LALBAUG SARVAJANIK UTSAV MANDAL,MUMBAI vs. CIT (EXEMPTIONS), MUMBAI, MUMBAI

The brief facts of the case are that the assessee, Lalbaug Sarvajanik Utsav Mandal, applied for registration under section 12AB of the Income-tax Act, 1961. The learned CIT(Exemptions), vide order dated 28.03.2026, granted registration under section 12AB(1)(b) for A.Ys. 2027-28 to 2036-37. However, while granting registration, Learned. CIT(Exemptions) inserted a condition stating that though the registration was being granted in view of the judgment of the Hon'ble Bombay High Court in Chamber of Tax Consultants v. CIT (Exemptions) [2026] 184 taxmann.com 374 (Bom.), the registration and consequential tax benefits from 01.04.2026 onwards would remain subject to the outcome of the proposed proceedings before the Hon'ble Supreme Court.

The assessee is in appeal before us against the order passed by the learned CIT(Exemptions) to the limited extent of the aforesaid condition.

The learned counsel for the assessee submitted that once registration under section 12AB of the Act had been granted by following the binding judgment of the Hon'ble jurisdictional High Court, the learned CIT(Exemptions) could not make such registration conditional upon the outcome of a proposed challenge before the Hon'ble Supreme Court. He therefore submitted that condition imposed by the Ld. CIT(A) may be deleted.

We have heard the rival submissions and perused the material available on record.

We find that the issue is covered by the judgment of the Hon'ble Bombay High Court in Chamber of Tax Consultants v. CIT (Exemptions) [2026] 184 taxmann.com 374 (Bom.). The Hon'ble High Court has held that a public charitable trust is irrevocable by operation of law unless the trust instrument itself provides for revocation and that registration cannot be denied merely because the trust deed does not contain an express irrevocability clause.

In the present case, the learned CIT(Exemptions) has accepted the above judgment and has already granted registration to the assessee under section 12AB of the Act. In our view, once Ld. CIT(A) has granted registration on the basis of the judgment of the jurisdictional High Court, the learned CIT(Exemptions) could not make the benefit of such registration dependent upon the outcome of a proposed SLP before the Hon'ble Supreme Court. Unless the judgment of the jurisdictional High Court is stayed, modified or reversed, it continues to bind the authorities within its jurisdiction.

We also find that an identical issue has been considered by the Coordinate Bench in KeshavlalVajechand Kapadia Charity Trust v. CIT (Exemptions) [2026] 187 taxmann.com 1010 (Mumbai-Trib.), wherein the Tribunal held that once registration is granted following the binding judgment of the jurisdictional High Court, the same cannot be made subject to a possible future challenge before the Hon'ble Supreme Court. Similar view was taken in Bai Manekbai A. Dubash Hareshwar Pandit Trust v. CIT (Exemptions) [2026] 188 taxmann.com 541 (Mumbai-Trib.), wherein an identical conditional rider was directed to be deleted. The Mumbai ITAT held that where CIT (Exemption) granted trust registration under section 12AB and approval under section 80G in compliance with jurisdictional High Court's binding judgment, CIT was not justified in attaching a caveat making such registration and benefits subject to outcome of a proposed Supreme Court challenge, hence such caveats were to be deleted.

Considering the above decisions, we find merit in the grievance of the assessee. The learned CIT(Exemptions) has already granted registration under section 12AB and the only dispute before us is with regard to condition imposed by CIT(Exemptions). We therefore direct the learned CIT(Exemptions) to delete the said conditional rider. The registration granted to the assessee under section 12AB of the Act shall operate in accordance with law without the aforesaid qualification. If the legal position is subsequently altered by the Hon'ble Supreme Court, the consequences shall follow in accordance with law at that stage.

In the result, the appeal of the assessee is allowed.