No Trust Deed Cannot Bar Section 12AB Renewal: ITAT Mumbai

Church of Our Lady of Immaculate Conception Vs CIT (Exemption) (ITAT Mumbai)

No Trust Deed Because None Ever Existed: ITAT Directs 12AB Renewal for Three Mumbai Churches

Summary: All three churches had sought renewal of registration under section 12AB. The Commissioner of Income Tax (Exemptions), Mumbai, rejected their applications principally because they could not furnish a formal trust deed or Memorandum of Association.

The Document the Churches Could Not Produce

The churches explained that they had not been created under separate written trust deeds or Memoranda of Association. They therefore could not submit an instrument that, according to them, had never existed.

They relied instead on their status as religious and charitable institutions registered as public trusts under the Maharashtra Public Trusts Act, 1950. The material placed before the Commissioner (Exemptions) included documents available with the Charity Commissioner, such as applications, Schedule-I particulars and registration certificates, as applicable. The churches also stated that their administration and functioning were governed by Canon Law.

The Commissioner (Exemptions) was not satisfied. In his view, registration under the Maharashtra law established their registered status but did not adequately prove their creation or establishment for the purposes of Rule 17A(2). Without a trust instrument or MOA, he considered the document requirement unfulfilled and held that he could not arrive at the satisfaction required under section 12AB regarding their objects and activities. He rejected all three renewal applications.

The churches appealed, arguing that the rules themselves recognise institutions established without a formal instrument.

Two Routes Under Rule 17A(2)

The Tribunal examined the wording of Rule 17A(2). Clause (a) deals with an applicant created or established under an instrument and requires a self-certified copy of that instrument. Clause (b) separately deals with an applicant created or established otherwise than under an instrument and requires a self-certified copy of a document evidencing its creation or establishment. Clause (c) concerns a copy of registration with the relevant registrar, including the Registrar of Public Trusts where applicable.

For the Tribunal, the distinction between clauses (a) and (b) was decisive. If a trust deed or MOA were compulsory in every case, the provision expressly addressing institutions established otherwise than under an instrument would serve no purpose.

The Commissioner (Exemptions) had treated production of a formal instrument as an invariable requirement. The Tribunal held that this approach could not be reconciled with the rule. Where an applicant says that no written instrument exists, the authority must examine whether the other documents furnished sufficiently evidence its creation or establishment. The inquiry cannot end merely because the documents do not bear the title “trust deed” or “MOA”.

What the Registration Records Could Prove

The churches’ registration particulars and certificates under the Maharashtra Public Trusts Act were relevant evidence. The Tribunal held that they could not be discarded simply because the churches could not produce a conventional trust deed. They had also relied on other available material concerning their establishment and continued functioning.

At the same time, the Tribunal made an important qualification. Registration under the Maharashtra Public Trusts Act does not automatically confer section 12AB registration. The competent authority must still consider the statutory requirements concerning the institution’s objects, genuineness of activities and compliance with other relevant laws. It may seek documents, information and make the inquiries needed to reach that satisfaction.

In these appeals, however, the rejection orders rested solely on the absence of a trust deed or MOA. They recorded no independent adverse finding about the genuineness of the churches’ activities or the religious and charitable character of their objects. This was also not a case where an existing instrument had been withheld: the churches’ consistent explanation was that there was no separate written instrument to furnish.

The Tribunal’s Direction

The Tribunal set aside the three rejection orders. It held that renewal could not be denied solely because the churches failed to produce an instrument that, on their case, never existed.

It went on to direct the Commissioner (Exemptions) to grant renewal of registration under section 12AB to all three churches in accordance with law. All three appeals were allowed. The Tribunal did not separately decide the churches’ remaining arguments, including those based on their long history of registration and the administration of their affairs under Canon Law.

This was a direction to grant renewal, rather than an open remand asking the Commissioner (Exemptions) to reconsider the same documentary objection from the beginning. The direction remains expressed as one to grant renewal in accordance with law.

Author’s Comments

This decision is particularly useful for long-established religious and charitable institutions whose origin is evidenced by public trust records and historical documents, rather than a modern written deed. Rule 17A(2) makes provision for both kinds of institution. The applicable clause depends on how the institution was created, not on an assumption that every applicant must have the same form of founding document.

The ruling does not make a registration certificate an automatic substitute for all scrutiny under section 12AB. Its narrower and stronger point is that an authority must examine the available evidence under Rule 17A(2)(b) when an institution was established without a formal instrument. Here, there was no separate adverse finding on objects or activities, and the sole reason for rejection was legally unsustainable.

For the three churches, the practical outcome is clear: their rejection orders were set aside and renewal was directed. The absence of a trust deed that never existed could not, by itself, defeat their applications.

Cases Discussed

• Radhasoami Satsang Vs CIT (Supreme Court) — Cited by the assessees in their common grounds in support of the rule of consistency and their contention that the Department had historically recognised their status.

FULL TEXT OF THE ORDER OF ITAT MUMBAI

These three appeals filed by the respective assessees are directed against the separate orders passed by the Ld. Commissioner of Income Tax (Exemptions), Mumbai [“Ld. CIT(E)”] u/s 12AB(1)(b)(ii) of the Income-tax Act, 1961 (“the Act”), rejecting their respective applications seeking renewal of registration. Since the issues involved in all these appeals are identical and arise out of substantially similar facts, they were heard together and are being disposed of by way of this consolidated order for the sake of convenience and brevity.

The relevant particulars of the appeals are as under:

2. The grounds raised by the respective assessees are identical. For the sake of convenience, the grounds raised in ITA No. 5716/Mum/2026 are reproduced hereunder:

“On the facts and circumstances of the case and in law,

1. The learned CIT(E) erred in rejecting the Application for Registration under Section 12AB of the Act solely on the ground that the Appellant failed to furnish the instrument of Trust/MOA as it amounts to non-compliance and non-fulfillment of mandatory requirements prescribed under Section 12AB (1)(b) of the Act read with Rule 17A(2) of the Income Tax Rules, 1962.

2. The learned CIT(E) erred in observing that the application in Schedule I and subsequent registration Certificate issued by the Charity Commissioner do not constitute documents “evidencing the creation of the trust” as prescribed under Rule 17A(2)(b) of Income tax Rules, 1962 by completely overlooking the fact that the appellant is a religious and charitable trust duly registered with the Charity Commissioner under the Maharashtra Public Trusts Act, 1950 based on valid declaration of trust since the year 1969 and exists as a public charitable trust

3. The learned CIT(E) failed to consider and appreciate the Certificate of Registration granted by the Charity Commissioner under the Maharashtra Public Trusts Act, 1950 which is a valid document that establishes the existence of the Appellant Trust and is covered by the provisions of Rule 17(A)(2)(b) – any document evidencing the creation or establishment of the trust.

4. The learned CIT(E) erred in observing that the Canon Law does not have any direct application for management and administrations of charitable trusts.

5. The learned CIT(E) erred in relying upon the provisions of the Indian Trusts Act, 1882 as the same are clearly not applicable in the case of the Appellant Trust-as it is undisputedly a public charitable trust.

6. The learned CIT(E) erred in summarily rejecting the renewal application without considedring the historical context and past records evidences, audit reports and Return of Income filed over the past several decades that confirm the trust’s long-standing charitable existence.

7. The CIT (E) failed to appreciate that there has been no change in the objects of the Church, the nature of its activities, or the applicable law, the learned CIT(E) is bound by the “Rule of Consistency” as established by the Hon ble Supreme Court in Radhascami Satsang vs. CIT. The CIT (E) cannot arbitrarily change its stand to deny a status it has historically recognized and accepted.

8) The learned CIT(E) failed to appreciate that the Department has granted/renewed registration under Section 12A/12AA/12AB of the Act for several decades in the past based on the same set of documents furnished on earlier occasions.

9) The learned CTT(E) failed to appreciate that his power under section 12AB of the Act is limited to verifying the genuineness of the activities of the charitable nature of object which in the case of the Appellant has not been doubted and therefore the order passed by the CIT (E) on the alleged ground bused on format of the document, rather than the nature of the activities is contrary to the provisions of the Act.

10] The learned CIT(E) failed to appreciate that the rejection Order passed by him certainly affects the day-to-day management and functioning of the Appellant Trust though he may not have intended so.”

3. Brief facts common to these appeals are that the respective assessees are religious-cum-charitable institutions which filed applications in Form No. 10AB seeking renewal of their registration u/s 12AB of the Act. During the course of proceedings, the Ld. CIT(E) called upon the respective assessees to furnish the documents prescribed under Rule 17A(2) of the Income-tax Rules, 1962 (“the Rules”), including the instrument evidencing their creation or establishment.

3.1. The respective assessees explained before the Ld. CIT(E) that they had not been created or established under separate written trust deeds/Memoranda of Association and, therefore, no such instruments were available for being furnished. It was submitted that the respective institutions are religious and charitable institutions registered as public trusts under the Maharashtra Public Trusts Act, 1950 and that the documents available with them, including the applications made before the Charity Commissioner, Schedule-I/registration particulars and certificates of registration, as applicable, constituted documents evidencing their creation, establishment and continued legal existence. It was further submitted that their administration and functioning were governed by Canon Law.

4. The Ld. CIT(E), however, was not satisfied with the explanations furnished by the respective assessees. Referring to section 12AB(1)(b) of the Act read with Rule 17A(2) of the Rules, the Ld. CIT(E) was of the view that the documents furnished by the respective assessees merely evidenced their registration under the Maharashtra Public Trusts Act, 1950 and could not be regarded as documents evidencing their creation or establishment. According to the Ld. CIT(E), in the absence of the instrument of trust/MOA, the mandatory requirement contemplated under Rule 17A(2) remained unfulfilled and the requisite satisfaction regarding the objects of the respective institutions and genuineness of their activities could not be arrived at. Accordingly, the respective applications seeking renewal of registration u/s 12AB were rejected.

Aggrieved by the aforesaid orders, the respective assessees are in appeal before us.

5. The Ld. AR submitted that the Ld. CIT(E) erred in rejecting the applications solely on the ground that the respective assessees did not possess formal instruments of trust/MOA. She submitted that Rule 17A(2) itself recognises institutions which are created or established otherwise than under an instrument and, therefore, the absence of a formal written trust deed cannot constitute a valid ground for rejection of the applications. It was submitted that the respective assessees are long-standing religious and charitable institutions registered under the Maharashtra Public Trusts Act, 1950 and the available documents evidencing their establishment, registration and continued functioning were duly placed before the Ld. CIT(E). According to the Ld. AR, these documents were required to be examined in terms of Rule 17A(2)(b) instead of insisting upon an instrument which, according to the respective assessees, never existed.

5.1. The Ld. AR further submitted that the genuineness of the activities carried on by the respective assessees or the charitable/religious nature of their objects has not been doubted by the Ld. CIT(E). It was accordingly submitted that rejection of the applications merely on account of the form in which the documents evidencing their creation or establishment were available was contrary to the scheme of section 12AB read with Rule 17A.

5.2. The Ld. DR, on the other hand, relied upon the respective impugned orders and submitted that the Ld. CIT(E) was required to satisfy himself regarding the objects of the respective institutions and genuineness of their activities before granting renewal u/s 12AB. According to the Ld. DR, in the absence of proper documents evidencing their creation or establishment, no infirmity could be found in the action of the Ld. CIT(E).

We have perused the submissions advanced by both sides in light of the record placed before us.

6. The controversy before us lies in a narrow compass. The applications filed by the respective assessees seeking renewal of registration u/s 12AB have essentially been rejected for want of an instrument evidencing their creation or establishment, namely, a formal trust deed/Memorandum of Association. The Ld. CIT(E) proceeded on the premise that in the absence of such instrument, the requirement prescribed under Rule 17A(2) remained unfulfilled and the satisfaction contemplated u/s 12AB could not be arrived at.

6.1. For appreciating the controversy, it is relevant to refer to Rule 17A(2) of the Rules, the relevant portion whereof reads as under:

“(2) The application under sub-rule (1) shall be accompanied by the following documents, as required by Form 10A or 10AB, as the case may be, namely:-

(a) where the applicant is created, or established, under an instrument, self-certified copy of such instrument creating or establishing the applicant;

(b) where the applicant is created, or established, otherwise than under an instrument, self-certified copy of the document evidencing the creation or establishment of the applicant;

(c) self-certified copy of registration with Registrar of Companies or Registrar of Firms and Societies or Registrar of Public Trusts, as the case may be;”

6.2. A plain reading of the aforesaid Rule makes it clear that it specifically contemplates two distinct situations. Clause (a) applies where an applicant is created or established under an instrument, whereas clause (b) expressly deals with an applicant which is created or established otherwise than under an instrument. The statutory framework, therefore, itself recognises that every trust or institution seeking registration or renewal u/s 12AB need not necessarily have been created or established under a formal written instrument.

6.3. In our considered opinion, therefore, the finding of the Ld. CIT(E) that furnishing of an instrument of trust/MOA is invariably mandatory cannot be reconciled with the plain language of Rule 17A(2)(b). If production of a formal trust deed or Memorandum of Association were mandatory in every case, clause (b), which specifically contemplates an applicant created or established otherwise than under an instrument, would be rendered otiose. Such an interpretation cannot be accepted.

6.4. Where an applicant specifically states that it was not created or established under a formal written instrument, the enquiry cannot terminate merely because a conventional trust deed/MOA is unavailable. In such circumstances, what is required to be examined is whether the documents furnished by the applicant constitute sufficient evidence of its creation or establishment within the meaning of Rule 17A(2)(b). The requirement under the Rule is, therefore, not necessarily the production of a particular nomenclature of document, but production of material capable of evidencing the creation or establishment of the applicant where no formal instrument exists.

6.5. We also note that clause (c) of Rule 17A(2) independently contemplates furnishing of a self-certified copy of registration with the Registrar of Public Trusts, as the case may be. In the present appeals, the respective assessees are stated to be registered under the Maharashtra Public Trusts Act, 1950 and have relied upon the documents available with the Charity Commissioner, including their registration particulars/certificates. Such material constitutes relevant evidence and could not have been discarded merely because the respective assessees were unable to produce a conventional trust deed/MOA which, according to them, never existed.

6.6. We are conscious that registration under the Maharashtra Public Trusts Act, 1950, by itself, would not automatically entitle an applicant to registration or renewal under the Income-tax Act. The satisfaction contemplated u/s 12AB regarding the objects of the trust or institution, genuineness of its activities and compliance with such requirements of any other law as may be material for achieving its objects remains to be arrived at by the competent authority. The Ld. CIT(E) is also empowered to call for such documents or information and make such enquiries as are considered necessary for arriving at the statutory satisfaction.

6.7. However, in the present cases, the respective applications have been rejected solely on account of non-furnishing of the instrument of trust/MOA and the impugned orders do not record any independent adverse finding regarding the genuineness of the activities carried on by the respective assessees or the charitable/religious nature of their objects. The consistent case of the respective assessees is that no separate written trust deed/Memorandum of Association exists and that they are religious and charitable institutions registered as public trusts under the Maharashtra Public Trusts Act, 1950. Thus, it is not a case where an instrument admittedly exists but has been withheld or not furnished by the respective assessees.

6.8. When the statute and the Rules themselves recognise an institution created or established otherwise than under an instrument, renewal of registration cannot be denied merely because such institution is unable to produce an instrument which, according to its very case, never existed. The documents evidencing registration and continued legal existence of the respective assessees under the Maharashtra Public Trusts Act, 1950, together with the other available material evidencing their establishment and functioning, could not have been disregarded merely for want of a conventional trust deed/MOA.

6.9. In view of the above discussion, we are unable to sustain the reasoning adopted by the Ld. CIT(E). We accordingly hold that the Ld. CIT(E) was not justified in rejecting the applications filed by the respective assessees seeking renewal of registration u/s 12AB on the sole ground of non-furnishing of the instrument of trust/MOA. Accordingly, the respective impugned orders passed by the Ld. CIT(E) are set aside.

We accordingly direct the Ld. CIT(E) to grant renewal of registration u/s 12AB to the respective assessees in accordance with law. Our findings and directions hereinabove shall apply mutatis mutandis to all the three appeals.

In view of the relief granted hereinabove, the remaining contentions raised in the respective grounds do not require separate adjudication.

Accordingly, the grounds raised by the respective assessees stand allowed.

In the result, all the three appeals filed by the respective assessees are allowed.

Order pronounced in the open court on 25-09-2026.