KEYUR FOUNDATION,NAVI MUMBAI vs. COMMISSIONER OF INCOME TAX (EXEMPTION), MUMBAI

INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI BENCH: E BEFORE HON’BLE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND HON’BLE SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER ITA Nos. 3105 and 3106/MUM/2026 िनधा�रण वष�/Assmt. Year: 2026-2027) Commissioner Of Income Tax (Exemption) Keyur Foundation Room No.601, 6h Floor, Office No.27, 1st Floor, Cumballa Hill Mtnl Welfare Chs, Opp. State Telephone Exchange Board Building, Near Everest Building, Pedder Road, Dr Vs. Cycle, Sector 17, Vashi, Navi Gopalrao Deshmukh Marg, Mumbai, Navi Mumbai- Mumbai 400705, Maharashtra Mumbai-400026, Maharashtra (अपीलाथ� Appellant) (��थ� Respondent) Permanent Account Number of AADTK3612R Assessee: िनधा�रती �ारा/Assessee represented Shri Jayendra G. Malavia, by: CA राज� व �ारा/Revenue represented by: Shri Hemanshu Joshi, Sr. DR

सुनवाई की तारीख / Date of conclusion of hearing: 10-Jun-2026 घोषणा की तारीख / Date of pronouncement: 19.06.2026 आदेश / ORDER PER GIRISH AGRAWAL, ACCOUNTANT MEMBER: These appeals filed by the assessee are arising out of the orders of ld. Commissioner of Income-tax (Exemptions), Mumbai [CIT(E)] vide order nos. ITBA/EXM/F/EXM45/2025-26/1086153317(1) and ITBA/EXM/F/EXM45/2025-26/1086153312(1) both, dated 18/02/2026 u/s 80G and 12AB(1)(b)(ii) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’).

ITA No. 3105/MUM/2026 1) The Learned Commissioner of Income Tax (The CIT(E)) erred in rejecting the application for Approval U/s 80G of the Act in view of the provisions of Section 80-G(5)(i) of the Act which stipulates the condition that the provision of section 80G is only available for institution OR fund for which Section 11 , 12 OR clause 23AA OR Clause 23C of Section 10 of the Act applies and due to the rejection of granting registration U/s 12A of the Act vide his order dated 18.02.2026, on the Ground of Non - inclusion of irrevocability OR dissolution clause in Trust Deed/ MOA and specified violation as per explanation (g) to the Section 12AB (4) of the Income Tax Act ,1961, the Approval U/s 80G is denied. 2) The learned CIT( E) erred in rejecting the application for Approval U/s 80G without giving adequate opportunity of being heard OR submit required explanation and without giving any Show Cause OR specific opportunity as required by law before rejection, violating the principles of natural justice and hence, it is bad in law and lacs legal infirmity.

ITA No. 3106/MUM/2026 1) The Learned Commissioner of Income Tax (The CIT(E)) erred in rejecting the application for granting registration U/s 12A of the Act on the Ground of Non - inclusion of irrevocability or dissolution clause in Trust Deed/ MOA and specified violation as per explanation (g) to the Section 12AB (4) of the Income Tax Act,1961. 2) The learned CIT(E) erred in rejecting the application for Registration without giving adequate opportunity of being heard or submit required explanation and without giving any Show Cause or specific opportunity as required by law before rejection, violating the principles of natural justice and hence, it is bad in law and lacs legal infirmity. The learned CIT(E) erred in rejecting the application for registration stating specified violation as per explanation (g) to the Section 12AB (4) of the Income Tax Act ,1961in mentioning YES in the application in Form 10AB for the question Whether the trust deed contains clause that the trust is irrevocable particularly without there been any reference in Income tax Act/ Rules for application of registration u/s 12A of Income tax Act, 1961 in respect of the same and hence making it is bad in law and lacks legal infirmity. 3. The issue raised is in respect of absence of irrevocability clause and dissolution clause in the trust deed for which the registration has been denied. There are two appeals. Appeal vide ITA no.3106/Mum/2026 is in respect of rejection of renewal of registration u/s 12AB sought by the assessee by filing an application in Form 10AB u/s 12A of the Act. The other appeal in ITA no.3105/Mum/2026 is in respect of seeking approval u/s 80G for which also, assessee had filed its Form 10AB.

4.1. Ld. Counsel for the assessee strongly relied on the decision of Hon’ble Jurisdictional High Court of Bombay in the case of CIT (E) vs. Tara Educational and Charitable Trust in Income Tax Appeal No.247 of 2015, judgment dated 31.07.2017 wherein Hon’ble Court had held absence of dissolution clause in the Trust Deed is not a valid ground for rejecting registration u/s 12AA since, there is no such requirement under the said section of the Act and even otherwise, provisions of section 55 of the MPTA takes care of such a requirement. He pointed out that substantive conditions for registration u/s 12AB are pari materia to the requirements in section 12AA and, therefore, squarely covers the case of the assessee. Conditions for grant of registration have note materially changed u/s 12AB of the Act.

4.2. He also referred to the decision of Co-ordinate Bench in the case of Radisson India Charitable Foundation vs. ITO (Exemption) [2025] 171 taxmann.com 845 (Del), wherein on a similar issue, it was held that absence of dissolution clause and not mentioning of fate of net asset in Trust Deed cannot be a ground to deny registration u/s 12AB. In this decision, reference was also made to provisions of section 115TD which was inserted by Finance Act, 2016 with effect from 01.06.2016, according to which relevance of having dissolution clause and the apprehension on the transfer of net asset to any other entity has been taken care of.

6.1. We perused the aforesaid and find that the issue before us is identical to what has been contested in the judgment by the Hon’ble Court. All the aspects as contended by the ld. Counsel before us have been elaborately considered and dealt with by the Hon’ble Court including its own judgment in the case of Tara Educational and Charitable Trust (supra.) as well as provisions of the Act and of the MPTA. Hon’ble Court, after detailed discussion analyzed and summarized its judgment in para 45-46 to hold that a public charitable trust is deemed irrevocable by operation of law unless the instrument of trust expressly provides a power of revocation. According to the Hon’ble Court, action of ld. CIT(E) is contrary to the plain language of the statute, binding judicial precedent of this very Court and is manifestly arbitrary. In para 46, by allowing the writ petition, it passed the order giving certain directions whereby Revenue is refrained from rejecting the applications for registration/renewal u/s 12AB on the ground of absence of an explicit irrevocability/dissolution clause in the Trust Deed. It also directed for the consequential order denying registration u/s 80G which is to be set aside and the registration be granted u/s 80G as it is consequential to granting of registration u/s 12AB. In sub-para (vi), Hon’ble Court made specific mention that all such orders where renewal of registration u/s 12AB has been rejected on the grounds discussed in the said judgment are quashed and set aside.

6.2. Relevant para 45 and 46 of the judgment by the Hon'ble Court (supra) are reproduced for ready reference: “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. (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.”

Order is pronounced in the open court on 19 June, 2026

Sd/- Sd/- (Amit Shukla) (Girish Agrawal) Judicial Member Accountant Member Dated: 19 June, 2026 MP, Sr.P.S. Copy to: 1 The Appellant 2 The Respondent 3 DR, ITAT, Mumbai 4 Guard File 5 CIT BY ORDER,

(Dy./Asstt.Registrar) ITAT, Mumbai