P.D. MEMORIAL TRUST,DELHI vs. CIT (EXEMPTION), DELHI, DELHI

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ITA 5889/DEL/2026Status: DisposedITAT Delhi23 June 2026AY 2026-273 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 assessee's application for registration under Section 12A. The Tribunal relied on the Bombay High Court's judgment in The Chamber of Tax Consultants Vs. CIT(Exemption) & Ors. The reasoning was that a public charitable trust is deemed irrevocable by law unless expressly stated otherwise. The Tribunal noted that the CIT(Exemptions) had not examined other crucial aspects such as the genuineness of the trust's activities, its charitable objects, and the commencement of its activities. Therefore, the order of the CIT(Exemptions) was set aside. The matter was restored to the CIT(Exemptions) to decide de novo, with a direction not to deny registration solely on the issue of irrevocability, but to examine other aspects after providing the assessee with a sufficient opportunity of being heard. No other issue was expressly left undecided.

What were the facts?

The assessee, M/s P.D. Memorial Trust, filed an appeal against the order of the Commissioner of Income Tax (Exemptions), Delhi, dated March 18, 2026. The CIT(Exemptions) rejected the assessee's application in Form 10AB for registration under Section 12A of the Income-tax Act, 1961. The rejection was based on the absence of a provision in the trust deed specifying whether the trust was revocable or irrevocable, and how assets would be transferred upon dissolution. The assessment year in question is 2026-27. The matter was heard on June 22, 2026.

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's decision 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 or renewal under Section 12AB, and 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.

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 S. Krishna, Advocate
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 18 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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