M/S. ST. FRANCIS ENGLISH SCHOOL THROUGH ITS FRUSTEE JOSEPH VICTOR DSOUZA ,MUMBAI vs. COMMISSIONER OF INCOME TAX (EXEMPTION), MUMBAI

The solitary grievance of the assessee is against the rejection of its application for regularisation of registration u/s 12AB of the Act on account of the absence of an irrevocability clause in the trust deed.

We have considered the submissions of both sides and perused the material available on record. The assessee filed an application in Form 10AB u/s 12A(i)(ac)(iii) of the Act on 30.06.2025 seeking registration u/s 12AB of the Act. Upon perusal of the application filed by the assessee, the learned CIT(E) noticed that in response to the question in Para No.6 of the application, i.e., whether the assessee trust deed contains a clause that the trust is irrevocable, the assessee stated ‘YES’. However, as per the trust deed/MOA, there is no clause regarding irrevocability or dissolution/winding up of the assessee trust/institution, which is mandatory as per the provisions of the Act.

Accordingly, vide impugned order, the learned CIT(E) held that in the absence of an explicit irrevocability and dissolution clause, there exist no statutory safeguard to ensure that the assets of the assessee trust shall be applied solely towards charitable purposes and upon dissolution, shall be transferred to another trust or institution having similar charitable objects, as mandated under the provisions of the Act. Accordingly, the learned CIT(E), vide impugned order, rejected the application filed by the assessee for regularization of provisions of registration in Form 10AB on the ground of non- inclusion of irrevocability or dissolution clause in the trust deed, considering the same to be a “Specified Violation” as per Explanation (g) to Section 12AB(4) of the Act. Being aggrieved, the assessee is in appeal before us.

Having considered the submissions and perused the material available on record, we find that a similar issue recently came out for consideration before the Hon’ble Jurisdictional High Court in the case of The Chamber of Tax Consultants Vs. The Commissioner of Income Tax (Exemptions), reported in [2026] 184 taxmann.com 374 (Bom), wherein the various Petitioners had challenged the rejection of the application for renewal of registration u/s 12AB of the Act due to the absence of the irrevocability clause in the trust deed. Since, similar to the present case, in the Writ Petitions before the Hon’ble High Court, the question in Para No.6 of the application was replied as ‘Yes’, the said reply was treated as furnishing ‘false or incorrect information’, considering the same to be “Specified Violation” in terms of Explanation (g) to Section 12AB(4) of the Act. Vide its judgment dated 09.03.2026, the Hon’ble Jurisdictional High Court, in the aforesaid case, allowed all the Writ Petitions and passed the following directions: - “46. In the result, the Writ Petition is allowed. Due to the peculiar facts, as presented by the Petitioners, we pass the following order: (i) The Respondents shall refrain from rejecting applications for registration/renewal under section 12AB solely on the ground of the absence of an explicit irrevocability and/or dissolution clause in the Trust Deed/instrument. (ii) The Respondents shall not treat the answer "Yes" to Row 6 of Form 10AB, in the absence of any explicit clause of irrevocability, as furnishing "false or incorrect information" constituting a "specified violation". Further, this shall not be a ground to reject an application for registration under section 12AB of the Act. (iii) The Respondents shall also amend the utility of Form 10A/10AB to allow applicants to correctly state their position regarding the irrevocability clause without being forced to make an incorrect declaration. This should be done as soon as possible. (iv) Question number 6 in Form 10AB should be modified to read thus, "Is the trust/institution revocable?".

Therefore, respectfully following the decision of the Hon’ble Jurisdictional High Court cited supra, we quash the impugned order and restore the application filed by the assessee in Form 10AB for regularisation of the registration u/s 12AB of the Act to the file of the learned CIT(E) for de novo adjudication, as per law, keeping in consideration the observations/directions of the Hon’ble Jurisdictional High Court in the aforesaid decision. As a result, the grounds raised by the assessee are allowed.

In the result, the appeal filed by the assessee is allowed. Order pronounced in the open Court on 17/04/2026