Dhamma Pattana Vipassana Trust Vs CIT (ITAT Mumbai)
Sections 12AB and 80G Approval Cannot Be Made Conditional on Outcome of Revenue’s Supreme Court Challenge
Background of the Case
The assessee, a charitable institution, challenged a condition attached to its registration under Section 12AB and approval under Section 80G of the Income-tax Act, 1961.
Through separate orders dated 28 March 2026, the CIT(Exemptions) granted the registration and approval. However, he stipulated that their applicability and consequential tax benefits would remain subject to the outcome of the Revenue’s Special Leave Petition before the Supreme Court.
The proposed or pending challenge concerned the Bombay High Court’s judgment in Chamber of Tax Consultants v. CIT (Exemptions), Writ Petition No. 7587 of 2026, referred to in the Tribunal’s order.
The trust did not dispute the grant of registration or approval. Its grievance was that the attached condition made their operation dependent on a future judicial outcome.
Assessee Challenges the Conditional Grant
The trust contended that Section 12AB does not authorise registration subject to a future contingency.
According to the assessee, the CIT(E)’s statutory enquiry concerned the trust’s objects, genuineness of activities and compliance with other laws relevant to achieving those objects.
Once satisfied on the statutory requirements, the authority could grant registration. If the requirements were not fulfilled, the application could be rejected in accordance with law.
The assessee argued that the legislation did not create an intermediate category in which registration was granted but its effectiveness and tax consequences remained uncertain because of future litigation.
It also contended that compliance with the Bombay High Court’s directions could not be qualified by adding a caveat intended to limit their effect.
Limited Issue Before the Tribunal
The Departmental Representative relied on the CIT(E)’s orders.
The Tribunal identified the limited question as whether the CIT(E) was justified in imposing the disputed condition while granting registration under Section 12AB.
It noted that the CIT(E) had not rejected the application. On examining the application and supporting material, he had granted registration.
The Tribunal therefore proceeded on the basis that the authority was satisfied with the relevant compliances. The dispute concerned the additional restriction linked to the Supreme Court proceedings, rather than any identified deficiency in the trust’s objects or activities.
Future Litigation Condition Held Unauthorised
The Tribunal held that the observation making registration and consequential tax benefits dependent on the Supreme Court’s decision was without statutory authority.
The registration framework did not empower the CIT(E) to impose a condition of this nature based on a future contingency.
Once registration was granted, its legal consequences had to follow in accordance with the Act. The possibility of a different judicial outcome in future did not justify creating a separate, conditional form of registration outside the statutory scheme.
The Tribunal’s reasoning thus focused on the limits of the authority’s powers when issuing the registration order.
Reliance on Chandraprabhu Digamber Jain Mandir
The Tribunal referred to Chandraprabhu Digamber Jain Mandir v. CIT (Exemptions), ITA No. 4394/MUM/2026, dated 29 June 2026, which concerned an identical condition attached to Section 12AB registration and Section 80G approval.
That decision explained that the statute permits registration to be granted or the application to be rejected in accordance with law. It does not contemplate registration whose effectiveness is capped by the outcome of future litigation.
It also distinguished the grant of registration from its subsequent cancellation or withdrawal. If circumstances warrant cancellation or withdrawal later, the authority must follow the statutory provisions governing that action.
A condition inserted at the registration stage cannot substitute that prescribed process.
Other Coordinate Bench Decisions Considered
The assessee also referred to decisions involving ILLA Rajesh Foundation, Keshav Lal Vejechand Kapadia Charity Trust and Sisters of Charity of St. Ann.
Following the coordinate Bench authorities referred to in its order, the Tribunal held that the disputed condition in paragraph 15 of the annexure to Form 10AD could not be sustained.
It further considered the case covered by the Bombay High Court judgment and the relevant coordinate Bench decisions.
Decision of the Tribunal
The Tribunal deleted the condition linking registration and approval to the outcome of the Supreme Court proceedings.
It directed that the registration under Section 12AB and approval under Section 80G operate without the impugned stipulation or restriction.
The appeals were disposed of in those terms.
The relief was granted directly; the matter was not remanded for reconsideration of the condition.
Author’s Comments
The decision draws a clear distinction between ordinary statutory conditions governing charitable exemption and an additional litigation-linked restriction introduced by the administrative authority.
Deleting the disputed caveat does not dispense with the trust’s continuing obligations under the Act or prevent lawful cancellation or withdrawal where the prescribed requirements are met.
Equally, the Tribunal did not decide the merits of the Revenue’s Supreme Court challenge or grant immunity from the consequences of a binding future judicial decision.
Its ruling is that the CIT(E) cannot create a conditional category of registration or approval unsupported by the statute. Registration already granted must operate according to law, and any subsequent action must follow the applicable statutory process.
Cases Discussed
- Chamber of Tax Consultants v. CIT (Exemptions), Writ Petition (L) No. 7587 of 2026 (Bombay High Court)
- Chandraprabhu Digamber Jain Mandir v. CIT (Exemptions), ITA No. 4394/MUM/2026
- ILLA Rajesh Foundation v. CIT (Exemptions), ITA Nos. 4488–4491/MUM/2026
- Keshav Lal Vejechand Kapadia Charity Trust v. CIT (Exemptions), ITA Nos. 4436 and 4403–4404/MUM/2026
- Sisters of Charity of St. Ann v. CIT (Exemptions), ITA Nos. 5920–5921/MUM/2026
- Chamber of Indian Charitable Trust
- Bai Navajbai Tata Zoroastrian Girls School
FULL TEXT OF THE JUDGMENT/ORDER OF ITAT MUMBAI
These appeals have been filed by the Assessee against the order dated 28th March, 2026, passed by the Learned Commissioner of Income tax (Exemptions), [“Ld. CIT (E)”] Mumbai, under Section 12AB(1)(b)(ii) and 80G of Income Tax Act, 1961 (“the Act”).
2. The Assessee has raised the following grounds of appeal in ITA NO.6575/MUM/2026 :
1. That the learned Commissioner of Income Tax Exemptions CIT E erred in law and on facts in granting registration renewal of approval under Section 12AB of the Income Tax Act, 1961 in a conditional and qualified manner, subject to the outcome of a proposed Special Leave Petition before the Hon’ble Supreme Court of India. Such conditional grant is unknown to law, renders the registration illusory, and is void ab initio as being contrary to the scheme of the Act and the binding judicial directions of the Hon’ble Bombay High Court.
2. That the learned CIT E has committed a gross error of law in qualifiedly complying with the judgment and directions of the Hon’ble Bombay High Court in Writ Petition L No. 7587 of 2026 The Chamber of Tax Consultants & Ors. Vs. the CIT E, while simultaneously seeking to nullify its effect by appending a condition that the benefits of registration remain subject to the outcome of the decision of the Hon’ble Supreme Court.
3. Having acknowledged the binding direction of Hon’ble Bombay High Court, the learned CIT E has erred in introducing a caveat that the applicability and consequential tax benefits remain subject to outcome of the decision of the Hon’ble Supreme Court. The order is, therefore, internally inconsistent and cannot be permitted to stand in its present form.
4. The learned CIT E has erred in converting a judicial direction into conditional OR provisional compliance.
5. In view of the foregoing Grounds of Appeal, the Appellant most respectfully prays that this Hon’ble Tribunal be pleased to Quash and set aside the conditional nature caveat appended to the order of registration approval dated 28.03.2026 passed by the learned CIT E Direct the learned CIT E to issue a fresh, clean, and unconditional order of registration renewal of approval under Section 12AB of the Income Tax Act, 1961 and under Section 80G, as the case may be, with effect from 01.04.2026, free from any condition OR caveat regarding the pendency OR outcome of any SLP OR proceedings before the Hon’ble Supreme Court Hold and declare that the Appellant Trusts registration/approval and all tax benefits consequential thereto are valid, subsisting, and fully operative with effect from 01.04.2026, and cannot be denied, withdrawn, OR made conditional pending the outcome of any SLP that the Revenue may prefer Grant such other and further relief as this Hon’ble Tribunal may deem fit and proper.
6.The appellant craves leave to add, to alter, to amend OR to withdraw any 0R all the grounds of appeal on 0R before the hearing of appeal.
The Assessee has raised the following grounds of appeal in ITA NO.6576/MUM/2026:
1. That the learned Commissioner of Income Tax Exemptions CIT E erred in law and on facts in granting registration renewal of approval under Section 12AB of the Income Tax Act, 1961 in a conditional and qualified manner, subject to the outcome of a proposed Special Leave Petition before the Hon’ble Supreme Court of India. Such conditional grant is unknown to law, renders the registration illusory, and is void ab initio as being contrary to the scheme of the Act and the binding judicial directions of the Hon’ble Bombay High Court.
2. That the learned CIT E has committed a gross error of law in qualifiedly complying with the judgment and directions of the Hon’ble Bombay High Court in Writ Petition L No. 7587 of 2026 The Chamber of Tax Consultants & Ors. Vs. the CIT E, while simultaneously seeking to nullify its effect by appending a condition that the benefits of registration remain subject to the outcome of the decision of the Hon’ble Supreme Court.
3. Having acknowledged the binding direction of Hon’ble Bombay High Court, the learned CIT E has erred in introducing a caveat that the applicability and consequential tax benefits remain subject to outcome of the decision of the Hon’ble Supreme Court. The order is, therefore, internally inconsistent and cannot be permitted to stand in its present form.
4. The learned CIT E has erred in converting a judicial direction into conditional OR provisional compliance.
5. In view of the foregoing Grounds of Appeal, the Appellant most respectfully prays that this Hon’ble Tribunal be pleased to Quash and set aside the conditional nature caveat appended to the order of registration approval dated 28.03.2026 passed by the learned CIT E Direct the learned CIT E to issue a fresh, clean, and unconditional order of registration renewal of approval under Section 12AB of the Income Tax Act, 1961 and under Section 80G, as the case may be, with effect from 01.04.2026, free from any condition OR caveat regarding the pendency OR outcome of any SLP OR proceedings before the Hon’ble Supreme Court Hold and declare that the Appellant Trusts registration/approval and all tax benefits consequential thereto are valid, subsisting, and fully operative with effect from 01.04.2026, and cannot be denied, withdrawn, OR made conditional pending the outcome of any SLP that the Revenue may prefer Grant such other and further relief as this Hon’ble Tribunal may deem fit and proper.
6. The appellant craves leave to add, to alter, to amend OR to withdraw any 0R all the grounds of appeal on 0R before the hearing of appeal.
3. The brief facts of the case are that the Assessee is a charitable institution, had applied for registration under Section 12AB and approval under section 80G of the Act.
4. The Ld. CIT(E) vide separate orders dated 28th March, 2026 granted Conditional registration /approval under Section 12AB and approval under Section 8G of the Act, by imposing a condition that registration and subsequent tax benefits would remain subject to the outcome of a special leave petition before the Honorable Supreme Court, filed by the Revenue against the judgment of the Hon’ble Bombay High Court in the case of 7587 of 2026 – Chamber of Tax Consultants vs The CIT (E), 2026, 184 Taxman.com 374.
5. The Assessee, being aggrieved by the conditional registration under Section 12AB, is in appeal before the Tribunal.
6. 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 by putting condition based upon a future contingency. The powers conferred to Ld. CIT(E) under Section 12AB of the Act, is limited to examining the objects, genuineness of the activities, and compliance with other laws for achieving the objects of the trust. Thus, the condition put in order, is beyond the scope.
7. Per contra, the departmental representative relied upon the order passed by the Ld.CIT(E).
8. We have carefully considered the rival submissions and perused the material available on the record. The 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.
9. At the outset, it is found that Ld.CIT(E) has not rejected the application filed by the Assessee. However, considering the application and material available on record, registration under Section 12AB of the Act has been granted to Assessee. Therefore, the Ld.CIT(E) was satisfied by the compliances. However, the observation is that the applicability and consequential tax benefits of the registration would remain subject to the outcome of the decision of the Honorable Supreme Court, are without authority, the provisions of Section 12A(2)(b) do not confer the power on the Ld.CIT(E) to grant registration subject to a future contingency or putting a condition for that.
10. We find that an identical issue came up for consideration before the coordinate bench in the case of Chandraprabhu Digamber Jain Mandir Vs. CIT (Exemptions), ITA No.4394/MUM/2026, dated 29-06-2026, While granting the registration under Section 12AB and approval under Section 80G, the Ld.CIT(E) has 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 Honorable Supreme Court.
11. The coordinate bench examined the legality of imposing a condition while granting registration/approval and held at para 16 ; “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 there from 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.”
12. The Assessee also referred following orders for consideration :
– ILLA Rajesh Foundation vs. CIT (Exemptions), Mumbai, ITA No. 4488/MUM/2026 to 4491/MUM/2026
– Keshav Lal Vejechand Kapadia Charity Trust vs. CIT (Exemptions), Mumbai, ITA Nos. 4436/MUM/2026 and 4403-4404/MUM/2026
– Sisters of Charity of St. Ann vs. Commissioner of Income Tax (Exemptions), Mumbai, ITA Nos. 5920 and 5921/MUM/2026
13. Respectfully following the decision of the coordinate bench in case of ILLA Rajesh Foundation vs. CIT (E), read with the decision in Chamber of Indian Charitable Trust and Bai Navajbai Tata Zoroastrian Girls School, we hold that the impugned condition contained in para 15 of the annexure to Form No. 10AD cannot be sustained.
14. In view of the facts of the instant case, it covered by the findings of the Honorable Bombay High Court in the case of Chamber of Tax Consultants (supra), and orders of co-ordinate benches, we hereby delete the conditions, that registration/approval granted under Section 12AB and under Section 80G by the Ld. CIT(E), shall operate without any stipulation, condition, or restrictions. Therefore, the impugned condition stands deleted.
15. In the result, the appeals for registration/approval under Section 12AB and 80G of the Income Tax Act, 1961, are disposed of in the aforesaid terms. Order pronounced in the open court on 12.10.2026.
