That means the information that we are receiving from those galaxies took place 40 billion yrs ago ?
Yes. That's why we draw spacetime diagrams. Since the velocity of light is constant in every reference frame, it takes the 45-degree line and hence the future light cone between spatial ($x$) and time ($ct$) dimensions. So, the answer is - yes we're seeing the old-time galaxies (or) the past. We can't observe an event in space at this instant. Because, no information can't be carried faster than light.
For example, here's a spacetime diagram for the light-cone of our sun when it dies...
One can clearly see that the Earth enters the light cone of the sun, only after 8 minutes (which is of course, the time taken for light to reach from the sun). So, we'd see the sun vanishing out after 8 minutes. Till that, we'd see sun as usual.
What does this show? It simply says the light is the carrier of information for us. In other words, we can't observe an event instantaneously or simultaneously.
In case if you're confused why there's such a large difference between the age and distance of galaxies, then the whole credit goes to the metric expansion of space and more specifically the inflation phase when the universe expanded so rapidly that the matter was thrown away to a much farther distance.
And so, the paradox..!