nitish Bhandary, A/RFor Respondent: Shri P.P. Barman, Addl. CIT, Sr. D/R
Section 143(2)Section 143(3)Section 250Section 36(1)(ii)

Associated Soapstone Distributing Co Private Limited, Jaipur vs. Principal Commissioner of Income Tax -2, Jaipur

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

ITA 243/JPR/2023[2018-19]Status: DisposedITAT Jaipur04 Mar 2024AY 2018-19
For Appellant: Shri Rohan Sogani, CAFor Respondent: Shri Arvind Kumar, CIT-DR
Section 139(1)Section 143(2)Section 143(3)Section 14ASection 263Section 36(1)(ii)Section 37Section 43B

DCIT Circle 13(2)(2), Mumbai vs. Nandanbala Commercials Private Limited, Mumbai

In the result, the appeal filed by the revenue is dismissed and cross objection filed by the assesse is also dismissed

ITA 1134/MUM/2023[2016-17]Status: DisposedITAT Mumbai29 Jan 2024AY 2016-17

Bench: Shri Aby T Varkey & Shri Amarjit Singhdy. Commissioner Of Vs. Nandanbala Commercials Income Tax Circle 13(2)(2) Private Limited Room No. 452, 4 Th Floor, (Formerly Known As Sanjay Infraspace Limited) Aayakar Bhavan, 1401-A, Wing One Bkc, M.K. Road, Plot No. C-66, G-Block, Mumbai – 400020 Bkc, Bandra-East Mumbai -400 092 स्थायी लेखा सं./जीआइआर सं./Pan/Gir No: Aavcs1575L Appellant .. Respondent

For Appellant: Madhur AgarwalFor Respondent: HM Bhatt
Section 143(2)Section 36(1)(ii)

ACIT-3(1)(1), Mumbai vs. Rustomjee Realty Pvt. Ltd., Mumbai

In the result, the appeal by the Revenue is partly allowed for statistical purposes

ITA 1585/MUM/2023[2020-21]Status: DisposedITAT Mumbai28 Nov 2023AY 2020-21

Bench: Shri Om Prakash Kant & Shri Sandeep Singh Karhail

For Appellant: Shri Naresh KumarFor Respondent: Smt. Sanyogita Nagpal
Section 142(1)Section 143(2)Section 143(3)Section 144BSection 250