DHIRAJLAL TALAKCHAND SHAH CHARITABLE TRUST,MUMBAI vs. COMMISSIONER OF INCOME TAX (EXEMPTION), MUMBAI

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ITA 3077/MUM/2026Status: DisposedITAT Mumbai11 June 2026AY 2026-276 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal followed the Bombay High Court's decision in Chamber of Tax Consultants, holding that the absence of an explicit irrevocability clause is not a ground for rejection. The CIT(E)'s orders were set aside.

What were the facts?

The assessee trust applied for renewal of registration under Section 12AB and 80G(5). The CIT(E) rejected the applications because the trust deed lacked irrevocability and dissolution clauses, deeming it a violation of Section 12AB(4).

What were the issues?

Whether rejection of registration/renewal under Section 12AB solely for the absence of an irrevocability or dissolution clause in the trust deed is valid. Whether consequential rejection of 80G registration is justified on the same grounds.

Which sections of the Income-tax Act were involved?

Section 12AB,Section 80G(5),Section 12A(1)(ac)(ii),Section 12AB(4)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “D” BENCH: MUMBAI

Before: SHRI VIKRAM SINGH YADAV & SHRI SIDDHARTHA NAUTIYAL & Dhirajlal

Hearing: 10.06.2026Pronounced: 11.06.2026

IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH: MUMBAI BEFORE SHRI VIKRAM SINGH YADAV, ACCOUNTANT MEMBER AND SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER ITA No. 3076/Mum/2026 (Assessment Year: 2026-27) and ITA No. 3077/Mum/2026 (Assessment Year: 2026-27)

Dhirajlal Talakchand Shah Commissioner of Income Tax Charitable Trust (Exemption) 21, Shakti Niwas, Ramchandra vs. Room No. 601, 6thFloor, Cumballa Lane Extn., Malad (West), Hill, MTNL Telephone Building, Mumbai, Maharashtra, 400064 Pedder Road, Dr. GopalraoDeshmukh Marg, Cumballa Hill, Mumbai, PAN: AAATQ0024G Maharashtra, 400026 (Appellant) (Respondent) For Assessee : Shri Prashant Ghumare, Adv. For Revenue : Shri Sandeep Lakra, CIT DR Date of Hearing : 10.06.2026 Date of Pronouncement : 11.06.2026 O R D E R PER VIKRAM SINGH YADAV, A.M : These are two appeals filed by the Assessee against the respective orders of the Learned Commissioner of Income Tax (Exemption), Mumbai [‘Ld.CIT(E)’] of even date i.e.,18.02.2026, wherein the Assessee’s applications seeking renewal of registration u/s. 12AB and 80G(5) have been rejected.

ITA Nos. 3076 & 3077/Mum/2026; A.Y. 2027-28 Dhirajlal Talakchand Shah Charitable Trust 2. During the course of hearing, the ld. AR submitted that the assessee trust has moved an application in Form 10AB on 29.09.2025 u/s. 12A(1)(ac)(ii) seeking renewal of registration u/s. 12AB of the Act. Subsequently, notices were issued calling for necessary information and documentation which were duly furnished by the assessee. Thereafter, the ld. CIT(E) on perusal of the trust deed, observed that there is no clause of irrevocability or dissolution in the trust deed and has rejected the assessee’s application seeking renewal of regular registration on the ground of non-inclusion of irrevocability/dissolution clause in the trust deed/MOA and specific violation as per Explanation (g) to Section 12AB(4) of the Act.

3.

It was further submitted that consequent to rejection of application u/s. 12AB of the Act, the assessee’s application u/s. 80G(5) of the Act was also rejected.

4.

It was submitted that the matter is now squarely covered by the decision of the Hon'ble Bombay High Court in the case of Chamber of Tax Consultants Vs. Commissioner of Income-tax (Exemptions) [2026] 184 taxmann.com 374, dated 09/03/2026, wherein the Bombay High Court has considered the matter at length and has directed the Revenue that the application for renewal should not be rejected on the ground of lack of the dissolution clause in the trust deed. It was accordingly, submitted that the matter may be set aside to the file of ld. CIT(E) to decide the same afresh after taking into consideration the decision of the Hon'ble Bombay High Court in case of Chamber of Tax Consultants (supra).

5.

The ld. DR has been heard, who had relied on the orders passed by the ld. CIT(E). At the same time, it was fairly submitted that considering

ITA Nos. 3076 & 3077/Mum/2026; A.Y. 2027-28 Dhirajlal Talakchand Shah Charitable Trust the decision of the Hon'ble Bombay High Court in case of Chamber of Tax Consultants (supra)., the matter need to be remitted to the file of ld. CIT(E).

6.

We have heard both the parties and perused the material on record. We find that ld. CIT(E) had rejected the application filed by the assessee for regularization of provisional approval for the reason that the Trust deed did not contained any clause regarding irrevocability or dissolution/winding up of the Assessee Trust. We find that in identical set of facts, the issue had come up for consideration before the Hon’ble Bombay High Court in the case of Chamber of Tax Consultants (supra) in a writ petition filed under Article 226 of the Constitution of India challenging the action of the ld. CIT(E) rejecting application for renewal u/s. 12AB of the Act. The issues requiring determination were recorded in Paragraph 4 of the said judgment which reads as under:

“4. The core issue arising for our determination revolves around a view taken by Respondent No. 1 (which the Petitioners allege is untenable) while processing renewal applications filed in Form 10AB under the registration regime effective from 1st April 2021 in terms of section 12AB of the Act. Respondent No. 1 has rejected the applications for renewal of registration of Petitioner Nos. 3 to 8, primarily, on two grounds: a. the trust deed or instrument constituting the concerned entities does not contain an explicit clause stating that the trust is "irrevocable" and/or providing for the manner of dissolution; b. the applicants, in their online Form 10AB, were compelled to answer "Yes" to the question in Row 6, viz., "Whether the trust deed contains clause that the trust is irrevocable?". Since, the trust deeds were silent on this aspect, Respondent No. 1 has treated this reply as furnishing "false or incorrect information," which constitutes a "specified violation" in terms of clause (9) of the Explanation below section 12AB(4) of the Act.”

7.

The Hon’ble Bombay High Court answered the above issue in favour of the Assessee and quashed the order passed by the ld. CIT(E) while allowing the writ petition giving following directions:

ITA Nos. 3076 & 3077/Mum/2026; A.Y. 2027-28 Dhirajlal Talakchand Shah Charitable Trust “45. In summary, we hold that a public charitable trust is deemed irrevocable by operation of law unless the instrument of trust expressly provides a power of revocation. The absence of an explicit irrevocability clause is not a ground for rejecting an application for registration or renewal under section 12AB of the Act. Even if the Deed provides for any revocability clause, due to operation of sections 22(3A) and 22(3B) of the MPT Act, such trusts which are registered under the MPT Act, would be irrevocable insofar as the Income-tax Act is concerned but we leave this issue open to be decided in an appropriate case. The action of Respondent No. 1 is therefore, contrary to the plain language of the statute, binding judicial precedents of this Court, and is manifestly arbitrary. Such action, as rightly pointed out by the Petitioners, have shaken the entire ecosystem of functioning of the charitable trusts. It cannot be forgotten that the trusts are contributing to nation building by doing charitable activities and that too voluntarily and, thus, must be treated with a fair and reasonable approach by the revenue. 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?". (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.

ITA Nos. 3076 & 3077/Mum/2026; A.Y. 2027-28 Dhirajlal Talakchand Shah Charitable Trust (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 1 April, 2026.”

8.

The above judgment of the Hon’ble Bombay High Court is applicable to the issue raised in the present appeal. Accordingly, respectfully following the above judgment of the Hon’ble Bombay High Court in the case of Chamber of Tax Consultants Vs. Commissioner of Income-tax, we set aside the impugned Order, dated 18/02/2026, passed by the ld. CIT(E) with the directions to decide the said application filed by the Assessee afresh in accordance with the aforesaid judgment of the Hon’ble Bombay High Court after providing reasonable opportunity to the assessee. All the rights and contentions of the Assessee are left open and the Assessee shall be at liberty to raise the same before the ld. CIT(E).

9.

In light of the above discussion, the appeal of the assessee in ITA No. 3077/Mum/2026 challenging the rejection of renewal application u/s 80G(5) is also set aside to the file of ld. CIT(E) to consider the same afresh in accordance with the aforesaid judgment of the Hon’ble Bombay High Court after providing reasonable opportunity to the assessee.

ITA Nos. 3076 & 3077/Mum/2026; A.Y. 2027-28 Dhirajlal Talakchand Shah Charitable Trust 10. In the result, both the appeals filed by the assessee are allowed for statistical purposes.

Order pronounced in the open court on 11.06.2026

Sd/- Sd/- SIDDHARTHA NAUTIYAL VIKRAM SINGH YADAV (JUDICIAL MEMBER) (ACCOUNTANT MEMBER)

Mumbai, Dated: 11.06.2026 Karishma J. Pawar, SR. PS

Copy to : 1) The Appellant 2) The Respondent 3) The CIT concerned 4) The D.R, ITAT, Mumbai 5) Guard file

By Order

Dy./Asst. Registrar I.T.A.T, Mumbai

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