Section 40A(7) of the Income Tax Act

Income-tax Act, 2025: s.36

Section 40A(7) falls under section 40A of the Income-tax Act, 1961, which corresponds to section 36 (Expenses or payments not deductible in certain circumstances) of the Income-tax Act, 2025.

Read section 36 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 40A(7) is CIT v. Gujarat State Road Transport Corporation (366 ITR 170), cited in 1,158 of the 268 judgments on BharatTax that turn on this section.

Leading authorities on Section 40A(7)

CIT v. Gujarat State Road Transport Corporation
366 ITR 170 · 2014 · High Court
1,158
citing judgments

Employees' contributions to welfare funds, such as provident fund, are not allowable as a deduction under section 36(1)(va) if deposited beyond the due date prescribed under the respective welfare statutes, even by a single day. Such delayed deposits are not cured even if made before the income-tax return filing due date.

Price Waterhouse Coopers Pvt. Ltd. v. CIT
348 ITR 306 · 2012 · Supreme Court
359
citing judgments

Penalty under section 271(1)(c) for furnishing inaccurate particulars cannot be imposed for a mere disallowance, bona fide mistake, or inadvertent error, especially when relevant facts are disclosed in the tax audit report. The levy of penalty requires proof of intent to conceal income or furnish false particulars.

Allied Motors (supra); CIT v. Podar Cement Pvt Ltd.
226 ITR 625 · 1997 · Supreme Court
244
citing judgments

Amendments to tax laws that are explanatory, declaratory, curative, or clarificatory in nature are judicially construed as retrospective, especially if they are intended to remedy unintended consequences.

Kalpesh Synthetics (P.) Ltd. v. DCIT
137 Taxmann.com 475 · 2022 · ITAT
198
citing judgments

A deduction claimed under Section 36(1)(va) for employee contributions remitted after the statutory due date but before the return filing due date cannot be disallowed during intimation processing under Section 143(1) if the issue is debatable. Such a disallowance cannot be made automatically based solely on auditor's mention of actual vs. due dates in the tax audit report.

100/223 Taxman 398/366 ITR 170 (Guj.) 3. CIT v. Merchem Ltd.
61 Taxmann.com 119 · 2015 · High Court
168
citing judgments

An amendment clarifying the disallowance of employee contributions under sections 36(1)(va) and 43B is prospective. Therefore, before such amendment, employee contributions paid before the due date for filing the income tax return are deductible.

378 ITR 443 (Kerala); and Unifac Management Services (India) P. Ltd. v. Asst. CIT
409 ITR 225 · 2018 · High Court
67
citing judgments

The beneficial provisions of Section 43B do not apply to sums covered by Section 36(1)(va), which are employee contributions to welfare funds. The scope of Section 43B and Section 36(1)(va) are distinct, meaning belated payment of employee contributions is not deductible under Section 43B, and only Section 36(1)(va) read with Section 2(24)(x) governs their deductibility.

Foundry (P.) Ltd. v. CIT
78 Taxmann.com 47 · 2017 · High Court
64
citing judgments

An employer can claim deduction for employee contributions to provident fund or ESI under Section 36(1)(va) if these sums are deposited on or before the due date for filing the income tax return under Section 139, extending the benefit of Section 43B to such payments.

CIT v. Bharat 42 Zuari Cement Limited, Kadapa Aluminium Co. Ltd.
303 ITR 256 · 2008 · High Court
45
citing judgments

An assessee can file a revised computation of income during ongoing assessment proceedings, even after the time limit for filing a revised return under section 139(5) has expired. This revised computation can be submitted without filing a revised return.

Goerge v. State of Kerala
3 SCC 557 · 2007 · Reported
35
citing judgments

A later Supreme Court decision retrospectively clarifies the law, superseding earlier incorrect interpretations, as judges discover and find the correct law rather than make it.

CIT v. Malayala Manorama Co. Ltd.
253 ITR 791 · 2018 · High Court
32
citing judgments

An Assessing Officer cannot allow a claim for deduction that is raised afresh unless a revised return is filed. However, an assessee is not disabled from raising such a claim before appellate authorities if it was disallowed by the Assessing Officer for the technical reason of not filing a revised return.

Judgments on Section 40A(7)

Assistant Commissioner of Income Tax, Circle-1, Eluru vs. The District Cooperative Bank Limited, Eluru

In the result, appeals of the revenue as well as the cross objections filed by the assessee are dismissed

ITA 292/VIZ/2018[2013-14]Status: DisposedITAT Visakhapatnam20 Sept 2018AY 2013-14

Bench: Shri V. Durga Rao& Shri D.S. Sunder Singhआयकर अपील सं./I.T.A.Nos.291 & 292/Viz/2018 (धििाारण िर्ा/ Assessment Year: 2012-2013 & 2013-14 Respectively) The Acit, Vs. The District Cooperative Circle-1 Central Bank Ltd. Eluru Ramachandra Rao Pet Eluru, West Godavari Dist. [Pan : Aadft3506D] (अपीलार्थी/ Appellant) (प्रत्यर्थी/ Respondent) Cross Objection Nos.74 & 75/Viz/2018 (Arising Out Of I.T.A. Nos.291 & 292/Viz/2018 Respectively) (धििाारण िर्ा/ Assessment Year: 2012-2013 & 2013-14 Respectively) The District Cooperative Vs. The Acit, Central Bank Ltd. Circle-1 Ramachandra Rao Pet Eluru Eluru, West Godavari Dist. [Pan : Aadft3506D] (अपीलार्थी/ Appellant) (प्रत्यर्थी/ Respondent) राजस्व की ओर से/ Revenue By : Shri K.C.Das, Dr निर्ााररती की ओर से/ Assessee By : Shri G.V.N.Hari, Ar सुिवाई की तारीख / Date Of Hearing : 18.09.2018 घोषणा की तारीख/Date Of Pronouncement : 20.09.2018

For Appellant: Shri G.V.N.Hari, ARFor Respondent: Shri K.C.Das, DR
Section 36(1)(v)Section 40A(7)

Assistant Commissioner of Income Tax, Circle-1, Eluru vs. The District Cooperative Bank Limited, Eluru

In the result, appeals of the revenue as well as the cross objections filed by the assessee are dismissed

ITA 291/VIZ/2018[2012-13]Status: DisposedITAT Visakhapatnam20 Sept 2018AY 2012-13

Bench: Shri V. Durga Rao& Shri D.S. Sunder Singhआयकर अपील सं./I.T.A.Nos.291 & 292/Viz/2018 (धििाारण िर्ा/ Assessment Year: 2012-2013 & 2013-14 Respectively) The Acit, Vs. The District Cooperative Circle-1 Central Bank Ltd. Eluru Ramachandra Rao Pet Eluru, West Godavari Dist. [Pan : Aadft3506D] (अपीलार्थी/ Appellant) (प्रत्यर्थी/ Respondent) Cross Objection Nos.74 & 75/Viz/2018 (Arising Out Of I.T.A. Nos.291 & 292/Viz/2018 Respectively) (धििाारण िर्ा/ Assessment Year: 2012-2013 & 2013-14 Respectively) The District Cooperative Vs. The Acit, Central Bank Ltd. Circle-1 Ramachandra Rao Pet Eluru Eluru, West Godavari Dist. [Pan : Aadft3506D] (अपीलार्थी/ Appellant) (प्रत्यर्थी/ Respondent) राजस्व की ओर से/ Revenue By : Shri K.C.Das, Dr निर्ााररती की ओर से/ Assessee By : Shri G.V.N.Hari, Ar सुिवाई की तारीख / Date Of Hearing : 18.09.2018 घोषणा की तारीख/Date Of Pronouncement : 20.09.2018

For Appellant: Shri G.V.N.Hari, ARFor Respondent: Shri K.C.Das, DR
Section 36(1)(v)Section 40A(7)