Sayaji U BA Khin Memorial Trust Vs CIT (ITAT Mumbai Bench)
Registration Granted, Benefits Suspended Till Supreme Court Decides? CIT(E) Cannot Create a “Wait & Watch” Category Under Sections 12AB & 80G – ITAT Mumbai
Summary: The assessee, a charitable trust, applied for registration u/s 12AB and approval u/s 80G. After calling for details and examining the trust’s objects and activities, the CIT(E) was satisfied about its eligibility and granted both registration and approval.
However, the CIT(E) inserted an unusual condition in the orders.
The trust deed did not contain an express clause declaring that the transfer of the trust property was irrevocable for all times. The CIT(E) observed that section 332(2)(b) of the Income Tax Act, 2025, effective from 01.04.2026, contemplated that properties must be held for the benefit of the general public under an irrevocable trust.
At the same time, the Bombay High Court, in The Chamber of Tax Consultants & Others v. CIT(E), had held that a public charitable trust is deemed irrevocable by operation of law unless its instrument expressly provides a power of revocation. The High Court had directed the Department not to reject applications for registration or renewal u/s 12AB merely because the trust deed lacked an express irrevocability clause.
The CIT(E) stated that registration and approval were being granted in respectful compliance with the binding directions of the Bombay High Court. However, he also recorded that the Revenue proposed to file an SLP before the Supreme Court against that judgment.
The CIT(E) therefore added a condition informing the trust, donors and other stakeholders that the applicability and consequential tax benefits of the registration and approval from 01.04.2026 would remain subject to the outcome of the proposed proceedings before the Supreme Court.
An identical condition was imposed in the approval granted u/s 80G.
The trust did not challenge the grant of registration or approval; it challenged only this conditional clause. It argued that the CIT(E) had no jurisdiction to grant registration while simultaneously keeping its legal consequences contingent upon a possible future judgment.
The assessee relied upon the decisions in Chandraprabhu Digamber Jain Mandir v. CIT(E) and ILLA Rajesh Foundation v. CIT(E), where identical conditions had been considered. :contentReference[oaicite:0]{index=0}
The Tribunal observed that the controversy was squarely covered by those decisions. In Chandraprabhu Digamber Jain Mandir, the Coordinate Bench had examined whether, after granting registration u/s 12AB(1)(b), the CIT(E) could declare that the registration’s tax consequences would depend upon the outcome of an SLP proposed by the Revenue.
The Coordinate Bench noted that the CIT(E) had not rejected the application. On the contrary, he had examined the material and affirmatively granted registration. Therefore, the statutory satisfaction regarding the trust’s eligibility had already been recorded in its favour.
Relying upon Chamber of Indian Charitable Trusts v. PCIT, it was held that the CIT(E), being a quasi-judicial authority, could exercise only those powers expressly conferred upon him by the statute. No implied authority could be assumed to impose conditions outside the scheme of section 12AB.
Reference was also made to the Supreme Court judgment in Industrial Infrastructure Development Corporation v. CIT [403 ITR 1 (SC)]. The Supreme Court held that a quasi-judicial order granting registration could be withdrawn or cancelled only where the statute expressly conferred such power. Administrative convenience or perceived necessity could not create an unstated jurisdiction.
The Coordinate Bench further relied upon Bai Navajbai Tata Zoroastrian Girls School v. CIT(E), where it was observed that guidance given by the Commissioner regarding a trust’s future conduct, however well-intentioned, could not be converted into a legally binding condition unless the statute contemplated such a consequence.
The Tribunal explained that section 12AB permits the Commissioner to grant registration or reject the application in accordance with law. It does not contemplate a third or intermediate category under which registration is formally granted but its efficacy is kept suspended or made contingent upon a future judicial event.
Once registration is granted, the consequences prescribed by the Act must follow. If circumstances subsequently arise justifying cancellation or withdrawal, the Department may act only through the statutory provisions governing such action and after following the prescribed procedure.
The possibility that the Supreme Court might take a different view in future could not authorise the CIT(E) to dilute an operative and binding High Court judgment. Until reversed or modified, the jurisdictional High Court’s decision had to be implemented fully and not conditionally.
Following the Coordinate Bench decisions, the ITAT directed the CIT(E) to delete the impugned conditions contained in paragraph 15 of the section 12AB order and paragraph 5 of the section 80G order.
The registration and approval would therefore operate unconditionally in accordance with law, without their benefits being made subject to the outcome of future Supreme Court proceedings.
Both appeals of the trust were accordingly allowed.
Author’s Comment
This decision draws an important line between legitimate statutory conditions and judicial hedging. The CIT(E) may verify eligibility, grant registration, reject an application for recorded reasons or later invoke statutory cancellation provisions. But he cannot grant registration with one hand and keep its consequences uncertain with the other.
A proposed SLP does not suspend a binding High Court judgment. Even the filing of an SLP, without a stay, does not ordinarily erase the judgment’s operative force. The Department’s intention to challenge the decision therefore could not justify a conditional registration.
The condition was also prejudicial beyond the trust itself. By warning donors that section 80G benefits remained uncertain, it could discourage donations despite a subsisting approval.
In short, section 12AB recognises registration or rejection—not “registration subject to what the Supreme Court may someday say.” A quasi-judicial authority must apply the law as it stands today, not administer the Act in anticipation of tomorrow’s possible judgment.
Cases Discussed
- Chandraprabhu Digamber Jain Madir Vs. CIT (Exemption), ITA No. 4394/Mum/2026.
- ILLA Rajesh Foundation Vs. CIT(Exemptions), ITA Nos. 4488 to 4491/Mum/2026, order dated 15.05.2026.
- Chamber of Indian Charitable Trusts v. PCIT, ITA Nos. 2168 & 2169/Mum/2021.
- Industrial Infrastructure Development Corporation v. CIT, (2018) 403 ITR 1 (SC).
- Bai Navajbai Tata Zoroastrian Girls School v. CIT(E), ITA No. 2177/Mum/2021.
- The Chamber of Tax Consultants & Ors Vs. The CIT(E), Writ Petition (L) No. 7587 of 2026.
FULL TEXT OF THE JUDGMENT/ORDER OF ITAT MUMBAI
Captioned appeals by the assessee arise out of two separate orders, both dated 28.03.2026, of ld. Commissioner of Income Tax (Exemptions) [in short, ‘ld. CIT(E)’], Mumbai, passed under Section 12AB and under Section 80G of the Income Tax Act, 1961 (in short, ‘the Act’).
2. The sole grievance of the assessee in these appeals relates to condition imposed by learned CIT(E) while granting registration under Section 12AB and approval under Section 80G of the Act.
3. We have heard the parties and perused the materials on record.
4. Briefly stated, the assessee, being a Charitable Trust, applied for registration under Section 12AB of the Act and approval under Section 80G of the Act. After receiving the application, learned CIT(E) called for various details. Upon verifying the details, learned CIT(E) being satisfied with the charitable objects of the assessee, granted registration under Section 12AB of the Act. However, while doing so, imposed the following condition in paragraph 15 of the order:
“15. In this case, the instrument of trust does not contain any explicit clause affirming that the transfer of property under trust is an irrevocable transfer for all times. Section 332(2)(b) of the Income Tax Act, 2025 inter-alia lays down that a public trust is eligible for registration, only if the trust properties are held for the benefit of the general public under an irrevocable trust. The date of commencement of Income Tax Act, 2025 is 1st April 2026 i.e the same date from which renewal of registration/approval has been sought by the applicant. Therefore, the eligibility conditions prescribed in the Statute for registration/approval are not satisfied in this case. However, Hon’ble Bombay High Court in the Writ Petition(L) No.7587 of 2026 in the case of The Chamber of Tax Consultants & Ors Vs The CIT(E) has held that a public charitable trust is deemed irrevocable by operation of law unless the instrument of trust expressly provides a power of revocation and directed the Department to refrain from rejecting applications for registration/renewal under section 12AB solely on the ground of the absence of an explicit irrevocability clause in the Trust Deed/instrument. Revenue is preferring to move a Special Leave Petition before the Hon’ble Supreme Court against the said order. In the background of these facts, this renewal of registration/approval is being granted in respectful compliance to the binding judicial directions of Hon’ble Bombay High Court. However, the applicant Trust, doner entities and other stakeholders are hereby informed, by way of abundant caution, that the applicability and consequential tax-benefits of this registration/approval w.e.f. 01.04.2026 onwards, remain subject to outcome of the decision of Hon’ble Supreme Court.”
Even, while granting approval under Section 80G of the Act, learned CIT(E) imposed identical condition.
5. Before us, learned counsel for the assessee has submitted that learned CIT(E) is wholly without jurisdiction in granting registration and approval with such a condition. In support of such contention, he relied upon the following decisions:
i. Chandraprabhu Digamber Jain Madir Vs. CIT (Exemption) ITA No. 4394/Mum/2026.
ii. ILLA Rajesh Foundation vs. CIT(Exemptions), Mumbai ITA No. 4488/Mum/2026 and others order dated 15.05.2026.
6. Learned DR relied upon the observations of learned CIT(E).
7. Having considered rival submissions and perused the materials on record, we find that the issue is squarely covered by the decisions cited by learned counsel for the assessee. While dealing with identical nature of dispute in case of Chandraprabhu Digamber Jain Madir Vs. CIT (Exemptions), the Coordinate Bench has held as under:
“8. We have carefully considered the rival submissions and perused the material available on record. The limited issue arising for our adjudication is whether the learned CIT(E), after granting registration under section 12AB(1)(b) of the Act to the assessee for Assessment Years 2027-28 to 2036-37, was justified in imposing a condition that the applicability and consequential tax benefits of such registration would remain subject to the outcome of the decision of the Hon’ble Supreme Court in the Special Leave Petition proposed to be filed by the Revenue.
9. At the outset, it is pertinent to note that the learned CIT(E) has not rejected the application filed by the assessee. On the contrary, after considering the application and material available on record, registration under section 12AB(1)(b) of the Act has been granted to the assessee. Therefore, the satisfaction contemplated under section 12AB regarding eligibility of the assessee stood recorded in favour of the assessee. The grievance of the assessee is confined to paragraph 15 of the annexure to Form No.10AD whereby, while granting registration, the learned CIT(E) observed that the applicability and consequential tax benefits of the registration would remain subject to the outcome of the decision of the Hon’ble Supreme Court. According to the assessee, such a condition is beyond the scope of section 12AB and beyond the jurisdiction vested in the learned CIT(E).
10. We find that an identical issue came up for consideration before the Coordinate Bench in the case of ILLA Rajesh Foundation v. CIT(E) in ITA Nos.4488 to 4491/Mum/2026. In that case also, while granting registration under section 12AB and approval under section 80G, the learned CIT(E) imposed a condition that the applicability and consequential tax benefits of such registration/approval would remain subject to the outcome of the decision of the Hon’ble Supreme Court. The Co-ordinate Bench examined the legality of such a condition and, while adjudicating the issue, relied upon the earlier decisions of the Coordinate Benches in Chamber of Indian Charitable Trusts v. PCIT [I.T.A. Nos. 2168 & 2169/Mum/2021] and Bai Navajbai Tata Zoroastrian Girls School v. CIT(E) [ITA No. 2177/Mum/2021].In paragraph 9 of the decision in ILLA Rajesh Foundation, the Co-ordinate Bench reproduced and relied upon the observations of the Coordinate Bench in Chamber of Indian Charitable Trusts wherein the following observations were made:
“Shri Pardiwala further pointed out that, the Commissioner of Incometax is a quasi-judicial authority and can only exercise those powers which are expressly conferred upon him under the Act. Absent such explicit conferment, the Commissioner cannot be assumed to have any implied powers.”
11. The Co-ordinate Bench further reproduced the observations of the Hon’ble Supreme Court in Industrial Infrastructure Development Corporation v. CIT,(2018) (403 ITR 1), as under:
“In our considered opinion, the CIT had no express power of cancellation of the registration certificate once granted by him to the assessee under Section 12A till 01.10.2004. It is for the reasons that, first, there was no express provision in the Act vesting the CIT with the power to cancel the registration certificate granted under Section 12A of the Act. Second, the order passed under Section 12A by the CIT is a quasi-judicial order and being quasi-judicial in nature, it could be withdrawn/recalled by the CIT only when there was express power vested in him under the Act to do so.”
12. The Coordinate Bench in Chamber of Indian Charitable Trusts thereafter held that the Commissioner can exercise only those powers which are specifically conferred by the statute and cannot impose conditions which are not contemplated by the statutory provisions governing registration under section 12AB.
13. The Co-ordinate Bench inILLA Rajesh Foundation also relied upon the decision in Bai Navajbai Tata Zoroastrian Girls School v. CIT(E)(supra). In the said decision, after considering conditions imposed while granting registration under section 12AB, the Coordinate Bench held as under:
“Learned Commissioner’s guidance about the conduct of the assessee, which is what in substance the conditions attached to the registration signify, cannot be treated, no matter how well intended it is, as a condition attached to the registration. These observations cannot be construed as legally binding in the sense that non-compliance with such guidance will not have any consequence unless and beyond what is specifically envisaged by the statute.”
14. The Co-ordinate Bench ultimately held that:
“To this extent, and in these terms, the legal effect of these conditions, as visualized in the conditional grant of registration, stands vacated.
15. After considering the aforesaid judicial precedents, the Coordinate Bench in ILLA Rajesh Foundation held that once registration under section 12AB is granted, the learned CIT(E) cannot keep the efficacy and consequences of such registration in a suspended or contingent state by linking them to a possible future outcome of litigation before a higher judicial forum. The Bench held that such a condition is dehors the scheme of section 12AB and beyond the powers conferred upon the learned CIT(E).
16. We find ourselves in complete agreement with the aforesaid view taken by the Coordinate Bench. Section 12AB empowers the Commissioner either to grant registration or to reject the application in accordance with law. The statute does not contemplate grant of a conditional registration dependent upon a future event. Once registration is granted, the consequences flowing therefrom must follow in accordance with the provisions of the Act. Similarly, if at any future point of time circumstances arise warranting cancellation or withdrawal of registration, the same can be done only in accordance with the statutory provisions governing such action. The statute does not envisage an intermediate category whereby registration is granted but its efficacy is kept contingent upon the outcome of future litigation.
17. In the present case, the learned CIT(E) has already granted registration to the assessee under section 12AB(1)(b) of the Act. Having done so, the learned CIT(E) could not have further provided that the applicability and consequential tax benefits of such registration would remain subject to the outcome of a future decision of the Hon’ble Supreme Court. Such a condition is not contemplated by section 12AB and travels beyond the jurisdiction vested in the learned CIT(E).
18. Respectfully following the decision of the Coordinate Bench in ILLA Rajesh Foundation, read with the decisions in Chamber of Indian Charitable Trusts and Bai Navajbai Tata Zoroastrian Girls School, we hold that the impugned condition contained in paragraph 15 of the annexure to Form No.10AD cannot be sustained.
19. We accordingly direct deletion of the condition whereby the applicability and consequential tax benefits of the registration granted to the assessee under section 12AB(1)(b) of the Act were made subject to the outcome of the decision of the Hon’ble Supreme Court. The registration granted by the learned CIT(E) shall operate in accordance with law without the aforesaid condition.”
8. Respectfully following the observations of the Coordinate Bench reproduced above, we direct learned CIT(E) to delete the conditions enshrined in paragraph 15 and paragraph 5 of the orders passed by him, respectively, under Sections 12AB and 80G of the Act.
9. In the result, the appeals are allowed as indicated above.
Order pronounced in the open court on 11/09/2026.
