Section 40(a)(ia) of the Income Tax Act

Income-tax Act, 2025: s.35

Section 40(a)(ia) falls under section 40 of the Income-tax Act, 1961, which corresponds to section 35 (Amounts not deductible in certain circumstances) of the Income-tax Act, 2025.

Read section 35 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 40(a)(ia) is S.A. Builders Ltd. v. CIT (288 ITR 1), cited in 1,484 of the 7,300 judgments on BharatTax that turn on this section.

Leading authorities on Section 40(a)(ia)

S.A. Builders Ltd. v. CIT
288 ITR 1 · 2007 · Supreme Court
1,484
citing judgments

Interest paid on borrowed funds cannot be disallowed merely because the assessee made interest-free advances, provided those advances were made for business purposes and commercial expediency. The Revenue cannot dictate a businessman's commercial decisions, but the assessee bears the onus to prove the business expediency.

CIT v. Alom Extrusions Ltd.
319 ITR 306 · 2009 · Supreme Court
1,344
citing judgments

A proviso inserted into a section to remedy unintended consequences, make the section workable, or supply an obvious omission must be read retrospectively in operation to give effect to the section as a whole.

CIT v. Woodward Governor India Pvt. Ltd.
312 ITR 254 · 2009 · Supreme Court
968
citing judgments

Foreign exchange fluctuations, whether gains or losses, are inextricably linked to the underlying business transaction and must be accounted for under the mercantile system. The Supreme Court also affirmed the standard accounting principle of valuing stock at cost or net realisable value, whichever is lower.

Bharat Earth Movers v. CIT
245 ITR 428 · 2000 · Supreme Court
901
citing judgments

A business liability that has definitely arisen in an accounting year is deductible even if it needs to be quantified and discharged later, as long as its incurring is certain and can be reasonably estimated.

Rotork Controls India Pvt. Ltd. v. CIT
314 ITR 62 · 2009 · Supreme Court
739
citing judgments

A provision for expenses, such as warranty, is a deductible liability for income tax purposes if it constitutes a present obligation arising from past events, and a reliable estimate of the amount of obligation is possible.

TRF Ltd. v. CIT
323 ITR 397 · 2010 · Supreme Court
714
citing judgments

For claiming deduction for bad debts under section 36(1)(vii) of the Income Tax Act, it is sufficient for the assessee to write off the debt as irrecoverable in its accounts, and it is not necessary to prove that the debt has actually become irrecoverable.

GE India Technology Centre Pvt. Ltd. v. CIT
327 ITR 456 · 2010 · Supreme Court
663
citing judgments

Tax must be deducted at source from payments made to a non-resident under Section 195 only if such payment is chargeable to tax in India. The Assessing Officer bears the onus to establish that the payments made are indeed chargeable to tax under the Income Tax Act.

Tuticorin Alkali Chemicals & Fertilizers Ltd. v. CIT
227 ITR 172 · 1997 · Supreme Court
621
citing judgments

Interest income earned on deposits, particularly before the commencement of business operations or as a requirement for business licensing, is taxable as "income from other sources" under Section 56, and cannot be treated as business income or set off against interest on borrowed funds.

Hindustan Coca Cola Beverage Pvt. Ltd. v. CIT
293 ITR 226 · 2007 · Supreme Court
576
citing judgments

The deductor cannot be treated as an assessee-in-default under Section 201(1) if the deductee has already paid the tax or offered the impugned receipts in their return of income. However, interest under Section 201(1A) for delayed deposit of tax can still be levied up to the date of filing of the return of income by the deductee.

CIT v. Reliance Industries Ltd.
410 ITR 466 · 2019 · Supreme Court
501
citing judgments

When mixed funds are available, interest-free advances are presumed to be made from the assessee's own interest-free funds, preventing disallowance of interest expenditure under section 36(1)(iii). This principle also applies to section 14A disallowance, where interest expenditure is not disallowed if surplus funds are available and no direct nexus is established with borrowed funds for investments earning exempt income.

Judgments on Section 40(a)(ia)

Backbone Arss Jv, Bhubaneswar vs. ITO, Ward-4(3), Bhubaneswar

In the result, appeals of the assessee i

ITA 88/CTK/2018[2013-14]Status: DisposedITAT Cuttack27 Apr 2018AY 2013-14

Bench: Shri N.S.Saini, Am & Shri Pavan Kumar Gadale, Jm आयकर अपीऱ सं./Ita No.81/Ctk/2018 (A.Y.2012-2013) Hcil Adhikarya Arss Jv Vs. Dcit, Circle-4(1), Plot No.38, Sector-A, Mancheswar Bhubaneswar Industrial Estate, Bhubaneswar-751010 Pan No.Aaefh 3757 R & आयकर अपीऱ सं./Ita Nos.82 & 112/Ctk/2018 (A.Y.2013-2014 & 2012-2013) M/S Arss Atlanta Jv Vs. Ito Ward-4(3), Plot No.38, Sector-A, Mancheswar Bhubaneswar Industrial Estate, Bhubaneswar-751010 Pan No.Aaqfa 8726 P & आयकर अपीऱ सं./Ita Nos.83 & 113/Ctk/2018 (A.Y.2013-14 & 2012-13) M/S Arss Anpr Jv Vs. Ito Ward-4(3), Plot No.38, Sector-A, Mancheswar Bhubaneswar Industrial Estate, Bhubaneswar-751010 Pan No.Aabaa 1158 M & आयकर अपीऱ सं./Ita Nos.84 & 116/Ctk/2018 (A.Y.2013-14 & 2012-13) M/S Arss Triveni Jv Vs. Dcit, Circle-4(1), Plot No.38, Sector-A, Mancheswar Bhubaneswar Industrial Estate, Bhubaneswar-751010 Pan No.Aabaa 1081 H & आयकर अपीऱ सं./Ita No.85/Ctk/2018 (A.Y.2013-14) M/S Arss-Gvr Jv Vs. Ito Ward-4(3), Plot No.38, Sector-A, Mancheswar Bhubaneswar Industrial Estate, Bhubaneswar-751010 Pan No.Aacaa 1049 A & आयकर अपीऱ सं./Ita Nos.86 & 111/Ctk/2018 (A.Y.2013-2014 & 2012-2013) M/S Niraj Arss Jv Vs. Ito Ward-4(3), Plot No.38, Sector-A, Mancheswar Bhubaneswar Industrial Estate, Bhubaneswar-751010 Pan No.Aaaan 5116 B

Patel-Arss Jv, Bhubaneswar vs. ITO, Ward-4(3), Bhubaneswar

In the result, appeals of the assessee i

ITA 87/CTK/2018[2013-14]Status: DisposedITAT Cuttack27 Apr 2018AY 2013-14

Bench: Shri N.S.Saini, Am & Shri Pavan Kumar Gadale, Jm आयकर अपीऱ सं./Ita No.81/Ctk/2018 (A.Y.2012-2013) Hcil Adhikarya Arss Jv Vs. Dcit, Circle-4(1), Plot No.38, Sector-A, Mancheswar Bhubaneswar Industrial Estate, Bhubaneswar-751010 Pan No.Aaefh 3757 R & आयकर अपीऱ सं./Ita Nos.82 & 112/Ctk/2018 (A.Y.2013-2014 & 2012-2013) M/S Arss Atlanta Jv Vs. Ito Ward-4(3), Plot No.38, Sector-A, Mancheswar Bhubaneswar Industrial Estate, Bhubaneswar-751010 Pan No.Aaqfa 8726 P & आयकर अपीऱ सं./Ita Nos.83 & 113/Ctk/2018 (A.Y.2013-14 & 2012-13) M/S Arss Anpr Jv Vs. Ito Ward-4(3), Plot No.38, Sector-A, Mancheswar Bhubaneswar Industrial Estate, Bhubaneswar-751010 Pan No.Aabaa 1158 M & आयकर अपीऱ सं./Ita Nos.84 & 116/Ctk/2018 (A.Y.2013-14 & 2012-13) M/S Arss Triveni Jv Vs. Dcit, Circle-4(1), Plot No.38, Sector-A, Mancheswar Bhubaneswar Industrial Estate, Bhubaneswar-751010 Pan No.Aabaa 1081 H & आयकर अपीऱ सं./Ita No.85/Ctk/2018 (A.Y.2013-14) M/S Arss-Gvr Jv Vs. Ito Ward-4(3), Plot No.38, Sector-A, Mancheswar Bhubaneswar Industrial Estate, Bhubaneswar-751010 Pan No.Aacaa 1049 A & आयकर अपीऱ सं./Ita Nos.86 & 111/Ctk/2018 (A.Y.2013-2014 & 2012-2013) M/S Niraj Arss Jv Vs. Ito Ward-4(3), Plot No.38, Sector-A, Mancheswar Bhubaneswar Industrial Estate, Bhubaneswar-751010 Pan No.Aaaan 5116 B

Niraj-Arss Jv, Bhubaneswar vs. DCIT, Circle-1(1), Bhubaneswar

In the result, appeals of the assessee i

ITA 86/CTK/2018[2013-14]Status: DisposedITAT Cuttack27 Apr 2018AY 2013-14

Bench: Shri N.S.Saini, Am & Shri Pavan Kumar Gadale, Jm आयकर अपीऱ सं./Ita No.81/Ctk/2018 (A.Y.2012-2013) Hcil Adhikarya Arss Jv Vs. Dcit, Circle-4(1), Plot No.38, Sector-A, Mancheswar Bhubaneswar Industrial Estate, Bhubaneswar-751010 Pan No.Aaefh 3757 R & आयकर अपीऱ सं./Ita Nos.82 & 112/Ctk/2018 (A.Y.2013-2014 & 2012-2013) M/S Arss Atlanta Jv Vs. Ito Ward-4(3), Plot No.38, Sector-A, Mancheswar Bhubaneswar Industrial Estate, Bhubaneswar-751010 Pan No.Aaqfa 8726 P & आयकर अपीऱ सं./Ita Nos.83 & 113/Ctk/2018 (A.Y.2013-14 & 2012-13) M/S Arss Anpr Jv Vs. Ito Ward-4(3), Plot No.38, Sector-A, Mancheswar Bhubaneswar Industrial Estate, Bhubaneswar-751010 Pan No.Aabaa 1158 M & आयकर अपीऱ सं./Ita Nos.84 & 116/Ctk/2018 (A.Y.2013-14 & 2012-13) M/S Arss Triveni Jv Vs. Dcit, Circle-4(1), Plot No.38, Sector-A, Mancheswar Bhubaneswar Industrial Estate, Bhubaneswar-751010 Pan No.Aabaa 1081 H & आयकर अपीऱ सं./Ita No.85/Ctk/2018 (A.Y.2013-14) M/S Arss-Gvr Jv Vs. Ito Ward-4(3), Plot No.38, Sector-A, Mancheswar Bhubaneswar Industrial Estate, Bhubaneswar-751010 Pan No.Aacaa 1049 A & आयकर अपीऱ सं./Ita Nos.86 & 111/Ctk/2018 (A.Y.2013-2014 & 2012-2013) M/S Niraj Arss Jv Vs. Ito Ward-4(3), Plot No.38, Sector-A, Mancheswar Bhubaneswar Industrial Estate, Bhubaneswar-751010 Pan No.Aaaan 5116 B

Arss-Gvr Jv, Bhubaneswar vs. ITO, Ward-4(3), Bhubaneswar

In the result, appeals of the assessee i

ITA 85/CTK/2018[2013-14]Status: DisposedITAT Cuttack27 Apr 2018AY 2013-14

Bench: Shri N.S.Saini, Am & Shri Pavan Kumar Gadale, Jm आयकर अपीऱ सं./Ita No.81/Ctk/2018 (A.Y.2012-2013) Hcil Adhikarya Arss Jv Vs. Dcit, Circle-4(1), Plot No.38, Sector-A, Mancheswar Bhubaneswar Industrial Estate, Bhubaneswar-751010 Pan No.Aaefh 3757 R & आयकर अपीऱ सं./Ita Nos.82 & 112/Ctk/2018 (A.Y.2013-2014 & 2012-2013) M/S Arss Atlanta Jv Vs. Ito Ward-4(3), Plot No.38, Sector-A, Mancheswar Bhubaneswar Industrial Estate, Bhubaneswar-751010 Pan No.Aaqfa 8726 P & आयकर अपीऱ सं./Ita Nos.83 & 113/Ctk/2018 (A.Y.2013-14 & 2012-13) M/S Arss Anpr Jv Vs. Ito Ward-4(3), Plot No.38, Sector-A, Mancheswar Bhubaneswar Industrial Estate, Bhubaneswar-751010 Pan No.Aabaa 1158 M & आयकर अपीऱ सं./Ita Nos.84 & 116/Ctk/2018 (A.Y.2013-14 & 2012-13) M/S Arss Triveni Jv Vs. Dcit, Circle-4(1), Plot No.38, Sector-A, Mancheswar Bhubaneswar Industrial Estate, Bhubaneswar-751010 Pan No.Aabaa 1081 H & आयकर अपीऱ सं./Ita No.85/Ctk/2018 (A.Y.2013-14) M/S Arss-Gvr Jv Vs. Ito Ward-4(3), Plot No.38, Sector-A, Mancheswar Bhubaneswar Industrial Estate, Bhubaneswar-751010 Pan No.Aacaa 1049 A & आयकर अपीऱ सं./Ita Nos.86 & 111/Ctk/2018 (A.Y.2013-2014 & 2012-2013) M/S Niraj Arss Jv Vs. Ito Ward-4(3), Plot No.38, Sector-A, Mancheswar Bhubaneswar Industrial Estate, Bhubaneswar-751010 Pan No.Aaaan 5116 B

Arss Triveni Jv, Bhubaneswar vs. DCIT, Circle-4(1), Bhubaneswar

In the result, appeals of the assessee i

ITA 84/CTK/2018[2013-14]Status: DisposedITAT Cuttack27 Apr 2018AY 2013-14

Bench: Shri N.S.Saini, Am & Shri Pavan Kumar Gadale, Jm आयकर अपीऱ सं./Ita No.81/Ctk/2018 (A.Y.2012-2013) Hcil Adhikarya Arss Jv Vs. Dcit, Circle-4(1), Plot No.38, Sector-A, Mancheswar Bhubaneswar Industrial Estate, Bhubaneswar-751010 Pan No.Aaefh 3757 R & आयकर अपीऱ सं./Ita Nos.82 & 112/Ctk/2018 (A.Y.2013-2014 & 2012-2013) M/S Arss Atlanta Jv Vs. Ito Ward-4(3), Plot No.38, Sector-A, Mancheswar Bhubaneswar Industrial Estate, Bhubaneswar-751010 Pan No.Aaqfa 8726 P & आयकर अपीऱ सं./Ita Nos.83 & 113/Ctk/2018 (A.Y.2013-14 & 2012-13) M/S Arss Anpr Jv Vs. Ito Ward-4(3), Plot No.38, Sector-A, Mancheswar Bhubaneswar Industrial Estate, Bhubaneswar-751010 Pan No.Aabaa 1158 M & आयकर अपीऱ सं./Ita Nos.84 & 116/Ctk/2018 (A.Y.2013-14 & 2012-13) M/S Arss Triveni Jv Vs. Dcit, Circle-4(1), Plot No.38, Sector-A, Mancheswar Bhubaneswar Industrial Estate, Bhubaneswar-751010 Pan No.Aabaa 1081 H & आयकर अपीऱ सं./Ita No.85/Ctk/2018 (A.Y.2013-14) M/S Arss-Gvr Jv Vs. Ito Ward-4(3), Plot No.38, Sector-A, Mancheswar Bhubaneswar Industrial Estate, Bhubaneswar-751010 Pan No.Aacaa 1049 A & आयकर अपीऱ सं./Ita Nos.86 & 111/Ctk/2018 (A.Y.2013-2014 & 2012-2013) M/S Niraj Arss Jv Vs. Ito Ward-4(3), Plot No.38, Sector-A, Mancheswar Bhubaneswar Industrial Estate, Bhubaneswar-751010 Pan No.Aaaan 5116 B

DCIT, Corporate Circle-1(2), Bhubaneswar vs. M/S. National Aluminium Company Limited, Bhubaneswar

In the result, appeal of the assessee i

ITA 339/CTK/2016[2010-11]Status: DisposedITAT Cuttack27 Apr 2018AY 2010-11

Bench: Shri N.S.Saini, Am & Shri Pavan Kumar Gadale, Jm आयकर अऩीऱ सं./Ita No.339 & 340/Ctk/2016 Dcit, Corporate Circle1(2)/ Vs. National Aluminium Company Acit, Circle-2(2), Limited, Bhubaneswar Nalco Bhavan, P/1, Nayapalli, Bhubaneswar स्थायी लेखा सं./ जीआइआर सं./ Pan/Gir No. : Aaacn 7449 M (अऩीऱाथी /Appellant) (प्रत्यथी / Respondent) .. & आयकर अऩीऱ सं./Ita No.352 & 353/Ctk/2016 & Ita No.374/Ctk/2014 (नििाारण वषा / Assessment Year :2010-11, 2012-13 & 2011-12) National Aluminium Company Vs. Jcit Range-2/ Limited, Acit, Corporate Circle-1(2) Nalco Bhavan, P/1, Nayapalli, Bhubaneswar Bhubaneswar स्थायी लेखा सं./ जीआइआर सं./ Pan/Gir No. : Aaacn 7449 M (अऩीऱाथी /Appellant) (प्रत्यथी / Respondent) .. & Cross Objection No.01/Ctk/2015 & 25/Ctk/2016 (Arising Out Of Ita Nos.376/Ctk/14 & Ita No.340/Ctk/2016) (नििाारण वषा / Assessment Year :2011-2012 & 2012-2013) National Aluminium Company Vs. Acit, Circle-2(2)/ Limited, Dcit, Corporate Circle- Nalco Bhavan, P/1, Nayapalli, 1(2), Bhubaneswar Bhubaneswar स्थायी लेखा सं./ जीआइआर सं./ Pan/Gir No. : Aaacn 7449 M (अऩीऱाथी /Appellant) (प्रत्यथी / Respondent) ..

For Appellant: Shri Ved Jain/B.K.Mahapatra, ARsFor Respondent: Shri Saad Kidwai, CIT DR
Section 14A

DCIT, Cir-10(1), Kolkata vs. M/S Champion Commercial Co. Ltd., Kolkata

In the result, Revenue’s appeal stands dismissed

ITA 1421/KOL/2016[2013-14]Status: DisposedITAT Kolkata27 Apr 2018AY 2013-14

Bench: Shri N.V.Vasudevan & Shri Waseem Ahmedassessment Year :2013-14 Dcit, Circle-10(1), V/S. M/S Champion P-7, Chowringhee Commercial Co. Ltd., Square, 3Rd Floor, P-15, Cit Road, Kolkata-69 Kolkata-73 [Pan No.Aabcc 2373 G] .. अपीलाथ" /Appellant ""यथ"/Respondent Shri Saurabh Kumar, Addl. Cit-Sr-Dr अपीलाथ" क" ओर से/By Appellant Shri Manoj Kataruka, Advocate ""यथ" क" ओर से/By Respondent 26-02-2018 सुनवाई क" तार"ख/Date Of Hearing 27-04-2018 घोषणा क" तार"ख/Date Of Pronouncement आदेश /O R D E R Per Waseem Ahmed:- This Appeal By The Revenue Is Directed Against The Order Of Commissioner Of Income Tax (Appeals)-4, Kolkata Dated 04.04.2016. Assessment Was Framed By Dcit, Circle-10(1), Kolkata U/S 143(3) Of The Income Tax Act, 1961 (Hereinafter Referred To As ‘The Act’) Vide His Order Dated 10.02.2016 For Assessment Year 2013-14. The Revenue Has Raised The Following Grounds:- “I. That On The Facts Of The Case Ld. Cit(A) Has Erred In Deleting The Addition Of Rs.2,50,938/- On A Wrong Appreciation Of Facts Ignoring The Provisions Of Section 37(1) Overrule The Judicial Pronouncement Of Cit Vs. Calcutta Agency Limited (1951) (191) Itr (Sc) Ii. That On The Facts & Circumstances Of The Case Ld. Cit(A) Has Erred In Deleting The Addition Of Rs.13,91,404/- On A Wrong Appreciation Of Facts Ignoring The Provisions Of Section 37 Of The It Act, 1961. Iii. That On The Facts Of The Case Ld. Cit(A) Has Erred In Deleting The Addition Of Rs.20,25,329/- On Wrong Appreciation Of Facts Ignoring The

Section 14Section 143(3)Section 194JSection 195Section 2(24)(x)Section 36(1)(va)Section 37Section 37(1)Section 44A