DYNAMIK GLOBAL,MUMBAI vs. INCOME TAX OFFICER (22)(2)(6), LOWER PAREL, MUMBAI

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ITA 344/MUM/2026Status: DisposedITAT Mumbai30 June 2026AY 2016-175 pages

In favour of the Revenue: the assessee's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that for a deduction under Section 35(1)(ii) to be valid, the recipient institution must have the specific approval from the prescribed authority. Since the society lacked this approval, the deduction claimed by the assessee was rightly disallowed.

What were the facts?

The assessee claimed a deduction under Section 35(1)(ii) for donations made to a society. The society was registered under Section 12A but lacked the required approval under Section 35(1)(ii) for the assessee to claim weighted deduction.

What were the issues?

Whether a donation to an institution registered under Section 12A but not approved under Section 35(1)(ii) is eligible for weighted deduction. Whether Form 26AS is conclusive proof of income in the absence of rejection of books of accounts.

Which sections of the Income-tax Act were involved?

Section 35(1)(ii),Section 12A,Section 145

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “D” BENCH; MUMBAI

Hearing: 29.06.2026Pronounced: 30.06.2026

IN THE INCOME TAX APPELLATE TRIBUNAL“D” BENCH; MUMBAI BEFORE SHRI VIKRAM SINGH YADAV, ACCOUNTANT MEMBER AND SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER ITA No. 344/Mum/2026 (Assessment Year: 2016-17)

Dynamik Global Income Tax Officer (22)(2)(6) 315, A to Z Industrial Estate, Piramal Chamber, Lalbaug, Lower Parel, Mumbai, vs. Parel, Mumbai, Maharashtra, Maharashtra, 400013 400012.

PAN: AAHFD9002E (Appellant) (Respondent) For Assessee : Shri Darshit Dhamecha For Revenue : Shri Prasma Prakash Tewari Date of Hearing : 29.06.2026 Date of Pronouncement : 30.06.2026 O R D E R PER VIKRAM SINGH YADAV, A.M :

This is an appeal filed by the Assessee against the order of the Learned Commissioner of Income Tax (Appeals)-National Faceless Appeal Centre (NFAC), Delhi [‘Ld.CIT(A)’], dated 19.11.2025, pertaining to Assessment Year (AY) 2016-17, wherein the Assessee has taken the following grounds of appeal: “1. On the facts and circumstances of the case and in law, the Ld AO has erred in confirming the addition of Rs. 17,50,000/- on account of disallowance of deductions claimed u/s 35(1)(ii) of the Act, 1961. 2. On the facts and circumstances of the case and in law, the Ld AO has grossly erred in confirming the addition Rs. 19,72,598/- merely on the basis of difference between Form 26AS and Profit & Loss Account, without appreciating that Form 26AS is not conclusive proof of income. The Ld. CIT(A) erred in law in placing excessive reliance on Form 26AS and ignoring the books of 3. accounts duly audited, without rejecting the books of accounts u/s 145 of the Act.

ITA No. 344/Mum/2026; A.Y. 2016-17 Dynamik Global

3.

Each of the above grounds of appeal is independent and without prejudice to other grounds of appeal. 4. The order of the Ld AO is bad in law which deserves to set aside.” 2. In ground no. 1, the assessee has challenged the sustenance of addition of Rs. 17,50,000/- on account of disallowance of deduction claimed u/s. 35(1)(ii) of the Income Tax Act, 1961 (‘the Act’).

3.

In this regard, briefly, the facts of the case are that as per information received by the Assessing Officer, pursuant to survey action u/s. 133A in case of Rural Development Society, it was found that the said society was registered u/s. 12A of the Act. However, it was not approved u/s. 35(1)(ii) of the Act and it has issued donation receipts to the donors so that respective donors can claim weighted deduction at the rate of 175% u/s. 35(1)(ii) of the Act and the assessee was found to be one of the donors and has claimed deduction u/s. 35(1)(ii) of the Act. Based on that information, the case of the assessee was re-opened and thereafter, during the course of assessment proceedings, the assessee was asked to show cause as to why the deduction so claimed should not be disallowed. In response, the assessee furnished a copy of the cheque showing payment of Rs. 10 lakh, letter for donation, receipt of donation and acknowledgement letter of donation and it was submitted that the deduction has been claimed in good faith and on the basis of the said documents. However, the Assessing Officer recorded his finding stating that the assessee has not filed a copy of the approval u/s. 35(1)(ii) as so claimed to be issued by the competent authority and in absence of the same, the donation paid to M/s. Rural Development Society is not eligible for reduction u/s. 35(1)(ii)of the Act and the same was brought to tax by the Assessing Officer.

ITA No. 344/Mum/2026; A.Y. 2016-17 Dynamik Global 4. On appeal, the submissions made before the Assessing Officer were reiterated. The ld. CIT(A) referring to the provisions of Section 35(1)(ii) held that a deduction for sums paid to a scientific research association, university, college or other institution which is undertaking scientific research, is allowed provided such institution is “approved” for the purposes of this section by the prescribed authority i.e. DSIR. It was held that the provisions relating to deductions and exemptions must be strictly adhered to and the burden rest entirely on the assessee. It was further held that the law clearly mandates that the recipient institution must have valid active approval u/s. 35(1)(ii) of the Act on the date the donation was made and the mere registration u/s. 12A is not sufficient to satisfy the conditions of Section 35(1)(ii) of the Act which are clearly distinct provisions dealing with different compliance requirements and it was incumbent upon the assessee to exercise due diligence and ensure all statutory conditions are met before claiming the benefit under this Act and the assessee should have obtained and verified a copy of the approval certificate u/s. 35(1)(ii) of the Act and the argument of having acted in good faith or being a victim does not override the specific objective legal requirement of the statute and tax liability is governed by strict compliance with law and not subjective intentions. It was accordingly held that the AO was justified in demanding documentary proof of the recipient approval status u/s. 35(1)(ii) of the Act and since the assessee failed to furnish this essential evidence during assessment as well as during the appellate proceedings, the conditions precedent for claiming the deduction have not been met. Accordingly, the finding of the Assessing Officer were upheld, whereby he has disallowed the deduction claimed by the assessee amounting to Rs. 17,50,000/-. Against the said order, the assessee is in appeal before us.

ITA No. 344/Mum/2026; A.Y. 2016-17 Dynamik Global 5. During the course of hearing, the submissions made before the lower authorities were reiterated, whereas the ld. DR has relied on the findings of the Assessing Officer as well as that of the ld. CIT(A).

6.

After hearing both the parties and considering the material available on the record, we see no infirmity in the findings of the ld. CIT(A), wherein he has clearly held that the donor institution has to be approved for the purposes of Section 35(1)(ii) of the Act and in absence of the necessary approval which is a condition precedent for claiming deduction u/s. 35(1)(ii) of the Act, the Assessing Officer was right in denying the claim of deduction u/s. 35(1)(ii) of the Act. In the result, the ground no. 1 is dismissed.

7.

In ground no. 2, the assessee has challenged the addition of Rs. 19,72,598/- on account of difference between form 26AS and profit &loss account. In this regard, it was submitted that the said difference has arisen on account of the fact that the deductor entity has deducted tax at source on gross invoice value which included VAT, service tax and the reimbursement components, wherein the assessee has recorded only the net taxable sales/services in its books of accounts. It was submitted that the assessee has since obtained a written confirmation from United Spirits Ltd. as well as from Mandovi Distilleries and Breweries Pvt. Ltd. and it was submitted that the same may be admitted by way of an additional evidence and the matter may be remitted to the file of the Assessing Officer for necessary examination/verification.

8.

The ld. DR has been heard, who has not raised any objections where the matter is remitted to the file of the Assessing Officer to verify the reconciliation statements as well as the confirmation filed by the assessee so obtained from the respective parties.

ITA No. 344/Mum/2026; A.Y. 2016-17 Dynamik Global 9. After hearing both the parties and considering the material available on the record, we deem it appropriate to set-aside the matter to the file of Assessing Officer to verify the reconciliation statement and the confirmation so obtained from the respective parties and decide the same afresh in accordance with law after providing reasonable opportunity to the assessee. In the result, ground no. 2 is allowed for statistical purposes.

10.

In the result, the appeal filed by the assessee is partly allowed.

Order pronounced on 30.06.2026

Sd/- Sd/- SIDDHARTHA NAUTIYAL VIKRAM SINGH YADAV (JUDICIAL MEMBER) (ACCOUNTANT MEMBER)

Mumbai, Dated: 30.06.2026 Karishma J. Pawar, SR. PS Copy to : 1) The Appellant 2) The Respondent 3) The CIT concerned 4) The D.R, ITAT, Mumbai 5) Guard file By Order

Dy./Asst. Registrar I.T.A.T, Mumbai

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