MADHUMEH UPCHAR SANSTHA,DELHI vs. CIT (E) , DELHI

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ITA 5853/DEL/2026Status: DisposedITAT Delhi23 June 20263 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the absence of an explicit irrevocability clause in the trust deed cannot be the sole ground for rejecting the application for registration under Section 12A. Citing the Bombay High Court's decision in The Chamber of Tax Consultants Vs. CIT(Exemption) & Ors., the Tribunal noted that a public charitable trust is considered irrevocable by operation of law unless expressly stated otherwise. The CIT(Exemptions) had not examined other crucial aspects such as the genuineness of the activities, the charitable objects, and the commencement of activities. Therefore, the Tribunal set aside the order of the CIT(Exemptions) with a direction that registration should not be denied on the issue of the irrevocability clause. However, the CIT(Exemptions) is permitted to examine other aspects like the genuineness of activities, charitable objects, and commencement of activities. The matter was restored to the file of the CIT(Exemptions) for de-novo decision after providing the assessee with an adequate opportunity of being heard.

What were the facts?

The assessee, M/s Madhumeh Upchar Sanstha, filed an appeal before the Income Tax Appellate Tribunal (ITAT), Delhi Bench against an order dated March 10, 2026, passed by the Commissioner of Income Tax (Exemptions), Delhi. The CIT(Exemptions) had rejected the assessee's application in Form 10AB for registration under Section 12A of the Income-tax Act, 1961. The rejection was primarily based on the absence of a specific provision in the trust deed regarding the revocability or irrevocability of the trust and the procedure for transferring trust assets upon dissolution. The assessment year is not specified.

What were the issues?

1. Whether the absence of an explicit irrevocability clause in the trust deed is a valid ground for rejecting an application for registration under Section 12A of the Income-tax Act, 1961, particularly when the trust is a public charitable trust? (Question of law) Assessee's Contention: The assessee argued that a public charitable trust is deemed irrevocable by operation of law unless the trust deed expressly states otherwise. They relied on the Bombay High Court judgment in The Chamber of Tax Consultants Vs. CIT(Exemption) & Ors., which held that the absence of an explicit irrevocability clause cannot be a ground for rejection of registration or renewal under Section 12AB, and that answering 'Yes' in Form 10AB in such circumstances does not constitute furnishing false information. Revenue's Contention: The learned CIT-DR could not controvert the facts presented by the assessee and the legal position cited.

Which sections of the Income-tax Act were involved?

Section 12A,Section 12AB

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH-E : NEW DELHI

Before: SHRI MAHAVIR SINGH & SHRI MANISH AGARWAL

For Appellant: Shri Ved Jain, Advocate, Ms. Kanishka Garg, CA
For Respondent: Shri Raghunath, CIT-DR
Hearing: 22.06.2026Pronounced: 22.06.2026

Per Bench:

This appeal by the assessee is directed against the order of learned CIT(Exemptions), Delhi dated 10 March, 2026 whereby the application of the assessee in Form 10AB for registration under Section 12A of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’)

was rejected.

2.

At the outset, the learned Counsel for the assessee stated that the assessee’s application in Form No.10AB seeking registration under Section 12A was rejected by the learned CIT(Exemption) for the reason that in the trust deed, there is no provision that the trust is revocable or irrevocable and how the assets of the trust are to be transferred in case of dissolution of the trust. The learned Counsel stated that Hon'ble Bombay High Court in the case of The Chamber of Tax Consultants Vs. CIT(Exemption) & Ors. in Writ Petition (L) No.7587 of 2026, judgement dated 9'" March, 2026, has held that a public charitable trust is deemed irrevocable by operation of law unless the trust deed expressly provides otherwise, and that absence of an explicit irrevocability clause cannot be ground for rejection of registration or renewal under Section 12AB. It was further directed by the Hon’ble High Court that applications for registration under Section 12AB shall not be rejected solely on the ground of absence of an irrevocability clause and that answering “Yes” in Form 10AB in such circumstances cannot be treated as furnishing false or incorrect information.

3.

When these facts were confronted to the learned CIT-DR, he could not controvert the above fact situation.

4.

After going through the arguments of both the sides as well as the case law of Hon'ble Bombay High Court cited by the learned Counsel for the assessee in the case of The Chamber of Tax Consultants (supra) and also the order of learned CIT(Exemption), we noted that apart from irrevocability clause, learned CIT(Exemption) has not examined and has not carried out necessary verification in support of the genuineness of the activities, charitable objects and commencement of its activities. Hence, we set aside the order of learned CIT(Exemption) with a direction that he will not deny registration on the issue of irrevocability clause but, he can examine other aspects like genuineness of the activities, charitable objects and commencement of the activities, etc. In terms of the above, the order of learned CIT(Exemption) is set aside and the matter is restored back to the file of learned CIT(Exemption) for deciding the same de-novo after providing sufficient opportunity of being heard to the assessee.

5.

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

Decision pronounced in the open Court on conclusion of hearing on 22™ June, 2026. (MANISH AGARWAL) (MAHAVIR SINGH) ACCOUNTANT MEMBER VICE PRESIDENT

Date : 23.06.2026 VK.

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