Shiv Sushil Bindal Charitable Trust Vs CIT(Exemption) (ITAT Delhi)
Delhi ITAT: U/s 12AB/80G Renewal Cannot Be Rejected for Absence of Express Irrevocability Clause; Dissolution Clause Transferring Assets to Similar Charity Is Sufficient
The Delhi ITAT held that absence of an express “irrevocability clause” in a charitable trust deed cannot by itself justify rejection of registration under section 12AB or approval under section 80G. The Tribunal directed the CIT(E) to consider the applications on merits and grant registration/approval if the other statutory conditions are satisfied.
The assessee was an old charitable trust registered under section 12A since 16.06.1993 and under section 80G since 05.09.2007, with no change in its objects or activities. Its renewal applications were rejected because the CIT(E) insisted that the trust deed must expressly declare the trust irrevocable.
The CIT(E) had also relied upon the Income-tax Act, 2025, particularly section 332, observing that from 01.04.2026 the law requires property to be held for the benefit of the general public under an irrevocable trust. On this basis, he concluded that the trust instrument itself must contain an explicit clause declaring the transfer of property irrevocable for all time.
The Tribunal disagreed. Crucially, Clause 42 of the trust deed already provided:
“In case of dissolution of the Trust the remaining assets shall be handed over to some other Trust/Society having similar aims and objects and will not be disbursed in any other manner.”
The ITAT held that this clause effectively ensured that on dissolution the assets could not revert to or benefit the settlor or any individual, but had necessarily to pass to another organisation having similar charitable objects. Thus, in substance, the trust satisfied the requirement against revocability for private benefit.
Following the Bombay High Court decision in Chamber of Tax Consultants v. CIT(E), the Tribunal held that the CIT(E) was not justified in insisting upon the physical insertion of an express irrevocability clause in the trust deed.
The order also records the legal proposition, based on CIT v. S. Raghbir Singh (SC), that where the trust deed contains no power to revoke, retransfer or resume the property, the trust cannot be regarded as revocable. In other words, the relevant enquiry is whether a revocation power exists, rather than whether the deed contains the magic words “this trust is irrevocable.”
Accordingly, the CIT(E)’s rejection was set aside and he was directed to consider the applications on merits and grant registration provided the other requisite conditions are satisfied.
Cases Discussed
