Shri Ramanlal Shah (Pradipkumar & Co.) Charitable Trust Vs CIT (Exemption) (ITAT Mumbai)
Summary: The Income Tax Appellate Tribunal, Mumbai, set aside the order dated 27 December 2025 passed by the Commissioner of Income Tax (Exemption), Mumbai, rejecting the application of Shri Ramanlal Shah (Pradipkumar & Co.) Charitable Trust for renewal of registration under Section 12AB of the Income Tax Act, 1961. The trust had filed Form 10AB on 24 May 2025 for Assessment Year 2027–28. Its application was rejected principally because its trust deed did not contain express irrevocability and dissolution clauses. The assessee maintained that it was a genuine charitable institution registered under the Bombay Public Trusts Act, 1950, engaged in medical relief, education, assistance to needy persons and other charitable activities. It also stated that it had approached the Charity Commissioner to amend its trust deed, although completion of that statutory process could extend beyond 31 March 2026.
When the appeal came up for hearing, nobody appeared on behalf of the assessee. Nevertheless, the Tribunal examined the grounds of appeal and found that the controversy was covered by the Bombay High Court’s decision in Chamber of Tax Consultants Vs. Commissioner of Income-tax (Exemptions), [2026] 184 taxmann.com 374, dated 9 March 2026. In that judgment, the High Court had considered rejection of applications under Section 12AB on the grounds that trust deeds lacked explicit irrevocability or dissolution clauses and that applicants had answered “Yes” to Row 6 of Form 10AB despite the absence of an express irrevocability provision. The tax authorities had treated such declarations as false or incorrect information constituting a specified violation under Section 12AB(4).
The Bombay High Court ruled that registration or renewal under Section 12AB could not be rejected solely because the trust deed lacked an express irrevocability or dissolution clause. It further directed that answering “Yes” to Row 6 of Form 10AB in those circumstances should not, by itself, be treated as furnishing false or incorrect information. The High Court directed modification of the Form 10A/10AB utility and specifically required Question 6 to ask whether the trust or institution was revocable. It also quashed rejection orders involving similarly situated trusts, including consequential Section 80G rejections based exclusively on the denial of Section 12AB registration, and directed fresh consideration of affected applications.
Following the binding Bombay High Court judgment, the ITAT Mumbai held that the same principles applied to the assessee’s appeal. Accordingly, it set aside the CIT(E)’s order dated 27 December 2025 and directed reconsideration of application No. CIT(Exemptions),MUMBAI/2025-26/12AA/11396 in accordance with the High Court’s ruling. The Tribunal expressly preserved all rights and contentions of the assessee and directed that a reasonable opportunity of hearing be provided. The appeal was allowed for statistical purposes by the order pronounced on 21 May 2026. Importantly, the Tribunal did not itself grant registration; it remanded the application for fresh adjudication.
Cases Discussed
Chamber of Tax Consultants Vs. Commissioner of Income-tax (Exemptions) — [2026] 184 taxmann.com 374 (Bombay High Court), 09.03.2026.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
The present appeal preferred by the Assessee is directed against the order, dated 27/12/2025, passed by the Learned Commissioner of Income Tax (Exemption), Mumbai [hereinafter referred to as the ‘CIT(E)’] whereby the application filed by the Assessee in Form No.10AB seeking registration under Section 12AB of the Income Tax Act, 1961 [hereinafter referred to as ‘the Act’] was rejected.
2. The Assessee has raised following grounds of appeal:
1. The impugned rejection order dated 27/12/2025 rejecting the assessee’s application for renewal of registration under Section 12A(1)(ac) (ii) of the Income Tax Act, 1961 filed on 24.05.2025 for assessment year 2027-2028, is erroneous, arbitrary, and contrary to law, in as much as it solely hinges on the non-inclusion of a irrevocable & dissolution clauses in the trust deed, overlooking the assessee’s
2. The assessee trust is a genuine charitable institution duly registered under Bombay Public Trusts Act, 1950, engaged in charitable activity such as Medical Relief, Education donation to needy people and other charitable object, has been compliant with all statutory obligations.
3. The assessee has approached the Charity Commissioner, seeking amendment to the trust deed to incorporate the requisite irrevocable & dissolution clauses as per Section 12A(1)(ac)(ii). The amendment process, being statutory, is underway but is likely to extend beyond 31.03.2026 due to procedural timelines under the relevant Trusts Act.
3. When the appeal was taken up for hearing, none was present on behalf of the Assessee. However on the perusal of the grounds raised by the Assessee in the present case we find that the issue raised therein had come up for consideration before the Hon’ble Bombay High Court in the case of Chamber of Tax Consultants Vs. Commissioner of Income-tax (Exemptions) [2026] 184 taxmann.com 374, dated 09/03/2026. On perusal of the same, we find that a writ petition was filed under Article 226 of the Constitution of India before the Hon’ble Bombay High Court challenging the action of the Learned CIT(E) rejecting application for renewal under Section 12AB of the Act. The issues requiring determination were recorded in Paragraph 4 of the said judgment which reads as under:
“4. The core issue arising for our determination revolves around a view taken by Respondent No. 1 (which the Petitioners allege is untenable) while processing renewal applications filed in Form 10AB under the registration regime effective from 1st April 2021 in terms of section 12AB of the Act. Respondent No. 1 has rejected the applications for renewal of registration of Petitioner Nos. 3 to 8, primarily, on two grounds
a. the trust deed or instrument constituting the concerned entities does not contain an explicit clause stating that the trust is “irrevocable” and/or providing for the manner of dissolution;
b. the applicants, in their online Form 10AB, were compelled to answer “Yes” to the question in Row 6, viz., “Whether the trust deed contains clause that the trust is irrevocable?”. Since, the trust deeds were silent on this aspect, Respondent No. 1 has treated this reply as furnishing “false or incorrect information,” which constitutes a “specified violation” in terms of clause (9) of the Explanation below section 12AB(4) of the Act.”
4. The Hon’ble Bombay High Court answered the above issued in favour of the Assessee and quashed the order passed by the Learned CIT(E) while allowing the writ petition giving following directions:
“46. In the result, the Writ Petition is allowed. Due to the peculiar facts, as presented by the Petitioners, we pass the following order:
i. The Respondents shall refrain from rejecting applications for registration/renewal under section 12AB solely on the ground of the absence of an explicit irrevocability and/or dissolution clause in the Trust Deed/instrument.
ii. The Respondents shall not treat the answer “Yes” to Row 6 of Form 10AB, in the absence of any explicit clause of irrevocability, as furnishing “false or incorrect information” constituting a “specified violation”. Further, this shall not be a ground to reject an application for registration under section 12AB of the Act.
iii. The Respondents shall also amend the utility of Form 10A/10AB to allow applicants to correctly state their position regarding the irrevocability clause without being forced to make an incorrect declaration. This should be done as soon as possible.
iv. Question number 6 in Form 10AB should be modified to read thus, “Is the trust/institution revocable?”.
v. The impugned orders passed in the case of Petitioner Nos. 3 to 8 rejecting registration under section 12AB of the Income-tax Act, are hereby quashed and set aside.
v. All such orders where renewal of registration under Section 12AB has been rejected on the grounds discussed above, are also hereby quashed and set aside.
vi. Further, it is also directed that all consequential orders passed denying registration under section 80G of the Act, where such rejection is on the ground that once registration under section 12AB is denied, registration under section 80G also cannot be granted, are also hereby quashed and set aside. This would, of course, apply only to a case where registration under section 12AB has been rejected on the grounds discussed above. The above order that we pass is to avoid any multiplicity of litigation so as to not require the trusts to challenge the orders passed by Respondent No. 1 denying registration under section 12AB and 80G of the Act on the grounds as discussed in this order.
vii. Respondent No.1 shall decide the applications of the Petitioners and all other similarly situated trusts, whose orders are hereby quashed, afresh and in accordance with the law and the ratio laid down in this judgment, within a period of six weeks from today. Any order so passed shall be deemed to come into effect from 1 April, 2026,
47. Rule is made absolute in the aforesaid terms and the Writ Petition is also disposed of in terms thereof. However, there shall be no order as to costs.”
5. The above judgment of the Hon’ble Bombay High Court is applicable to the issued raised in the present appeal. Accordingly, respectfully following the above judgment of the Hon’ble Bombay High Court in the case of Chamber of Tax Consultants Vs. Commissioner of Income-tax (Exemptions) [2026] 184 taxmann.com 374, we set aside the impugned Order, dated 27/12/2025, passed by the Learned CIT(E) with the directions to decide application [CIT(Exemptions),MUMBAI/2025-26/12AA/11396] filed by the Assessee afresh in accordance with the aforesaid judgment of the Hon’ble Bombay High Court.
All the rights and contentions of the Assessee are left open and the Assessee shall be at liberty to raise the same before the Learned CIT(E). It is clarified that the Assessee would be granted a reasonable opportunity of being heard. In terms of the aforesaid, all the Grounds raised by the Assessee are allowed for statistical purposes.
6. In result, the present appeal preferred by the Assessee is allowed for statistical purposes.
Order pronounced on 21.05.2026.
