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)

Dy.CIT. CC.5(2) Cent. RG. -5, Mumbai vs. M/S. Usv Pvt. Ltd, Mumbai

In the result, both the appeals of the Revenue are partly allowed for statistical purposes

ITA 2574/MUM/2021[2012-13]Status: DisposedITAT Mumbai01 Apr 2024AY 2012-13

Bench: Shri Aby T. Varkey, Jm & Shri Gagan Goyal, Am आयकर अपील सं/ I.T.A. No.2574/Mum/2021 (निर्धारण वर्ा / Assessment Year: 2012-13) & आयकर अपील सं/ I.T.A. No.2356/Mum/2021 (निर्धारण वर्ा / Assessment Year: 2013-14) Dcit-Cc-5(2) बिधम/ M/S. Usv Pvt. Ltd. Central Range-5, Room Arvind Vithal Gandhi Vs. No.1908, Air India Building, Chowk, Govandi, Nariman Point, Mumbai- Mumbai-400088. 400021. स्थधयी लेखध सं./जीआइआर सं./Pan/Gir No. : Aaacu1366N (अपीलार्थी /Appellant) .. (प्रत्यर्थी / Respondent) Assessee By: Shri Paras Savla Shri Pratik Poddar Revenue By: Smt Mahita Nair (Sr. Dr) सुनवाई की तारीख / Date Of Hearing: 09/02/2024 घोषणा की तारीख /Date Of Pronouncement: 01/04/2024 आदेश / O R D E R Per Aby T. Varkey, Jm: These Are Appeals Preferred By The Revenue Against The Order Of The Ld. Commissioner Of Income Tax (Appeals), [Hereinafter “Ld. Cit(A)], Mumbai Dated 31.08.2020 & Order Dated 10.03.2021 For The Assessment Year 2012-13 & Ay. 2013-14 Respectively. Since Issues In Both The Years Were The Same, Both These Appeals Were Heard Together. Both The Parties Also Agreed That There Is No Change Of Facts Or Position In Law Across Both These Years & Therefore Argued Them Together Raising Similar Arguments On These Issues. We Accordingly Dispose Both The Appeals By This Common Order.

For Appellant: Shri Paras SavlaFor Respondent: Smt Mahita Nair (Sr. DR)
Section 115JSection 92C

Dy.CIT C C 5(2) Central RG-5, Mumbai vs. M/S. Usv Private Ltd, Mumbai

In the result, both the appeals of the Revenue are partly allowed for statistical purposes

ITA 2356/MUM/2021[2013-14]Status: DisposedITAT Mumbai01 Apr 2024AY 2013-14

Bench: Shri Aby T. Varkey, Jm & Shri Gagan Goyal, Am आयकर अपील सं/ I.T.A. No.2574/Mum/2021 (निर्धारण वर्ा / Assessment Year: 2012-13) & आयकर अपील सं/ I.T.A. No.2356/Mum/2021 (निर्धारण वर्ा / Assessment Year: 2013-14) Dcit-Cc-5(2) बिधम/ M/S. Usv Pvt. Ltd. Central Range-5, Room Arvind Vithal Gandhi Vs. No.1908, Air India Building, Chowk, Govandi, Nariman Point, Mumbai- Mumbai-400088. 400021. स्थधयी लेखध सं./जीआइआर सं./Pan/Gir No. : Aaacu1366N (अपीलार्थी /Appellant) .. (प्रत्यर्थी / Respondent) Assessee By: Shri Paras Savla Shri Pratik Poddar Revenue By: Smt Mahita Nair (Sr. Dr) सुनवाई की तारीख / Date Of Hearing: 09/02/2024 घोषणा की तारीख /Date Of Pronouncement: 01/04/2024 आदेश / O R D E R Per Aby T. Varkey, Jm: These Are Appeals Preferred By The Revenue Against The Order Of The Ld. Commissioner Of Income Tax (Appeals), [Hereinafter “Ld. Cit(A)], Mumbai Dated 31.08.2020 & Order Dated 10.03.2021 For The Assessment Year 2012-13 & Ay. 2013-14 Respectively. Since Issues In Both The Years Were The Same, Both These Appeals Were Heard Together. Both The Parties Also Agreed That There Is No Change Of Facts Or Position In Law Across Both These Years & Therefore Argued Them Together Raising Similar Arguments On These Issues. We Accordingly Dispose Both The Appeals By This Common Order.

For Appellant: Shri Paras SavlaFor Respondent: Smt Mahita Nair (Sr. DR)
Section 115JSection 92C