METHIBAI DEVRAJ GUNDECHA CHARITABLE TRUST,MUMBAI vs. COMMISSIONER OF INCOME TAX (EXEMPTION), MUMBAI

PDF · subscribers
ITA 1848/MUM/2026Status: DisposedITAT Mumbai31 July 2026AY 2026-276 pages

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

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the rejection of the application solely on the ground of absence of an irrevocability clause was incorrect, following the Bombay High Court's decision. The CIT(Exemption) was directed to grant registration under Section 12AB and approval under Section 80G.

What were the facts?

The assessee's application for approval under Sections 12AB and 80G was rejected by the CIT(Exemption) due to the absence of an irrevocability clause in the trust deed. Subsequently, the Bombay High Court quashed such rejections and directed fresh consideration.

What were the issues?

Whether rejection of registration/approval under Sections 12AB and 80G solely for absence of an irrevocability clause is valid, especially in light of High Court pronouncements.

Which sections of the Income-tax Act were involved?

Section 12AB,Section 80G

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCHES, MUMBAI

Before: SANDEEP GOSAIN & BIJAYANANDA PRUSETH

Heard together (2 matters)

ITA 1848/MUM/2026
ITA 1849/MUM/2026

Read from the judgment's own cause title. This page is filed under one of them.

PER SANDEEP GOSAIN, JUDICIAL MEMBER: The aforesaid appeals have been filed by the Assessee against the order of the Learned CIT(Exemption), Mumbai dated 28 January 2026 for the Assessment Year 2026-27.

2. The solitary effective ground raised by the assessee relates to challenging the order of the Ld. CIT(A) in rejecting the application filed for seeking approval under Sections 12AB and 80G of the Act.

3.

In this regard, after having heard the matter, we noticed that the reasons recorded for rejection of the application under Section 12AB in the present case are reproduced hereinbelow:

"5. In view of the above, the application for regularization of provisional registration in Form No. 10AB filed by the assessee is not allowable on the grounds of non-inclusion of an irrevocability or dissolution clause in the Trust Deed/MoA and specified violation as per Explanation (g) to Section 12AB(4) of the Income-tax Act, 1961. However, the applicant is at liberty to pursue the remedies available under the Statute, without any prejudice."

4.

The relevant extract of the rejection order under Section 80G is reproduced hereinbelow:

"3. The provisions of Section 80G(5)(i) of the Act stipulate the condition that the provisions of this section are applicable only to an institution or fund to which Section 11, Section 12, or clause (23AA) or clause (23C) of Section 10 of the Act applies. The applicant fails to fulfil any of the above criteria in view of the rejection of its application for registration under Section 12AB of the Act. Thus, its application for approval under Section 80G of the Act becomes untenable."

5.

It is important to mention here that subsequently, the Hon'ble Bombay High Court, in Writ Petition (L) No. 7587 of 2026 dated 09.03.2026 (uploaded on 18.03.2026), filed by the Chambers of Tax Consultants and others, has quashed and set aside all orders whereby renewal/registration under Section 12AB had been rejected solely on the ground of absence of an explicit irrevocability and/or dissolution clause in the Trust Deed. The Hon'ble High Court further directed the Commissioner of Income Tax 2 (Exemptions) to decide such applications afresh within a period of six weeks from the date of the order.

6.

The relevant extract of the Hon'ble Bombay High Court order is reproduced hereinbelow (page nos. 158 and 159 of the paper book and page nos. 46 and 47 of the order):

"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 absence of an explicit irrevocability and/or dissolution clause in the Trust Deed/instrument.

(vi) All such orders where renewal of registration under Section 12AB has been rejected on the grounds discussed above are also hereby quashed and set aside.

(vii) Further, it is also directed that all consequential orders passed denying registration under Section 80G of the Act, where such rejection is on the ground that once registration under Section 12AB is denied, registration under Section 80G also cannot be granted, are also hereby quashed and set aside.

(viii) Respondent No. 1 shall decide the applications of the Petitioners and all other similarly situated trusts, whose orders are hereby quashed, afresh and in accordance with law and the ratio laid down in this judgment, within a period of six weeks from today. Any order so passed shall be deemed to come into effect from 1st April, 2026."

7.

Pursuant to the aforesaid judgment, the assessee filed a letter dated 24.03.2026 before the Commissioner of Income Tax (Exemptions), along with the complete set of applications under Sections 12AB and 80G, requesting fresh consideration of the applications in light of the aforesaid judgment of the Hon'ble Bombay High Court.

8. Since the period of six weeks directed by the Hon'ble High Court had already expired on 20.04.2026, the assessee filed a reminder letter dated 27.04.2026 before the Commissioner of Income Tax (Exemptions). However, the Ld. CIT(E) did not adjudicate the same in accordance with the directions of the Hon'ble jurisdictional High Court.

9.

After considering the facts of the present case filed before us, we noticed that the Coordinate Bench of the ITAT in ITA Nos. 1262/Mum/2026 and 1263/Mum/2026 in the case of Amita Memorial Trust, involving identical facts and issues, vide order dated 30.03.2026, decided the matter in favour of the assessee and directed the Ld. CIT(E) to grant registration under Section 12AB as well as approval under Section 80G of the Act.

10.

The operative portion of the ITAT order is reproduced hereinbelow:

"8. In the conspectus of the above detailed discussion, by taking into account the facts 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.

10.

Accordingly, the action of the Ld. CIT(E) rejecting the application for grant of registration under Section 12AB and under Section 80G(5) is set aside and the orders so passed are quashed. Grounds raised by the assessee are allowed with the direction to the Ld. CIT(E) to grant registration under Section 12AB and approval under Section 80G of the Act."

11.

Thus, considering the totality of the facts and circumstances, and keeping in view the decisions of the Hon'ble High Court and the Coordinate Bench of the ITAT, as well as the doctrine of binding precedent and judicial consistency, we direct the Ld. CIT(E) to grant registration under Section 12AB and approval under Section 80G of the Act to the assessee.

12.

In the result, appeal filed by the Assessee stands allowed.

Order pronounced in the open court on 31.07.2026.

Sd/- Sd/- BIJAYANANDA PRUSETH SANDEEP GOSAIN ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai Dated: 31.07.2026 RY-SrPS Copy to: METHIBAI DEVRAJ GUNDECHA CHARITABLE TRUST , H WING ASHOKRAJ JAWAHAR NAGAR, 1 GOREGAON ,, MUMBAI-400062, MAHARASHTRA COMMISSIONER OF INCOME TAX (EXEMPTION), 601 , 6TH FLOOR, CUMBALLA HILL MTNL 2 TE BUILDING PEDDER ROAD, DR. GOPALRAO DESHMUKH MARG,, MUMBAI-400026, MAHARASHTRA 3 THE PCIT / CIT, 4 THE D.R., ITAT, MUMBAI BENCH 5 GUARD FILE

More judgments on Section 12AB

All 5,972 judgments and leading authorities on Section 12AB →

Recent GST High Court judgments

Search GST case law →