Amrut Baug Charity Trust Vs CIT (ITAT Mumbai)
Proposed SLP Cannot Dilute Binding High Court Judgment: ITAT Deletes Conditional Rider in Section 12AB Registration
The controversy
The Mumbai ITAT considered whether the Commissioner of Income Tax (Exemptions) could grant registration under section 12AB pursuant to a binding Bombay High Court judgment, while simultaneously making its operation and consequential tax benefits dependent upon the outcome of a proposed Special Leave Petition before the Supreme Court.
The Tribunal held that the Revenue’s intention to challenge a judgment does not diminish its binding force. It directed deletion of the disputed condition, while preserving all legitimately applicable statutory requirements governing the registration.
The appeal concerned the conditional rider attached to registration already granted, rather than rejection of the registration application.
Registration granted following High Court directions
Amrut Baug Charity Trust had applied for registration under section 12AB. By an order dated 6 April 2026, issued in Form 10AD, the CIT(E), Mumbai, granted registration under section 12AB(1)(b) for the period relevant to AYs 2027-28 to 2036-37.
While granting registration, the authority incorporated conditions in the annexure to the order. The trust challenged Condition No. 15.
That condition recorded that the trust instrument did not contain an explicit declaration that the transfer of property under the trust was irrevocable for all time. It also referred to section 332(2)(b) of the Income-tax Act, 2025, and the Bombay High Court’s judgment in The Chamber of Tax Consultants and Others v. CIT(E), Writ Petition (L) No. 7587 of 2026.
As noted in the Tribunal’s order, the High Court had directed the Department not to reject registration or renewal applications merely because the trust deed lacked an explicit irrevocability clause.
Compliance accompanied by a future contingency
The CIT(E) granted registration in compliance with the jurisdictional High Court’s directions.
However, the authority added that the Revenue proposed to file an SLP before the Supreme Court. It consequently stipulated that the applicability of registration and the resulting tax benefits would remain subject to the outcome of the Supreme Court’s decision.
The trust objected that this qualification impaired the effect of an otherwise favourable statutory order. Its grievance was that a binding judicial direction had been implemented with a rider introducing uncertainty about the benefits flowing from registration.
It therefore sought deletion of the condition relating to the proposed Supreme Court proceedings.
Trust relied on the continuing force of the judgment
Before the Tribunal, the authorised representative argued that the CIT(E), having granted registration by following the Bombay High Court’s judgment, could not make it conditional upon a prospective challenge.
The trust submitted that a jurisdictional High Court judgment continues to bind authorities within its territorial jurisdiction unless its operation is stayed, or it is reversed or modified by a superior judicial forum.
A proposal to initiate further proceedings, it argued, did not justify restricting the present effect of the judgment.
The Revenue relied on the registration order passed by the CIT(E).
Tribunal upheld judicial discipline
The Tribunal first identified the precise scope of the dispute: registration had already been granted, and the challenge concerned only the rider affecting its efficacy and consequential benefits.
It noted that the CIT(E) was conscious of the Bombay High Court judgment and had expressly granted registration in compliance with its binding directions.
The Tribunal held that the mere proposal or decision to challenge a judgment before the Supreme Court cannot, by itself, dilute its binding character.
Having accepted the judgment and acted upon it, the CIT(E) could not simultaneously make the registration’s effectiveness contingent upon the outcome of a proposed SLP. Such a stipulation introduced uncertainty into a validly granted statutory registration.
Subsequent Supreme Court orders remain effective according to law
The Tribunal also clarified that any subsequent Supreme Court judgment or order would govern the parties’ rights and obligations in accordance with law.
However, until such an eventuality arose, the subsisting jurisdictional High Court judgment had to receive full effect.
It accordingly directed the CIT(E) to expunge the condition making registration and consequential tax benefits dependent upon the proposed Supreme Court proceedings.
The appeal was allowed outright. Registration was directed to continue according to law, subject to legitimately applicable statutory conditions.
Author’s comments
The decision makes a clear distinction between the Revenue’s right to challenge a judgment and its obligation to implement the judgment while it remains operative. A contemplated appeal cannot function as an administrative qualification of binding judicial relief.
The Tribunal’s approach also recognises the practical importance of certainty. Registration granted with a future litigation rider can leave a trust unsure about the consequences of an order ostensibly issued in its favour.
At the same time, deletion of the rider does not confer automatic exemption from every tax liability. The Tribunal expressly preserved the statutory conditions legitimately applicable to registration.
Nor does the ruling prevent a subsequent Supreme Court decision from operating according to law. It requires the existing judgment to be implemented fully until a legally relevant subsequent development changes that position.
Cases Discussed
- The Chamber of Tax Consultants & Ors. v. CIT(E), Writ Petition (L) No. 7587 of 2026 (Bombay High Court) — Followed as the binding jurisdictional High Court judgment directing that registration or renewal applications should not be rejected merely for absence of an express irrevocability clause in the trust instrument. The Tribunal held that a proposed Special Leave Petition does not dilute the judgment’s binding effect.
FULL TEXT OF THE JUDGMENT/ORDER OF ITAT MUMBAI
Present appeal is filed by the assessee against the order dated 06/04/2026 passed by the Ld. Commissioner of Income Tax (Exemptions), Mumbai [“Ld. CIT(E)”] in Form No. 10AD, whereby registration has been granted to the assessee u/s 12AB(1)(b) of the Income-tax Act, 1961 for the period relevant to Assessment Years 2027-28 to 2036-37, subject to the conditions stipulated therein.
2. Grounds raised by the assessee are as under:
“1. On the facts and circumstances of the case and in law, the Ld. CIT(E) erred in granting the approval subject to the outcome of the Special Leave Petition to be filed by the Revenue before the Hon’ble Supreme Court against the judgment of the Hon’ble Bombay High Court in the case of The Chamber of Tax Consultants & Ors. v. CIT(E) in Writ Petition (L) No. 7587 of 2026.
2. On the facts and in the circumstances of the case and in law, the Ld. CIT(E) erred in granting the approval conditional, which was initially denied merely on account of the absence of an express irrevocability clause in the trust deed.”
2.1. Brief facts of the case are that the assessee is a charitable trust which had applied for registration under the relevant provisions of section 12AB. The Ld. CIT(E), vide impugned order dated 06/04/2026, granted registration u/s 12AB(1)(b). However, while doing so, the Ld. CIT(E) incorporated certain conditions in the Annexure forming part of the order.
2.2. The controversy in the present appeal is confined to Condition No. 15 of the said Annexure. The Ld. CIT(E) observed therein that the instrument of trust did not contain an explicit clause affirming that transfer of property under the trust was irrevocable for all times. Reference was thereafter made to section 332(2)(b) of the Income-tax Act, 2025 and to the judgment of the Hon’ble Bombay High Court in The Chamber of Tax Consultants & Ors. v. CIT(E) in Writ Petition (L) No. 7587 of 2026.
2.3. The Ld. CIT(E), after noting that the Hon’ble Bombay High Court had directed the Department not to reject applications for registration/renewal merely for absence of an explicit irrevocability clause in the trust deed/instrument, granted registration in compliance with the binding directions of the Hon’ble jurisdictional High Court. The Ld. CIT(E), however, further stipulated that since the Revenue proposed to prefer a Special Leave Petition before the Hon’ble Supreme Court, the applicability and consequential tax benefits flowing from the registration would remain subject to the outcome of the decision of the Hon’ble Supreme Court.
The assessee is aggrieved by the aforesaid conditional stipulation and is in appeal before us.
3. The Ld.AR submitted that once the Ld.CIT(E) granted registration following the binding judgment of the Hon’ble jurisdictional High Court, could not have granted subject to a condition based on the outcome of a proposed Special Leave Petition before the Hon’ble Supreme Court. It was submitted that the judgment of the Hon’ble jurisdictional High Court continues to bind all authorities within its territorial jurisdiction unless the operation thereof is stayed or the judgment is reversed or modified by the Hon’ble Supreme Court.
3.1. The Ld.AR accordingly prayed that the condition incorporated by the Ld.CIT(E), making the registration and consequential benefits subject to the outcome of the proceedings proposed to be initiated before the Hon’ble Supreme Court, be expunged.
3.2. The Ld.DR relied upon the order passed by the Ld. CIT(E).
We have perused the submissions advanced by both sides in light of the record placed before us.
4. At the outset, we note that the registration sought by the assessee has in fact been granted by the Ld.CIT(E). Thus, the assessee is not aggrieved by the grant of registration itself. The limited grievance is against the rider imposed, whereby the registration and consequential tax benefits have been made subject to the outcome of the proposed proceedings before the Hon’ble Supreme Court.
4.1. It is evident from the impugned order itself that the Ld.CIT(E) was conscious of the judgment rendered by the Hon’ble jurisdictional High Court in The Chamber of Tax Consultants & Ors. v. CIT(E) (supra) and, in fact, granted registration in what has been described in the impugned order as “respectful compliance” with the binding judicial directions of the Hon’ble Bombay High Court.
4.2. Once a judgment is rendered by the Hon’ble jurisdictional High Court, the same is binding upon the authorities functioning within its jurisdiction unless its operation has been stayed or the judgment has been reversed or modified by a superior judicial forum. The mere proposal or decision of the Revenue to challenge such judgment before the Hon’ble Supreme Court cannot, by itself, dilute its binding character.
4.3. In our considered opinion, having accepted the binding nature of the judgment of the Hon’ble Bombay High Court and having granted registration in compliance therewith, the Ld.CIT(E) could not simultaneously make the efficacy of such registration contingent upon the outcome of a proposed Special Leave Petition. Such a stipulation introduces a contingency into an otherwise validly granted statutory registration and would result in uncertainty regarding the legal consequences flowing therefrom.
4.4. Needless to observe that any subsequent judgment or order passed by the Hon’ble Supreme Court would operate and govern the rights and obligations of the parties in accordance with law. However, till such eventuality arises, the subsisting judgment of the Hon’ble jurisdictional High Court is required to be given full effect.
4.5. Accordingly, we hold that the condition imposed by the Ld.CIT(E), to the extent it makes the registration granted to the assessee and the consequential tax benefits arising therefrom subject to the outcome of the proposed Special Leave Petition/decision of the Hon’ble Supreme Court, cannot be sustained.
We therefore direct the Ld. CIT(E) to expunge/delete the aforesaid conditional stipulation from the registration order.
4.6. We clarify that the registration already granted to the assessee u/s 12AB(1)(b) shall otherwise continue to operate in accordance with law and subject to the statutory conditions legitimately applicable thereto. Our direction is confined to expunge the impugned condition making such registration and consequential benefits contingent on the outcome of the proposed proceedings before the Hon’ble Supreme Court.
Accordingly, the grounds raised by the assessee are allowed.
In the result, appeal filed by the assessee stands allowed.
Order pronounced in the open court on 08/10/2026.
