Missing Irrevocability and Dissolution Clauses Cannot Deny 12AB Registration: ITAT Delhi

Suraj Devi Charitable Trust Vs CIT (ITAT Delhi)

No Irrevocability or Dissolution Clause in Trust Deed? That Alone Cannot Defeat 12AB Registration: Delhi ITAT

Trust’s Registration and 80G Approval Rejected

In Suraj Devi Charitable Trust v. CIT(E) (ITA Nos. 6150 and 6151/Del/2026), the Delhi Income Tax Appellate Tribunal considered whether a charitable trust could be denied registration because its trust deed did not contain express irrevocability and dissolution clauses. The CIT(E) had rejected the trust’s application for registration and, as a consequence, its application for approval under section 80G. The Tribunal set aside both rejection orders.

The trust had previously held 12A registration and 80G approval. It applied in Form 10AB for registration under the new regime. During verification, the CIT(E) requested its audited financial statements for FY 2024–25, copies of earlier registration and approval, and clarification about the missing clauses in the deed.

The trust furnished the financial statements and earlier approvals. On the deed clauses, it maintained that their absence was not a statutory ground for refusing registration. The CIT(E) disagreed. Treating the absence of an irrevocability clause as a deficiency that the trust had not removed, he stated that verification of its activities, objects and commencement could not be completed. He rejected the application, while leaving the trust free to file afresh after removing the stated deficiencies.

The Trust’s Case Before the Tribunal

The trust submitted that it had carried on charitable activities for the general public without a profit motive. Its programmes benefited socially and economically weaker sections, and any surplus was applied towards its charitable purposes. It also pointed out that it had been registered for many years and that neither its objects nor its activities had changed.

Its principal legal argument was that section 12AB does not require a trust deed to contain an explicit declaration that the trust is irrevocable. The trust relied on the Bombay High Court decision in Chamber of Tax Consultants v. CIT(E), which addressed rejection of registration applications on account of missing irrevocability and dissolution clauses. The Department supported the CIT(E)’s orders.

What the Precedents Said About the Missing Clauses

The Tribunal drew on the Bombay High Court’s holding that a public charitable trust is irrevocable by operation of law unless its instrument expressly reserves a power of revocation. Accordingly, the mere absence of the word “irrevocable” or an explicit clause to that effect cannot, by itself, justify refusal of registration under section 12AB.

The Bombay High Court had also examined a difficulty with Form 10AB: the portal required applicants to answer whether the deed contained an irrevocability clause, but would not permit submission if “No” was selected. The Court disapproved of a system that could force an applicant to select “Yes” and then expose it to an allegation of furnishing incorrect information. In the present appeal, the Tribunal relied on the High Court’s legal conclusion about irrevocability; it did not make a separate finding that this trust had been accused of giving a false answer in the portal.

For the dissolution clause, the Tribunal referred to Radisson India Charitable Foundation v. ITO (Exemption). That decision held that the absence of a clause expressly stating what would happen to the trust’s assets on dissolution was not, by itself, a reason to deny registration. It also noted the relevance of section 115TD, which addresses specified circumstances involving a charitable entity’s accreted income and assets.

Registration Directed; Consequential 80G Rejection Set Aside

Applying those decisions, the Tribunal held that the CIT(E)’s rejection could not stand merely because the deed lacked express irrevocability and dissolution clauses. It quashed the registration order and directed the CIT(E) to grant registration in accordance with law.

The 80G application had been rejected because the CIT(E) had rejected the trust’s registration application. Once that basis fell, the Tribunal quashed the consequential 80G rejection as well. Both of the trust’s appeals were allowed.

The decision should be read in its proper scope. It does not mean that every trust automatically qualifies for registration or 80G approval regardless of its objects and activities. It holds that the absence of these particular clauses, without more, is not a lawful reason for rejection.

Author’s Comment

The practical importance of this ruling lies in the distinction between what the Act requires and what an officer may prefer to see in a trust deed. An express clause can make a deed clearer, but its absence cannot be converted into an additional statutory eligibility condition. Where a long-standing trust has supplied its accounts and earlier approvals, the application must be examined against the applicable legal requirements rather than rejected solely for refusing to insert prescribed wording.

The order is particularly useful where the refusal of 80G approval follows automatically from a rejected 12AB application. Correcting the underlying registration decision also requires the consequential refusal to be revisited. Here, the Tribunal went further on registration by directing its grant, while setting aside the linked 80G rejection.

Delhi ITAT, order pronounced on 29 September 2026.

Cases Discussed

• Chamber of Tax Consultants vs. CIT(E), [2026] 184 Taxmann.com 374 (Bombay) – Bombay High Court precedent relied upon by the assessee and followed by the Tribunal for holding that a public charitable trust is deemed irrevocable by operation of law unless the instrument expressly provides a power of revocation and that absence of an explicit irrevocability clause cannot by itself justify rejection under section 12AB.
• Radisson India Charitable Foundation vs. ITO, Exemption, [2025] 171 taxmann.com 845 (Delhi Tribunal); order dated 22.01.2025 – Followed for holding that absence of a dissolution clause and non-mention of the fate of net assets in the trust deed cannot by itself constitute a ground for denial of registration under section 12AB, particularly in view of section 115TD.

Alternative SEO Titles

Missing Irrevocability and Dissolution Clauses Cannot Deny 12AB Registration: ITAT Delhi

Trust Registration Cannot Be Rejected for Missing Irrevocability Clause: ITAT Delhi

Absence of Dissolution Clause No Ground to Deny 12AB Registration: ITAT Delhi

ITAT Delhi Directs 12AB Registration and Quashes Consequential 80G Rejection

Express Irrevocability Clause Not Mandatory for Charitable Trust Registration: ITAT Delhi

FULL TEXT OF THE ORDER OF ITAT DELHI

These appeals by the assessee are directed against the respective orders both dated 12.03.2026 of the Ld. Commissioner of Income Tax (Exemption), Delhi [hereinafter referred to as “CIT(E)”] passed u/s. 12AB(1)(ac)(ii) and u/s. 80G of the Income Tax Act, 1961 (hereinafter referred as Act). Since the issues involved in these appeals are inter-connected, hence, the same were heard together and disposed of by this common order for the sake of convenience, by dealing with ITA No. 6151/Del/2026 being the lead case.

2. The grounds raised in ITA No. 6151/Del/2026 read as under:-

i) The CIT(E), Delhi erred in law and on facts in rejecting the appellant’s application for registration u/s. 12A of the Act based on the absence of irrevocable and dissolutions clause in the appellant’s trust deed.

(ii) The Ld. CIT(E), Delhi erred in law and on facts by relying on the premise that the absence of irrevocability clause in the trust deed will result into the rejection of registration. Without appreciating the fact that such harsh conditions for registration does not exist in the Act.

iii) Alternatively, and without prejudice to the above grounds of appeal appellant contends that the rejection of registration application merely based on absence of irrevocability or dissolution clause is bad in law and CIT(E) order ought to be rectified by taking into consideration the ratio laid down by Chamber of Tax Consultants vs. CIT(E) [2026] 184 Taxmann.com 374 (Bombay).

3. The ground raised in ITA No. 6150/Del/2026 read as under:-

i) The CIT(E), Delhi erred in law and on facts in rejecting the appellant’s application for registration u/s. 80G of the Act.

(ii) The Ld. CIT(E), Delhi erred in law and on facts by relying on the premise that the absence of irrevocability clause in the trust deed will result into the rejection of registration. Without appreciating the fact that such harsh conditions for registration does not exist in the Act.

iii) Alternatively, and without prejudice to the above grounds of appeal appellant contends that the rejection of registration application merely based on absence of irrevocability or dissolution clause is bad in law and CIT(E) order ought to be rectified by taking into consideration the ratio laid down by Chamber of Tax Consultants vs. CIT(E) [2026] 184 Taxmann.com 374 (Bombay).

4. The brief facts of the case are that the assessee/applicant has filed an application in Form 10AB for registration u/s. 12A(1)(ac)(ii) of the Act. The assessee was issued a notice dated 06.01.2026 with a request to furnish certain details / documents / clarifications in support if its request for registration u/s. 12A(1)(ac)(ii) of the Act. The assessee filed part details and thereafter vide show cause notice dated 16.2.2026 following documents were sought from the applicant:

i) Absence of IRREVOCABLE & DISSOLUTION (how its assets will be on dissolution) clause in the trust deed.

ii) Audited Financials of FY 2024-25 will all annexures and schedules.

iii) Copy of 12A/80G registration/approval issued prior to 1.4.2021.

In response to the aforesaid show cause notice, applicant replied on 19.2.2026 submitted the audited accounts of FY 2024-25 and copy of 12A/80G registration/ approval issued prior to 1.4.2021. On the issue of IRREVOCABLE & DISSOLUTION clause in trust, the applicant stated that mere absence of irrevocability clause and dissolution clause shall not be the ground of registration application. The CIT(E) noted that there was “absence of irrevocable clause in the Trust Deed of incorporation” and assessee was advised to remove the said deficiency, but the said deficiency was not removed. Thus, the CIT(E) observed that since the assessee/applicant has failed to remove the deficiencies as required by the notices, therefore the necessary verification in support of genuineness of the activities, charitable objects, commencement of the activities could not be completed, hence, he rejected the application filed in Form 10AB for grant of registration u/s. 12A(1)(ac)(ii) of the Act with the liberty to file a fresh application as per the relevant provisions of the Income Tax Act, 1961 after removal of the deficiencies.

5. Aggrieved, assessee is in appeal before the Tribunal.

6. We have heard the rival contentions and gone through the facts and circumstances of the case. Before us, ld. AR for the assessee submitted that the applicant-trust was granted 12A registration and also granted 80G approval. It was further submitted that the applicant filed the Form 10A for revalidation before the statutory deadline. It was also submitted that the Trust is engaged in charitable activities for the benefit of the general public without any profit motive. The applicant undertakes welfare programmes for socially and economically weaker sections and carries out its activities strictly in accordance with the Trust Deed. It was also submitted that the income and surplus, if any, are wholly applied towards charitable purposes and all activities are voluntary, non-commercial and fall within the definition of “Charitable purpose” under section 2(15) of the Act. The renewal application of the assessee for registration u/s. 12AB(1)(ac)(ii) of the Act alleging that non-existence of the irrevocable clause in the Trust Deed, which direction is illegal perse and was also even otherwise never desired by the revenue authorities from the assessee since the constitution of the assessee Trust. It was further submitted that CIT(E) rejected the application for renewal of registration u/s. 12AB(1)(ac)(ii) of the Act ignoring that the assessee has been registered u/s. 12A since long when it was constituted and there has been no change in either the activities or the objects of the trust since then. Thus, the impugned rejection order must be reversed and the registration prayed must be granted. Ld. AR for the assessee submitted that Hon’ble Bombay High Court in the case of Chamber of Tax Consultants vs. CIT(E) [2026] 184 Taxmann.com 374 (Bombay) has dealt the similar issue and held that “where public charitable trusts registered under MPT Act, 1950 were denied renewal under section 12AB on the ground that trust deeds lacked explicit irrevocability and dissolution clauses, though under section 63 and MPT Act trusts were not revocable in absence of express power, further no such condition was prescribed under section 12AB, rejection was unsustainable and was to be quashed.” Ld. DR relied upon the order of the Ld. CIT(E). We find that the Hon’ble Bombay High Court in the case of Chamber of Tax Consultants vs. CIT(E) has dealt the similar and identical issue wherein, it has been held as under:-

44. Now, we come to the second ground for rejection, namely furnishing “false information”. It is undisputed that in Row No. 6 of MARCH 09, 2026 S.R.JOSHI 1-wpl-7587-2026.doc Form No. 10AB, an applicant was required to answer the question “Whether the trust deed contains clause that the trust is irrevocable?” in either of two forms ‘Yes’ or ‘No’. It is also not disputed that the trusts making the application are compelled to answer “Yes” if they want the form to be uploaded. If this question was answered in the negative, then the system does not allow the form to be filed at all. During the course of hearing, Mr. Pardiwalla, showed us a screenshot of the portal wherein, when “No” was ticked, there was an error displayed on the screen with the comment “Approval/ Registration is not allowed if the applicant being a trust does not have an irrevocable clause” . As we have already discussed earlier, this is not the correct position in law. In any event, the system cannot be designed in a manner so as to not allow an applicant to file an application with correct particulars. It is pertinent to note that there is a verification clause at the end of the form and the person signing the form declares that the details given in the form are true and correct to the best of his knowledge and belief. If one is forced to answer any question in any particular fashion which is not correct, then, certainly the verification clause is violated. This is completely arbitrary. The problem does not end here. An applicant is forced to write “Yes” to Row number 6 despite there being no specific irrevocability clause and this is considered by Respondent No. 1 to be furnishing “false or incorrect information,” constituting a “specified violation” under clause (g) of the Explanation below section 12AB(4) of the Act. There cannot be any justification to this at all. To penalise an Assessee for a situation created by a utility designed by the Department itself is in violation of all legal principles. A procedural form cannot be used as a tool to coerce applicants into making declarations that are then used to their detriment. Therefore, we are of the view that the Respondents will have to change their system in this regard and the least which can be done is not to use this as a ground to deny registration. The argument of the Respondents that even subsequently, the trusts have asserted that they are irrevocable, which is also false, does not merit any acceptance. First of all, that is not the reason as stated in the impugned order to deny registration. At this stage, such orders cannot be improved upon. Moreover, since the Deed has no revocability clause, and, thus, the trusts have, under a bonafide belief, submitted that the trusts are irrevocable. In fact, their belief is correct and this, therefore, cannot be considered to be false or incorrect information at all.

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.

7. We further find that the issue in dispute is also squarely covered by the decision of the ITAT, Delhi Bench vide its order dated 22.1.2025 in the case of Radisson India Charitable Foundation vs. ITO, Exemption [2025] 171 taxmann.com 845 (Delhi Tribunal) wherein, vide para no. 11 & 12 it has been held as under:-

“11. Another reason for rejecting the registration is that there is no dissolution clause in the trust deed of the Assessee. We have gone through the trust deed, wherein in the Clause of ‘power of trustees’, it is mentioned as under: –

“1. The Trustees shall have the following powers:

(a) To start, abolish, discontinue, and restart any charity/charitable organization or institution for the benefit of the general public and impose conditions to its subscription or donations made therein.

(h) To transfer and hand over the Trust to any other trust/society/association/institution on such terms and conditions as the Trustees shall in their absolute discretion think fit and proper.”

12. From the plain reading of the above Clauses, though the trustees have power to transfer and hand over the trust to any other trust/society/Association/Institution, is no mentioning regarding the Radisson India Charitable Foundation dissolution of the trust and the fate of net asset of the trust in case of dissolution. It is true that the net asset of the trust can be transferred to any entity since, as per the above Clause in the trust deed, the trustees have absolute right to transfer and hand over the Trust to any other trust/society/association/institution on such terms and conditions as the Trustees shall in their absolute discretion think fit and proper. However, after the amendment to provision of Section 115TD of the Act, which has been inserted by Finance Act, 2016 w.e.f. 01/06/2016, the relevance of having dissolution clause and the apprehension on the transfer of net asset to any other entity has been taken care by the said provisions of Section 115TD of the Act. Thus, in our considered opinion, the absence of dissolution clause and non- mentioning of fate of net asset in the trust deed cannot be a ground to deny the registration u/s 12AB of the Act. Thus, the Ld. CIT(E) committed error in rejecting the registration u/s 12A and 80G of the Act.”

8. In view of aforesaid factual matrix and respectfully following the aforesaid precedents, we note that the issue of non-existence of the irrevocable clause in the Trust Deed is squarely covered by the aforesaid precedents in favour of the assessee in the present case. As per the aforesaid decision, public charitable trust is deemed irrevocable by operation of law unless the instrument of trust expressly provides a power of revocation, thus, the absence of an explicit irrevocability clause and also non-mentioning of dissolution clause is not a ground for rejecting an application for registration or renewal under section 12AB of the Act. In the instant case it reveals that the applicant is doing charitable activities and that too voluntarily and, thus, must be treated with a fair and reasonable approach by the revenue. Thus, in our view, the order of the Ld. CIT(E) is not sustainable in the eyes of law, in view the aforesaid precedent and accordingly, the impugned order of the Ld. CIT(E) is hereby quashed with the directions grant registration u/s. 12A(1)(ac)(ii) of the Act to the applicant-trust, in accordance with law. Resultantly, the appeal of the assessee is allowed in the aforesaid manner.

9. As regards ITA No. 6150/Del/2026 is concerned, we note that Ld. CIT(E) has noted that since registration u/s. 12A(1)(ac)(ii) of the Act is being rejected, thus, granting of approval u/s. 80G(5)(ii) is not relevant without the registration u/s. 12A, hence, the same was rejected by the Ld. CIT(E). Since we have already quashed the Ld. CIT(E)’s order as aforesaid and directed him to grant registration u/s 12A(1)(ac)(ii) of the Act to the applicant-trust, thus the consequential order passed denying approval u/s. 80G(5)(ii) of the Act is also hereby quashed and set aside in the very terms. In the result, this appeal of the assessee is also allowed.

10. In the result, both the appeals of the assessee are allowed in the aforesaid manner.

Order pronounced in the open court on 29.09.2026.