AMITA MEMORIAL TRUST,MUMBAI vs. CIT (EXEMPTION) MUMBAI, MUMBAI

The entire controversy in the present appeals before us is in respect of absence of explicit clause in the Trust Deed regarding irrevocability and dissolution which according to the ld. CIT(E) renders the assessee trust liable for rejection of its registration u/s 12AB of the Act. There are two appeals. Appeal vide is in respect of rejection of renewal of registration u/s 12AB sought by the assessee by filing an application in Form 10AB u/s 12A(1)(ac)(ii) of the Act. The other appeal in 80G (5)(ii) for which also, assessee had filed its Form 10AB. 3.1. In the proceedings conducted by the ld. CIT(E), assessee was required to demonstrate if its Trust Deed contains clause regarding irrevocability and dissolution for which it is contended that assessee trust is intended to exist permanently and will continue perpetually, therefore, no separate clause on irrevocability or dissolution is required in the Trust Deed. Ld. CIT(E) thus, observed that Trust Deed of the assessee does not contain clause regarding irrevocability and dissolution which does not give statutory safeguard to the Revenue to ensure that the assets of the assessee shall be applied solely towards charitable purposes and upon its dissolution, shall be transferred to another trust or institution having similar charitable objects as mandated under the provisions of the Act. According to him, it is explicitly mentioned in the statute itself that the benefit of tax exemption u/s 11 is restricted only to public charitable trusts or public religious trusts which are not revocable in nature. For this, he referred to the words “subject to provisions of section 60 to 63” in section 11. He also took note of the reply given by the assessee in point no.6 of Form 10AB where the question mentioned is “whether the Trust Deed contains clause that the trust is irrevocable?” to which the assessee had furnished its answer as “Yes”. On this answer of the assessee in Form 10AB, he observed that since there is no specific clause regarding irrevocability or dissolution of the assessee trust mandatorily required under the provisions of the Act, furnishing of such answer tantamount to furnishing of false or incorrect information falling within the ambit of “specified violation” as defined under Explanation (g) to section 12AB(4) of the Act. He thus, held that the application filed by the assessee in Form 10AB for regularization of provisional registration is not allowable on the grounds of non-inclusion of irrevocability or dissolution clause in the Trust Deed and specified violation incurred by the assessee under Explanation (g) to section 12AB (4) of the Act. Thus, the application of the assessee for regularization of provisional registration filed in Form 10AB was rejected. Aggrieved, assessee is in appeal before the Tribunal.

TR.25822 dated 12.08.1987, issued by the Commissioner of Income Tax, Bombay City – 4, Bombay. It was also granted certificate of registration/approval u/s 80G(5) vide certificate dated 15.10.1987 bearing Registration No. TC/80G/CH – 1104A (8). In order to comply with the new registration regime effective from 01.04.2021, assessee filed renewal application in terms of section 12AB, first by seeking provisional registration vide Form No.10AC which was granted vide registration dated 31.08.2021 for the period from A.Y.2022-23 to A.Y.2026-27. Thereafter, for the regularization of this provisional registration, assessee applied in Form 10AB whereby ld. CIT(E) rejected the said application for renewal of the registration. Similar course of action was undertaken by the assessee for complying with the requirements in respect of registration u/s 80G.

According to the ld. Counsel of the assessee, the rejection done by Ld. CIT(E) is on two grounds, viz., (i) Trust Deed does not contain explicit clause in respect of trust being “irrevocable” and does not provide for the manner of its dissolution; (ii) reply furnished by the assessee in point no.6 of Form 10AB in response to the question “Whether the Trust Deed contains clause that the trust is irrevocable?” is false or incorrect information constituting specified violation under clause (g) of Explanation to section 12AB(4). 5.1. In respect of the first ground, ld. Counsel for the assessee submitted that assessee has been initially granted the registration in the erstwhile regime despite there being no such explicit clause in the Trust Deed as contemplated by ld. CIT(E). There is no change in facts or law to warrant the interpretation so adopted by the ld. CIT(E) when the grant of registration is required u/s 12AB, conditions in which are pari materia to section 12AA/12A. He further asserted that provisions of section 12AA and section 12AB do not require explicit clause on “irrevocability” as a condition precedent for granting of registration. Reference made by ld. CIT(E) to sections 60 to 63 are not for the purpose of registration but are applicable only at the time of considering grant of exemption u/s 11 of the Act. According to the ld. Counsel, a trust is irrevocable unless the Trust Deed expressly provides for power of revocation. According to him, absence of irrevocability clause implies irrevocability and not revocability. Interpretation by ld. CIT(E) presuming that assessee trust is revocable in absence of explicit irrevocable clause is misplaced. 5.2. Ld. Counsel pointed out that assessee trust is registered with the Charity Commissioner, Mumbai with the Registration No. E – 11304 (Mumbai) and is covered by the provisions of Maharashtra Public Trust Act, 1950 (MPTA) which provides for adequate safeguard viz-a-viz the apprehension and presumption which led to rejection of application for registration u/s 12AB. According to him, u/s 55 of the MPTA, if the original objects of the trust cannot be fulfilled for any reason, the Charity Commissioner may direct the property or income of the trust or any portion thereof to be applied by invoking the doctrine of cypres to any other charitable objects but the trust cannot be revoked or dissolved. He emphasized that under the Public Trust law, once property is dedicated to a public charitable purpose, the dedication is completed and settlor is divested of the property. The assets so settled in favour of public trust can never revert back to the settlor. Reference was also made to provisions of section 22(3A) and (3B) of the MPTA, according to which, for a trust to be a revocable trust, power to revoke the same is essential which must be explicitly expressed in the Trust Deed so as to enable the settlor to invoke the same and revoke the trust. In other words, in the absence of any revocability clause, a trust cannot be revoked. Hence, the interpretation adopted by ld. CIT(E) for explicit requirements of “irrevocability clause” is misplaced. 5.3. He strongly relied on the decision of Hon’ble Jurisdictional High Court of Bombay in the case of CIT (E) vs. Tara Educational and Charitable Trust in Income Tax Appeal No.247 of 2015, judgment dated 31.07.2017 wherein Hon’ble Court had held absence of dissolution clause in the Trust Deed is not a valid ground for rejecting registration u/s 12AA since, there is no such requirement under the said section of the Act and even otherwise, provisions of section 55 of the MPTA takes care of such a requirement. He pointed out that substantive conditions for registration u/s 12AB are pari materia to the requirements in section 12AA and, therefore, squarely covers the case of the assessee. Conditions for grant of registration have note materially changed u/s 12AB of the Act. 5.4. He also referred to the decision of Co-ordinate Bench in the case of Radisson India Charitable Foundation vs. ITO (Exemption) [2025] 171 taxmann.com 845 (Del), wherein on a similar issue, it was held that absence of dissolution clause and not mentioning of fate of net asset in Trust Deed cannot be a ground to deny registration u/s 12AB. In this decision, reference was also made to provisions of section 115TD which was inserted by Finance Act, 2016 with effect from 01.06.2016, according to which relevance of having dissolution clause and the apprehension on the transfer of net asset to any other entity has been taken care of. 5.5. Ld. Counsel thus, reiterated on the first ground taken by the ld. CIT(E) for rejecting the application that no such demands were made when the initial registration of the trust was granted or when there was renewal of the registration provisionally, more particularly when there has been no change in the Trust Deed since then. 6 5.6. On the second ground which formed the basis for the rejection of the application of the assessee as to furnishing of false information falling within the specified violation in terms of clause (g) in Explanation to section 12AB(4), ld. Counsel for the assessee placed on record screenshot taken from the e-portal of the Income-tax Department to demonstrate that assessee trust while filing the application was compelled to answer “Yes” for uploading its Form 10AB. If this question was answered in the negative then, the system does not allow the form to be filed at all. From the screenshot furnished by the ld. Counsel, it was pointed out that when “No” was ticked, an error was displayed on the screen with the comment “Approval/registration is not allowed if the applicant being a trust does not have an irrevocable clause”. According to him, assessee is forced to write “Yes” to this question while uploading the form despite there being no specific requirement in the statute to have a clause on irrevocability, as already contended. According to him, Trust Deed of the assessee does not have revocability clause and, therefore, it always had a bona fide belief that the assessee trust was always irrevocable and, therefore, with this belief, the answer “Yes” given by the assessee to the question on the utility is correct and cannot be considered to be false or incorrect information as inferred by the ld. CIT(E) while rejecting the application. Such a procedural constraint imposed on the assessee by way of digital utility cannot be held against the assessee. Ld. Counsel thus strongly asserted that the order of ld. CIT(E) be set aside and direction be given for grant of registration u/s 12AB as well as u/s 80G which is consequent to grant of registration u/s 12AB.

Per contra, ld. CIT DR placed reliance on the order of ld. CIT(E) and asserted that provisions of section 12AB empowers the CIT(E) to examine the issue of revocability. According to him, irrevocability requirement is a condition precedent for grant of registration and exemption.

We have heard both the parties and perused the material on record. We have given our thoughtful consideration to the submissions made before us as well as judicial precedents relied upon. In the course of the hearing, it was brought to the knowledge of the Bench that this issue has been taken up before the Hon’ble Jurisdictional High Court of Bombay by large number of public charitable trusts in writ petition vide Writ Petition (L) No. 7587 of 2026 in the case of The Chamber of Tax Consultants and Others vs. CIT(E), contesting on the very same issue. The judgment is awaited to be available in public domain as hearings have already been concluded. Ld. Counsel pointed out that all the contentions raised before us have been put forth before the Hon’ble Court in the writ petition supra. The hearing before us concluded on 17.03.2026 and the order of the Hon’ble Court in the aforesaid writ petition was uploaded on the website on 18.03.2026. 7.1. We perused the judgment of the Hon’ble Court in the aforesaid Writ Petition and find that the issue before us is identical to what has been contested in the judgment by the Hon’ble Court. All the aspects as contended by the ld. Counsel before us have been elaborately considered and dealt with by the Hon’ble Court including its own judgment in the case of Tara Educational and Charitable Trust (supra.) as well as provisions of the Act and of the MPTA. Hon’ble Court has also dealt with procedural aspect of uploading the form on the e-portal of the Income-tax Department whereby assessee is required to submit its answer on the question of “Whether the Trust Deed contains clause that the trust is irrevocable?” in either “Yes” or “No”. Hon’ble Court, after detailed discussion analysed and summarized its judgment in para 45- 46 to held that a public charitable trust is deemed irrevocable by operation of law unless the instrument of trust expressly provides a power of revocation. According to the Hon’ble Court, action of ld. CIT(E) is contrary to the plain language of the statute, binding judicial precedent of this very Court and is manifestly arbitrary. In para 46, by allowing the writ petition, it passed the order giving certain directions whereby Revenue is refrained from rejecting the applications for registration/renewal u/s 12AB on the ground of absence of an explicit irrevocability/dissolution clause in the Trust Deed. Hon’ble Court also directed that Revenue shall not treat the answer “Yes” to row no. 6 of the Form 10AB as furnishing false or incorrect information which shall not be a ground to reject the application for registration u/s 12AB. It is also directed for the consequential order passed denying registration u/s 80G which are to be set aside and the registration be granted u/s 80G which is consequential to granting of registration u/s 12AB. In sub-para (vi), Hon’ble Court made specific mention that all such orders where renewal of registration u/s 12AB has been rejected on the grounds discussed in the said judgment are quashed and set aside. 7.2. Relevant para 45 and 46 of the judgment by the Hon'ble Court (supra) are reproduced for ready reference: “45. In summary, we hold that a public charitable trust is deemed irrevocable by operation of law unless the instrument of trust expressly provides a power of revocation. The absence of an explicit irrevocability clause is not a ground for rejecting an application for registration or renewal under section 12AB of the Act. Even if the Deed provides for any revocability clause, due to operation of sections 22(3A) and 22(3B) of the MPT Act, such trusts which are registered under the MPT Act, would be irrevocable insofar as the Income-tax Act is concerned but we leave this issue open to be decided in an appropriate case. The action of Respondent No. 1 is therefore, contrary to the plain language of the statute, binding judicial precedents of this Court, and is manifestly arbitrary. Such action, as rightly pointed out by the Petitioners, have shaken the entire ecosystem of functioning of the charitable trusts. It cannot be forgotten that the trusts are contributing to nation building by doing charitable activities and that too voluntarily and, thus, must be treated with a fair and reasonable approach by the revenue.

In the result, the Writ Petition is allowed. Due to the peculiar facts, as presented by the Petitioners, we pass the following order: 9

In the conspectus of the above detailed discussion by taking into account the fact of the case, provisions of the Act, provisions of the MPTA and the binding judicial precedents of the jurisdictional High Court of Bombay referred above as well as other judicial precedents, the issue before us is manifestly covered in favour of the assessee.