FILM CRAFTS FEDERATION ,MUMBAI vs. ITO WARD (EXEMPTION)WARD 1(3), MUMBAI

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ITA 1582/MUM/2026Status: DisposedITAT Mumbai28 April 20264 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the absence of an explicit irrevocability or dissolution clause cannot be the sole ground for rejecting an application for registration under section 12AB, following a jurisdictional High Court judgment.

What were the facts?

The assessee applied for registration under section 12AB. The CIT(E) rejected the application because the trust deed lacked an explicit irrevocability or dissolution clause, deeming it a specified violation.

What were the issues?

Whether the rejection of registration under section 12AB solely on the ground of absence of an explicit irrevocability or dissolution clause is justified.

Which sections of the Income-tax Act were involved?

Section 12AB,Section 12A(1)(ac)(ii)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “F” BENCH, MUMBAI

Before: SHRI NARENDER KUMAR CHOUDHRY & SHRI JAGADISH

For Appellant: Ms. Mitali Parekh
For Respondent: Shri Ramkrishna Bandi, CIT DR
Hearing: 27.04.2026Pronounced: 28.04.2026

Per: SHRI JAGADISH, A.M.:

1.

This appeal by the assessee is directed against the order dated 29.01.2026 passed by the Ld. Commissioner of Income Tax (Exemptions), Mumbai, rejecting the application for registration under section 12AB of the Income-tax Act, 1961. 2. The sole issue arising for consideration is whether the Ld. CIT(E) was justified in rejecting the application filed in Form No. 10AB under

ITA No.1582/M/2026 Film Crafts Federation section 12A(1)(ac)(ii) of the Act seeking registration under section 12AB. The assessee had filed the said application on 11.08.2025. The rejection is on the ground that the trust deed/MoA does not contain an explicit irrevocability or dissolution clause and that the same constitutes a specified violation within the meaning of Explanation (g) to section 12AB(4) of the Act.

3.

The Ld. Authorised Representative submitted that the issue is squarely covered by the judgment of the Hon’ble Bombay High Court in the case of Chamber of Tax Consultants vs. CIT (Exemptions) (2026) 184 taxmann.com 374 (Bom), wherein it has been held that absence of an explicit irrevocability or dissolution clause cannot be a ground for rejection of registration under section 12AB.

4.

The Ld. Departmental Representative relied on the order of the Ld. CIT(E).

5.

We have heard the rival submissions and perused the material available on record. We find that the issue involved is covered by the judgment of the Hon’ble jurisdictional High Courtin the case of Chamber of Tax Consultants vs. CIT (Exemptions) (2026) 184 taxmann.com 374 (Bom). The relevant directions of the Hon’ble High Court are reproduced as under:

“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

ITA No.1582/M/2026 Film Crafts Federation 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?". (v) The impugned orders passed in the case of Petitioner Nos. 3 to 8 rejecting registration under section 12AB of the Income-tax Act, are hereby quashed and set aside. (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. This would, of course, apply only to a case where registration under section 12AB has been rejected on the grounds discussed above. The above order that we pass is to avoid any multiplicity of litigation so as to not require the trusts to challenge the orders passed by Respondent No. 1 denying registration under section 12AB and 80G of the Act on the grounds as discussed in this order. (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 the 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.”

6.

In view of the above binding directions of the Hon’ble jurisdictional High Court, the basis adopted by the Ld. CIT(E) for rejecting the application cannot be sustained. Accordingly, we set aside the impugned order and restore the application to the file of the Ld. CIT(E) for consideration afresh in accordance with law, after affording

ITA No.1582/M/2026 Film Crafts Federation reasonable opportunity of being heard to the assessee. The assessee shall also furnish the requisite details as may be called for.

7.

In the result, the appeal of the assessee is allowed for statistical purposes.

Order pronounced in the open court on 28/04/2026

Sd/- Sd/-

(NARENDER KUMAR CHOUDHRY) (JAGADISH) Judicial Member Accountant Member

Mumbai, Dated: 28/04/2026 Ashwani Rao Sr. Private Secretary

Copy of the order forwarded to: 1. Appellant 2. Respondent 3. The CIT 4. The CIT (Appeals) 5. The DR, I.T.A.T.

By order

(Assistant Registrar) ITAT, Mumbai

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