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

Income-tax Act, 2025: s.35

Section 40(a)(ii) 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)(ii) is Sesa Goa Ltd. v. JCIT (117 Taxmann.com 96), cited in 291 of the 393 judgments on BharatTax that turn on this section.

Leading authorities on Section 40(a)(ii)

Sesa Goa Ltd. v. JCIT
117 Taxmann.com 96 · 2020 · High Court
291
citing judgments

Education cess paid on total income and dividend distribution tax are allowable deductions for income tax purposes.

CIT v. Yokogawa India Ltd.
341 ITR 385 · 2012 · High Court
270
citing judgments

A provision for doubtful debts cannot be added back while computing book profits under Section 115JB of the Income-tax Act for Minimum Alternate Tax (MAT) purposes.

CIT v. K. Srinivasan
83 ITR 346 · 1972 · Supreme Court
129
citing judgments

The term 'tax' includes surcharge and cess. Surcharge and additional surcharge are considered components of income tax, which can be levied as a basic charge, surcharge, special surcharge, and additional surcharge.

M.M. Aqua Technologies Ltd. v. Commissioner of Income Tax, Delhi
2021 SCC OnLine SC 575 · 2021 · Reported
102
citing judgments

A tax provision is retrospective only if legislative intent is explicit or if it is purely clarificatory and does not alter existing law. Provisions framed 'for the removal of doubts' are not presumed to be retrospective if they change the law as it stood.

Chambal Fertilisers & Chemicals Ltd. v. JCIT
107 Taxmann.com 484 · 2019 · High Court
49
citing judgments

Education cess paid by an assessee is not allowable as a deduction under Section 37 read with Section 40(a)(ii) of the Income Tax Act, as it is considered a 'tax'. This position was affirmed by the Supreme Court in a later decision.

CIT v. Raymond Ltd.
21 Taxmann.com 60 · 2012 · High Court
48
citing judgments

The amount transferred to Debenture Redemption Reserve is to be excluded when computing book profit under section 115JB for the purpose of Minimum Alternate Tax.

Tata Iron and Steel Co. Ltd. & Ors. v. State of Bihar
48 ITR 123 · 1963 · Supreme Court
43
citing judgments

An integrated business engaged in captive consumption derives profits or value from its internal activities, even when intermediate products are not sold externally. The principle that a person cannot make profits out of himself does not apply to deny profits from such internal operations for tax or cess purposes.

DCIT v. Gloster Jute Mills Limited
88 Taxmann.com 738 · 2017 · ITAT
39
citing judgments

Additional depreciation under Section 32(1)(iia) can be claimed in the year an asset is acquired and installed, even if it is claimed in a subsequent year of acquisition and installation.

CIT v. Sulzer India Ltd.
369 ITR 717 · 2014 · High Court
38
citing judgments

Where an assessee discharges a future liability at its present value, it does not result in a "benefit" accruing to the assessee, and therefore, Section 41(1) of the Income Tax Act, 1961, is not applicable.

CIT v. Shri Goverdhan Ltd.
69 ITR 675 · 1968 · Supreme Court
37
citing judgments

Income accrues to an assessee when they acquire a right to receive it, even if it has not yet been actually received or quantified. A debt is created once liability is established, and its future quantification does not make it contingent.

Judgments on Section 40(a)(ii)

Royal Sundaram General Insurance Company Ltd, Chennai vs. DCIT, Ltu, Chennai

ITA 87/CHNY/2018[2009-10]Status: DisposedITAT Chennai08 Jan 2025AY 2009-10

Bench: Shri Aby T Varkey & Shri Amitabh Shuklaआयकर अपील सं./Ita Nos.86, 87, 88, 89, 90, 91, 92 & 93 /Chny/2018 निर्धारण वर्ष /Assessment Years: 2008-09, 2009-10, 2010-11, 2011-12, 2011-12, 2012-13, 2013-14, 2014-15, M/S.Royal Sundaram General Insurance Company Limited, Vishranthi Melaram Towers, No.2/319, Rajiv Gandhi Salai(Omr), Karapakkam, Chennai-600 097. [Pan: Aabcr7106G] Dy. Commissioner Of Income Tax, Large Tax Payer Unit, Chennai. आयकर अपील सं./Ita Nos.491, 492, 493, 494, 495 & 496 /Chny/2018 निर्धारण वर्ष /Assessment Years: 2008-09, 2010-11, 2011-12, 2012-13, 2013-14, 2014-15 Dy. Commissioner Of Income Tax, M/S.Royal Sundaram General Large Tax Payer Unit, Insurance Company Limited, Chennai. Vishranthi Melaram Towers, No.2/319, Rajiv Gandhi Salai(Omr), Karapakkam, Chennai-600 097. [Pan: Aabcr7106G] (अपीलार्थी/Appellant) (प्रत्यर्थी/Respondent) अपीलार्थी की ओर से / Assessee By : Shri Vikaram Vijayaraghavan, Advocate प्रत्यर्थी की ओर से /Revenue By : Shri A.Sanjay For Ms V.Pushpa, सुनवाई की तारीख/Date Of Hearing : Sr.Standing Counsel For It Dept. 15.10.2024 घोषणा की तारीख /Date Of Pronouncement : 08.01.2025 आदेश / Order Per Bench: The Following Appeals Have Been Raised By The Appellant Assessee & Appellant Revenue Contesting Assessment / Appellate Orders For Ays 2008-09 To Ay 2014-15. As The Grounds Of Appeal In Respective Appeals Of Assessee & Revenue Are Largely Common, All The Appeals Are Adjudicated Through This Common Orders. S. No. Appeal Nos. Ays Appellate Cit(A) Order Details Revenue A B C D E F 1 2 3

For Appellant: Shri Vikaram Vijayaraghavan, AdvocateFor Respondent: Shri A.Sanjay for Ms V.Pushpa
Section 148

DCIT Ltu 1, Chennai vs. M/S Royal Sundaram General Insurance Company Limited, Chennai

In the result, the appeals of the assesse and Revenue are dealt as under:-

ITA 495/CHNY/2018[2013-14]Status: DisposedITAT Chennai08 Jan 2025AY 2013-14

Bench: Shri Aby T Varkey & Shri Amitabh Shuklaआयकर अपील सं./Ita Nos.86, 87, 88, 89, 90, 91, 92 & 93 /Chny/2018 निर्धारण वर्ा /Assessment Years: 2008-09, 2009-10, 2010-11, 2011-12, 2011-12, 2012-13, 2013-14, 2014-15, M/S.Royal Sundaram General Dy. Commissioner Of Income Tax, Insurance Company Limited, Large Tax Payer Unit, Vishranthi Melaram Towers, Chennai. No.2/319, Rajiv Gandhi Salai(Omr), Karapakkam, Chennai-600 097. [Pan: Aabcr7106G] आयकर अपील सं./Ita Nos.491, 492, 493, 494, 495 & 496 /Chny/2018 निर्धारण वर्ा /Assessment Years: 2008-09, 2010-11, 2011-12, 2012-13, 2013-14, 2014-15 Dy. Commissioner Of Income Tax, M/S.Royal Sundaram General Large Tax Payer Unit, Insurance Company Limited, Chennai. Vishranthi Melaram Towers, No.2/319, Rajiv Gandhi Salai(Omr), Karapakkam, Chennai-600 097. [Pan: Aabcr7106G] (अपीलार्थी/Appellant) (प्रत्यर्थी/Respondent) : Shri Vikaram Vijayaraghavan, Advocate अपीलार्थी की ओर से/ Assessee By प्रत्यर्थी की ओर से /Revenue By : Shri A.Sanjay For Ms V.Pushpa, Sr.Standing Counsel For It Dept. सुनवाई की तारीख/Date Of Hearing : 15.10.2024 घोषणा की तारीख /Date Of Pronouncement : 08.01.2025

For Respondent: Shri A.Sanjay for Ms V.Pushpa
Section 143(3)Section 148

DCIT Ltu 1, Chennai vs. M/S Royal Sundaram General Insurance Company Limited, Chennai

In the result, the appeals of the assesse and Revenue are dealt as under:-

ITA 494/CHNY/2018[2012-13]Status: DisposedITAT Chennai08 Jan 2025AY 2012-13

Bench: Shri Aby T Varkey & Shri Amitabh Shuklaआयकर अपील सं./Ita Nos.86, 87, 88, 89, 90, 91, 92 & 93 /Chny/2018 निर्धारण वर्ा /Assessment Years: 2008-09, 2009-10, 2010-11, 2011-12, 2011-12, 2012-13, 2013-14, 2014-15, M/S.Royal Sundaram General Dy. Commissioner Of Income Tax, Insurance Company Limited, Large Tax Payer Unit, Vishranthi Melaram Towers, Chennai. No.2/319, Rajiv Gandhi Salai(Omr), Karapakkam, Chennai-600 097. [Pan: Aabcr7106G] आयकर अपील सं./Ita Nos.491, 492, 493, 494, 495 & 496 /Chny/2018 निर्धारण वर्ा /Assessment Years: 2008-09, 2010-11, 2011-12, 2012-13, 2013-14, 2014-15 Dy. Commissioner Of Income Tax, M/S.Royal Sundaram General Large Tax Payer Unit, Insurance Company Limited, Chennai. Vishranthi Melaram Towers, No.2/319, Rajiv Gandhi Salai(Omr), Karapakkam, Chennai-600 097. [Pan: Aabcr7106G] (अपीलार्थी/Appellant) (प्रत्यर्थी/Respondent) : Shri Vikaram Vijayaraghavan, Advocate अपीलार्थी की ओर से/ Assessee By प्रत्यर्थी की ओर से /Revenue By : Shri A.Sanjay For Ms V.Pushpa, Sr.Standing Counsel For It Dept. सुनवाई की तारीख/Date Of Hearing : 15.10.2024 घोषणा की तारीख /Date Of Pronouncement : 08.01.2025

For Respondent: Shri A.Sanjay for Ms V.Pushpa
Section 143(3)Section 148

Vedant Fashions Ltd., Kolkata vs. DCIT, Cir. 3(2), Kolkata

In the result, the appeal of the assessee is allowed

ITA 530/KOL/2024[2020-21]Status: DisposedITAT Kolkata29 Nov 2024AY 2020-21

Bench: Shri Sonjoy Sarma & Shri Rajesh Kumari.T.A. No.530/Kol/2024 Assessment Year: 2020-21 Vedant Fashions Ltd...………………........………………....Appellant Sdf-1, A-501, A-502, 4Th Floor, 19 Canal South Road, Paridhan Garment Park, Kolkata – 700015. [Pan: Aabcv4646B] Vs. Dcit, Circle-3(2), Kolkata.….…….…............................…..…..... Respondent Appearances By: Shri Sunil Surana, Fca, Appeared On Behalf Of The Assessee. Shri Pradip Kr. Biswas, Addl. Cit, Appeared On Behalf Of The Revenue. Date Of Concluding The Hearing : November 18, 2024 Date Of Pronouncing The Order : November 29, 2024 आदेश / Order Per Sonjoy Sarma: The Present Appeal Has Been Preferred By The Assessee Against The Order Dated 30.01.2024 Of The Commissioner Of Income Tax (Appeals)- 21, Kolkata [Hereinafter Referred To As ‘Cit(A)’] Passed U/S 250 Of The Income Tax Act (Hereinafter Referred To As The ‘Act’). 2. The Brief Facts Of The Case Are That The Assessee Filed Its Return Of Income Declaring A Total Income Of Rs.3084417870/-. The Case Of The Assessee Was Selected For Scrutiny By Issuing Notice U/S 143(2) Under Cass, Consequent To This, Notices U/S 142(1) & 133(6) Of The Act Were Issued To The Assessee Seeking Clarification & Verification Of The Deduction Claimed In The Return. During The Assessment Proceedings, The Assessing Officer Observed That The Assessee Had Claimed A Deduction Of Rs.2,98,57,165/- Towards Health & Education Cess. The Assessing Officer Disallowed This Deduction Holding That The Health And

Section 142(1)Section 143(2)Section 14ASection 14A(2)Section 250Section 40