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

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

Section 36(1)(viii) 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)(viii) is Maxopp Investment Ltd. v. CIT (347 ITR 272), cited in 516 of the 364 judgments on BharatTax that turn on this section.

Leading authorities on Section 36(1)(viii)

Maxopp Investment Ltd. v. CIT
347 ITR 272 · 2012 · High Court
516
citing judgments

Disallowance under Section 14A cannot exceed the exempt income earned. The Assessing Officer must record satisfaction regarding the assessee's accounts before making any disallowance.

Catholic Syrian Bank Ltd. v. CIT
343 ITR 270 · 2012 · Supreme Court
326
citing judgments

For a bad debt deduction under Section 36(1)(vii), the debt must be actually written off as irrecoverable in the assessee's accounts, distinct from merely making a provision for bad and doubtful debts. The assessee bears the onus to satisfy the conditions under both Section 36(1)(vii) and Section 36(2) of the Income-tax Act.

United Commercial Bank v. CIT
240 ITR 355 · 1999 · Supreme Court
314
citing judgments

Liabilities accrued on a notional basis are allowable as deductions under the mercantile system of accounting even if their exact quantification or discharge is deferred to a future date or if the demand itself is disputed.

CIT v. Essar Tele
401 ITR 445 · 2018 · Supreme Court
198
citing judgments

Rule 8D of the Income Tax Rules, read with Section 14A, applies prospectively. It cannot be applied to any assessment year prior to Assessment Year 2008-09.

Bharat Commerce Industries Ltd. v. CIT
230 ITR 733 · 1998 · Supreme Court
130
citing judgments

The Supreme Court holds that interest paid under Section 201(1A) of the Income-tax Act, for failure to deduct tax at source, is not an allowable business expenditure under Section 37(1) of the Act.

UCO Bank, Calcutta v. Commissioner of Income Tax, W.B
4 SCC 599 · 1999 · Reported
122
citing judgments

Circulars and instructions issued by the Central Board of Direct Taxes (CBDT) under Section 119 of the Income Tax Act have the force of law and are binding on all income tax authorities. These circulars can mitigate the rigour of statutory provisions, provide administrative relief, and ensure uniform application of the Act for the benefit of the assessee.

Raj Dadarkar & Associates v. ACIT
394 ITR 592 · 2017 · Supreme Court
107
citing judgments

The object clause in a partnership deed is not determinative of the head under which rental income is to be assessed; income from letting out shops and stalls developed by the assessee may still be classified as 'Income from House Property' rather than 'Profits and Gains of Business'.

Godrej & Boyce Mfg. Co. Ltd. v. DCIT, Range10(2), Mumbai
234 CTR 1 · 2010 · High Court
97
citing judgments

Expenditure incurred by an assessee in relation to income not forming part of the total income is not deductible under Section 14A(1). The disallowance must be restricted to direct and indirect expenses having an approximate connection with the earning of such exempt income, and Rule 8D applies from Assessment Year 2008-09.

Maruti Udyog v. DCIT
92 ITD 119 · 2005 · ITAT
87
citing judgments

The onus is on the revenue to establish the nexus between expenses incurred and exempt income before making a disallowance under section 14A.

CIT, Panji v. Dempo Company Limited
74 Taxmann.com 15 · 2016 · Supreme Court
62
citing judgments

The 20% tax rate under Section 112 applies to capital gains arising from the transfer of a depreciable asset, even if it is deemed a short-term capital gain under Section 50, provided the asset was held for more than 36 months. The fiction created by Section 50 for treating such gains as short-term does not alter the long-term nature of the asset for applying the tax rate under Section 112.

Judgments on Section 36(1)(viii)

Sundaram Home Finance Ltd., Chennai vs. ITO, Corporate Ward-6(1), Chennai

In the result, appeal filed by the assessee stands dismissed

ITA 1996/CHNY/2026[2014-15]Status: DisposedITAT Chennai23 Sept 2026AY 2014-15

Bench: Shri Inturi Rama Rao & Shri Ss Viswanethra Raviिनधा"रण वष"/Assessment Year: 2014-15 Sundaram Home Finance Ltd, Income Tax Officer, 5Th Floor, Sundaram Towers, Corporate Ward-6(1), No.46, Whites Road, Royapettah, Chennai. Vs. Chennai – 600014 अपीलाथ" Appellant ""थ" Respondent Aadcs4826J Permanent Account Number Of Assessee: अपीलाथ" "ारा/Appellant Represented By: Mr.R.Vijayaraghavan- Advocate ""थ" "ारा/Respondent Represented By: Mr.Madhan Kumar – Sr.Dr सुनवाई की तारीख / Date Of Conclusion Of Hearing: 30.07.2026 घोषणा की तारीख / Date Of Pronouncement: 23.09.2026 आदेश / Order Per Inturi Rama Rao: This Appeal Filed By The Assessee Directed Against The Order Passed By Learned Commissioner Of Income Tax(Appeals)[Nfac], Dated 03.02.2026 Passed U/S.250 Of The Income Tax Act, 1961 For The Assessment Year 2014-15. 2. The Assessee Raised The Following Grounds Of Appeal : “1. The Order Passed By The Learned Commissioner Of Income Tax (Appeals) [Cit(A)], National Faceless Appeal Centre (Nfac) Confirming The Levy Of Penalty Under Section 271(1)(C) Of The Act Is Contrary To Law, Facts & Circumstances Of The Case & Therefore Liable To Be Set Aside.

Section 14ASection 250Section 271(1)(c)Section 275Section 36(1)Section 36(1)(viii)

Dy. Commissioner of Income Tax Circle-3(3)(1), Mumbai vs. Small Industries Development Bank of India, Mumbai

In the result, the ground No

ITA 870/MUM/2026[2012-13]Status: DisposedITAT Mumbai07 Sept 2026AY 2012-13

Bench: Shri Pawan Singh & Shri Manoj Kumar Aggarwal(Physicalhearing) Small Industries Development Bank Dcit, Central Circle – 3(3)(2), Of India, Swavalamban Bhawan, Vs Mumbai, Aayakar Bhawan, C-11, G Block, Bandra Kurla M.K. Marg, New Marine Lines, Complex, Bandra East, Mumbai – 400020. Mumbai – 400051. [Pan: Aabcs3480N] Appellant / Assessee Respondent / Revenue Dcit, Central Circle – 3(3)(1), Small Industries Development Bank Of Mumbai Vs India, Swavalamban Bhawan, C-11, 522, 5Th Floor, Aayakar Bhavan, G Block, Bandra Kurla Complex, Bandra M.K. Road, Mumbai – 400020. East, Mumbai – 400051. [Pan: Aabcs3480N] Appellant / Revenue Respondent / Assessee Assessee By Shri Rakesh Joshi, Ar Revenue By Shri Sajit V Nair, Sr. Dr Date Of Institution 26.12.2025 Date Of Hearing 17.06.2026 Date Of Pronouncement 07.09.2026 Order Under Section 254(1) Of Income Tax Act Per Pawan Singh; 1. This Appeal By Assessee Is Directed Against The Order Of Ld. Cit(A)/Nfacdated 13.11.2025 For Assessment Year (Ay) 2012-13. The Assessee Has Raised Following Grounds Of Appeal: “1. On The Facts & Circumstances Of The Case As Well As In Law, The Learned Cit(A) Has Erred In Confirming The Action Of The Learned Assessing Officer In Disallowing Claim Of Rs.60,79,783/-, Being Proportionate Amortised Amount Of Lease Premium Paid To Mumbai Metropolitan Regional Development Authority In Respect Of Leasehold Land & The Reasons Assigned For Doing So Are Wrong & Contrary To The Facts & Circumstances Of The Case, Provisions Of Income Tax Act, 1961 & Rules Made Thereunder.

Section 115JSection 158ASection 254(1)Section 36(1)(vii)Section 36(1)(viia)Section 37(1)

Small Industries Development Bank of India, Mumbai vs. Deputy Commissioner of Income Tax, Central Circle 3(3)2, Mumbai

In the result, the ground No

ITA 9170/MUM/2025[2012-13]Status: DisposedITAT Mumbai07 Sept 2026AY 2012-13

Bench: Shri Pawan Singh & Shri Manoj Kumar Aggarwal(Physicalhearing) Small Industries Development Bank Dcit, Central Circle – 3(3)(2), Of India, Swavalamban Bhawan, Vs Mumbai, Aayakar Bhawan, C-11, G Block, Bandra Kurla M.K. Marg, New Marine Lines, Complex, Bandra East, Mumbai – 400020. Mumbai – 400051. [Pan: Aabcs3480N] Appellant / Assessee Respondent / Revenue Dcit, Central Circle – 3(3)(1), Small Industries Development Bank Of Mumbai Vs India, Swavalamban Bhawan, C-11, 522, 5Th Floor, Aayakar Bhavan, G Block, Bandra Kurla Complex, Bandra M.K. Road, Mumbai – 400020. East, Mumbai – 400051. [Pan: Aabcs3480N] Appellant / Revenue Respondent / Assessee Assessee By Shri Rakesh Joshi, Ar Revenue By Shri Sajit V Nair, Sr. Dr Date Of Institution 26.12.2025 Date Of Hearing 17.06.2026 Date Of Pronouncement 07.09.2026 Order Under Section 254(1) Of Income Tax Act Per Pawan Singh; 1. This Appeal By Assessee Is Directed Against The Order Of Ld. Cit(A)/Nfacdated 13.11.2025 For Assessment Year (Ay) 2012-13. The Assessee Has Raised Following Grounds Of Appeal: “1. On The Facts & Circumstances Of The Case As Well As In Law, The Learned Cit(A) Has Erred In Confirming The Action Of The Learned Assessing Officer In Disallowing Claim Of Rs.60,79,783/-, Being Proportionate Amortised Amount Of Lease Premium Paid To Mumbai Metropolitan Regional Development Authority In Respect Of Leasehold Land & The Reasons Assigned For Doing So Are Wrong & Contrary To The Facts & Circumstances Of The Case, Provisions Of Income Tax Act, 1961 & Rules Made Thereunder.

Section 115JSection 158ASection 254(1)Section 36(1)(vii)Section 36(1)(viia)Section 37(1)