Chamber of Tax Consultants Vs CIT (Exemptions) (Bombay High Court)
No Irrevocability Clause Required for Sec 12AB Registration – Bombay HC Quashes Rejection of Trust Registration
Bombay HC dealt with rejection of 12AB renewal applications of multiple charitable trusts on grounds that:
- Trust deed did not contain irrevocability clause / dissolution clause
- Assessee marked “Yes” in Form 10AB- treated as false information / specified violation
HC held:
1. No such condition in law:
- Sec 12AB requires satisfaction on objects, genuineness & compliance
- No requirement of irrevocability clause in statute
- Department cannot read new condition into law
2. Legal position on revocability clarified:
- As per Sec 63 – trust is revocable only if explicit power to re-transfer / reassume control exists
- Silence ≠ revocable ; rather implies irrevocable
3. MPT Act overrides concern:
- Even if trust revoked – assets cannot revert to settlor
- Must go to Charity Commissioner / similar objects (cy-pres)
- Hence, public trusts inherently irrevocable
4. Earlier registrations & consistency:
- Same deeds earlier accepted u/s 12A / 12AB
- No change in law – new interpretation impermissible
5. Form 10AB issue:
- System forces “Yes” – cannot penalise assessee
- Treating it as false info is arbitrary
6. Safeguards already exist:
- Sec 13, Sec 115TD & registration conditions prevent misuse
- Revocability concerns to be tested at exemption stage, not registration
Final Outcome:
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