Sayaji U BA Khin Memorial Trust Vs CIT (ITAT Mumbai Bench)
Registration Granted, Benefits Suspended Till Supreme Court Decides? CIT(E) Cannot Create a “Wait & Watch” Category Under Sections 12AB & 80G – ITAT Mumbai
Summary: The assessee, a charitable trust, applied for registration u/s 12AB and approval u/s 80G. After calling for details and examining the trust’s objects and activities, the CIT(E) was satisfied about its eligibility and granted both registration and approval.
However, the CIT(E) inserted an unusual condition in the orders.
The trust deed did not contain an express clause declaring that the transfer of the trust property was irrevocable for all times. The CIT(E) observed that section 332(2)(b) of the Income Tax Act, 2025, effective from 01.04.2026, contemplated that properties must be held for the benefit of the general public under an irrevocable trust.
At the same time, the Bombay High Court, in The Chamber of Tax Consultants & Others v. CIT(E), had held that a public charitable trust is deemed irrevocable by operation of law unless its instrument expressly provides a power of revocation. The High Court had directed the Department not to reject applications for registration or renewal u/s 12AB merely because the trust deed lacked an express irrevocability clause.
