Mumbai Marathi Granthasangrahalaya Vs CIT (Exemptions) (ITAT Mumbai)
Registration Granted, Benefits Kept Waiting? ITAT Deletes the SLP Condition
Background: Renewal Granted With a Qualification
The assessee, Mumbai Marathi Granthasangrahalaya, is a charitable institution which applied for renewal of its registration under Section 12AB.
By an order dated 28 March 2026, the Commissioner of Income-tax (Exemptions) granted registration. However, the grant carried a condition that its applicability and subsequent tax benefits would remain subject to the outcome of a Special Leave Petition before the Supreme Court against the Bombay High Court’s judgment in Chamber of Tax Consultants v. CIT (Exemptions) [2026] 184 taxmann.com 374.
The institution challenged this qualification before the Tribunal.
The application had not been rejected. The grievance concerned the condition attached to a registration which had already been granted after consideration of the application and supporting material.
The Assessee Questioned the Authority to Impose the Condition
The assessee argued that Section 12AB does not empower the CIT(E) to make registration dependent on a future contingency.
Its submission was that the statutory inquiry concerns the institution’s objects, genuineness of activities and relevant compliance with other laws governing achievement of those objects.
Once the authority was satisfied and granted registration, it could not introduce an additional restriction tying the registration’s effectiveness to the outcome of separate litigation.
The Revenue relied on the CIT(E)’s order and defended the condition.
The Tribunal confined its examination to whether that condition could legally be imposed while granting registration under Section 12AB(1)(b).
Registration Itself Reflected the CIT(E)’s Satisfaction
The Tribunal noted that the CIT(E) had examined the application and compliance material and had chosen to grant registration.
It therefore observed that the authority was satisfied with the compliances made by the assessee. Despite this satisfaction, the order restricted the applicability of registration and its consequential benefits by linking them to a future Supreme Court decision.
The Bench held that the registration and approval provisions did not confer power to impose such a future-contingency condition.
The defect lay in creating uncertainty around a statutory grant without authority for that restriction.
An Identical Mumbai Tribunal Decision Followed
The Bench relied on Chandraprabhu Digamber Jain Mandir v. CIT (Exemptions), ITA No.4394/Mum/2026, which had considered an identical condition.
In that case, registration and approval had been granted, but their applicability and consequential tax benefits were made subject to the outcome of Supreme Court proceedings.
The coordinate Bench held that the statute contemplates grant or rejection in accordance with law, rather than conditional registration dependent on a future event.
Once registration is granted, its consequences must follow under the Act. If circumstances later warrant cancellation or withdrawal, the authority must act through the statutory provisions governing that action.
The legislation does not envisage registration being granted while its effectiveness is simultaneously held contingent on future litigation.
A Consistent Line of Decisions Supported Deletion
The precedent reproduced in the order referred to ILLA Rajesh Foundation, Chamber of Indian Charitable Trusts, and Bai Navajbai Tata Zoroastrian Girls School.
The assessee also relied on the Mumbai Tribunal’s orders in ILLA Rajesh Foundation v. CIT (Exemptions) and Keshavlal Vajechand Kapadia Charity Trust v. CIT (Exemptions).
Following the Bombay High Court ruling cited in the order and the coordinate Bench decisions, the Tribunal concluded that the disputed condition could not survive.
It directed that the registration under Section 12AB should operate without the impugned stipulation or restriction, and allowed the appeal.
Irrevocability Grounds Were Not Separately Determined
The assessee’s grounds also referred to the absence of an express irrevocability clause and contended that a public charitable trust is ordinarily irrevocable unless its instrument expressly provides otherwise.
However, the Tribunal identified the limited issue for adjudication as the legality of the condition attached to the registration already granted.
Accordingly, the order should not be presented as a detailed, independent ruling on every question concerning irrevocability clauses. Its operative relief is the deletion of the Supreme Court-outcome condition.
Similarly, references to Section 80G appear in the order and supporting precedents, but the final direction in this appeal expressly concerns Section 12AB registration.
Author’s Comments
A statutory registration cannot be converted into a provisional promise merely because the Department is pursuing further litigation. This decision requires the authority to give effect to the registration through the framework prescribed by the Act.
The ruling also preserves an important distinction: deleting the unauthorised condition does not prevent the Department from taking any future action otherwise permitted by law. Such action must satisfy the relevant statutory requirements.
Equally, registration does not by itself guarantee exemption for every receipt or every assessment year. The institution must continue to satisfy the applicable conditions for claiming tax benefits. The Tribunal removed the additional litigation-linked restriction; it did not dispense with ordinary statutory compliance.
For charitable institutions receiving similarly qualified registration orders, the decision provides direct support for challenging the condition while recognising that ongoing compliance obligations remain.
Cases Discussed
- Chamber of Tax Consultants Vs CIT (Exemptions), (2026) 184 Taxman.com 374 (Bombay High Court)
- Chandraprabhu Digamber Jain Mandir Vs CIT (Exemptions), ITA No.4394/Mum/2026 (ITAT Mumbai) —
- ILLA Rajesh Foundation Vs CIT (Exemptions), ITA Nos.4488 & 4491/MUM/2026 (ITAT Mumbai) — relied upon by the assessee; the Tribunal had considered conditional Section 12AB registration/Section 80G approval linked to future Supreme Court proceedings.
- Keshavlal Vajechand Kapadia Charity Trust Vs CIT (Exemptions), ITA Nos.4436 & 4437/MUM/2026 and 4403 & 4404/MUM/2026 (ITAT Mumbai) — relied upon by the assessee on the issue of Section 12AB/Section 80G proceedings and conditions linked to further Supreme Court litigation.
- Chamber of Indian Charitable Trusts — referred to in the coordinate Bench ruling reproduced in the impugned order as supporting deletion of the conditional registration stipulation.
- Bai Navajbai Tata Zoroastrian Girls School — referred to in the coordinate Bench ruling reproduced in the order as supporting the conclusion that the impugned condition could not be sustained.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
This appeal has been filed by the Assessee against an order dated 28-03-2026, by National Faceless Appeal Centre (NFAC)/Ld. Commissioner of Income Tax (Exemptions) [in short Ld. CIT(E)] under Section 12A(1)(b)(ii) and 80G of the Income Tax Act, 1961, (in short ‘the Act’).
2. The Assessee has raised the following grounds of appeal:
1. The learned Commissioner of Income Tax Exemptions erred in not appreciating that a public charitable trust is deemed irrevocable by operation of law unless the instrument of trust expressly provides a power of revocation.
2. The learned Commissioner of Income Tax Exemptions erred in not appreciating that the absence of an explicit clause of irrevocability is not a ground for rejecting the renewal application under section 12AB of the Income Tax Act, 1961/Section 332 of the Income Tax Act, 2025.
3. The learned Commissioner of Income Tax Exemptions erred in making the grant of registration subject to the outcome of the proposed SLP against the Order of the jurisdictional High Court, as imposing such a condition was beyond his jurisdiction and illegal.
4. The appellant craves leave to add, alter OR amend any of the grounds of the appeal, at any time before OR at the time of hearing.
2. The brief facts of the case are that the Assessee is a charitable institution, had applied for renewal of registration under Section 12AB of the Act. The Ld.CIT (Exemptions) vide order dated 28th March 2026 granted conditional registration under section 12AB, by imposing a condition that registration and subsequent tax benefits would remain subject to the outcome of a special leave petition, pending before the Honorable Supreme Court against the judgment of the Honorable Bombay High Court in the case of Chamber of Tax Consultants vs CIT (Exemptions), (2026) 184 Taxman.com 374 (Bombay).
3. The Assessee, being aggrieved by the conditional registration under section 12AB, is in appeal before the Tribunal.
4. Before us, the learned AR of the Assessee contended that the provisions of Section 12AB of the Act, do not empower the Ld.CIT(E) to grant registration/approval subject to any condition, based upon a future contingency. The power conferred to Ld. CIT(E) under Section 12AB is limited to examining the objects, genuineness of the activities and compliance with other laws for achieving the objects of the trust.
5. Per contra, the Departmental Representative relied upon the order passed by the Ld. CIT(E).
6. We have carefully considered the rival submissions and perused the material available on the record, and observed that limited issue before us for adjudication is whether the Ld. CIT(E) was justified in imposing a condition while granting registration under Section 12AB(1)(b) of the Act to the Assessee.
7. At the outset, it is found that Ld. CIT (E) has not rejected the application for registration u/s 12AB of the Act, filed by the Assessee. However, considering the application and compliance material available on record, registration under Section 12AB of the Act has been granted to the Assessee. Therefore, the Ld. CIT(E) was satisfied by the compliances made by the Assessee. But, the applicability and consequential tax benefit of the registration/approval would remain restricted to subject to the outcome of the decision of the Hon’ble Supreme Court. The provisions for registration and approval do not confer the power to Ld.CIT(E) to grant registration/ approval by putting any condition based upon future contingency.
8. We find that an identical issue came up for consideration before the Co-ordinate Bench, ITAT, Mumbai, in the case Chandraprabhu Digamber Jain Mandir vs CIT( Exemptions), in case, ITA NO.4394/Mum/2026. Wherein also while granting the registration under Section 12A and approval under Section 80G, the Ld.CIT(E) imposed 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.
9. The Co-ordinate Bench examined the legality of imposing any condition, while granting registration/approval, and held at para 16 that:
“Section 12A empowers the Commissioner either to grant registration or to reject the application in accordance with the law. The statute does not contemplate grant of 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 the registration, the same can be done only in accordance with the statute provisions governing such action. The statute does not envisage an intermediate category whereby registration is granted but its efficacy is capped contingent upon the outcome of the future litigation.
18. Respectfully following the decision of the coordinate bench in ILLA Rajesh Foundation, read with the decision in Chamber of Indian Charitable Trusts and Bai Navajbai Tata Zoroastrian Girls School, we hold that the impugned condition contained in para 15 of the annexure to Form No. 10 AD cannot be sustained.
19. We accordingly direct deletion of the condition whereby the applicability and consequential tax benefit 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 Supreme Court. The registration granted by Ld. CIT (E) shall operate in accordance with law without the aforesaid condition.
10. The Assessee also relied upon the following Orders:
1. ILLA Rajesh Foundation vs. CIT (Exemptions), Mumbai, ITA No. 4488 & 4491/MUM/2026
2. Keshavlal Vajechand Kapadia Charity Trust vs. CIT (Exemptions), Mumbai, ITA Nos. 4436 MUM/2026 & 4437/MUM/2026 and 4403 & 4404/MUM/2026
11. In view of the facts of the instant case, it is covered by the findings of the Hon’ble Bombay High Court in the case of Chamber of Tax Consultants (supra), and orders passed by co-ordinate bench of ITAT, we respectfully, follow them and hereby hold that the registration granted under Section 12AB of the Act by learned Commissioner of Income Tax (Exemptions), shall operate without any stipulation, condition, or restrictions. Therefore, the impugned condition stands deleted.
12. Thus, the appeal filed by the assessee for registration under Section 12AB of the Act, is disposed of in the aforesaid terms.
13. In the result, appeal filed by the Assesse is allowed.
Order pronounced in the open court on 30.09.2026.
