Case Law Details
Bhaichand Mehta Charitable Trust Vs CIT (Exemption) (ITAT Mumbai)
No Irrevocability Clause? No Problem: Trust Wins U/s 12AB & 80G Battle After Bombay HC Ruling
The Mumbai ITAT dismissed as infructuous the appeals of Bhaichand Mehta Charitable Trust after noting that the trust had subsequently been granted renewal of registration under Section 12AB and approval under Section 80G, following the landmark Bombay High Court ruling in The Chamber of Tax Consultants & Ors. v. CIT(E).
The CIT(E) had originally rejected the trust’s applications on the ground that the trust deed did not contain an express irrevocability and dissolution clause. The CIT(E) further alleged that the trust had furnished incorrect information in Form 10AB by stating that the trust was irrevocable and treated the same as a specified violation under Section 12AB. Consequently, both the 12AB registration and 80G approval were denied.
During the pendency of the appeal, the Bombay High Court held that a public charitable trust is deemed to be irrevocable by operation of law unless the trust deed specifically provides a power of revocation, and directed the Department not to reject registration applications merely because the trust deed lacks an express irrevocability clause. Pursuant to this judgment, the CIT(E) himself granted registration under Section 12AB and approval under Section 80G to the trust.
Since the substantive relief sought by the assessee had already been granted, the Tribunal held that nothing survived for adjudication and dismissed the appeals as infructuous. However, it clarified that if the assessee wished to challenge any conditions imposed in the subsequent registration orders, it would be free to pursue appropriate remedies separately.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
These two appeals filed by the assessee-trust are directed against separate orders passed by the Commissioner of Income Tax (Exemptions), Mumbai [hereinafter referred to as “the CIT(E)”], both dated 31.01.2026.ITA No.3003/Mum/2026 arises from the order passed under section 12AB(1)(b)(ii) of the Income-tax Act, 1961 rejecting the assessee’s application filed in Form No.10AB seeking renewal of registration under section 12AB of the Act. ITA No.3004/Mum/2026 arises from the order passed under the proviso to section 80G(5) of the Act rejecting the assessee’s application for renewal of approval under section 80G(5)(vi) of the Act. Since common facts are involved and both appeals pertain to the same assessee-trust, they were heard together and are disposed of by way of this consolidated order.
2. Briefly stated, the facts of the case are that the assessee-trust filed Form No.10AB on 29.09.2025 seeking renewal of registration under section 12AB of the Act. During verification of the application, the CIT(E) noticed that the application was incomplete and all the documents required under Rule 17A(2) had not been furnished. Accordingly, notice dated 18.12.2025 was issued requiring the assessee to furnish complete details and documents. In response, the assessee filed submissions and furnished the requisite documents.
3. Upon examination of the trust deed and the particulars furnished in Form No.10AB, the CIT(E) observed that the trust deed did not contain an express clause regarding irrevocability and dissolution of the trust. According to the CIT(E), in the absence of an explicit irrevocability and dissolution clause, there was no statutory safeguard ensuring that the assets of the trust would continue to be applied for charitable purposes and, upon dissolution, would be transferred to another trust or institution having similar charitable objects.
4. The CIT(E) further observed that in Form No.10AB the assessee had answered “Yes” to the question whether the trust deed contained a clause rendering the trust irrevocable. However, according to the CIT(E), no such clause was found in the trust deed. The CIT(E), therefore, treated the same as furnishing of incorrect information attracting Explanation (g) to section 12AB(4) of the Act and concluded that the assessee had committed a specified violation. On the aforesaid reasoning, the application seeking renewal of registration under section 12AB was rejected vide order dated 31.01.2026.
5. Consequent to the rejection of registration under section 12AB, the CIT(E) also rejected the assessee’s application for renewal of approval under section 80G(5)(vi). The CIT(E) held that the benefit of section 80G(5) is available only to an institution or fund to which sections 11 and 12 apply and, since the assessee’s application under section 12AB stood rejected, the application under section 80G had become untenable.
6. Aggrieved by the orders of CIT(E), the assessee is in appeal before us.
7. During the course of hearing, the learned Authorised Representative (AR) submitted that subsequent to the passing of the impugned orders, the Hon’ble Bombay High Court in Writ Petition (L) No.7587 of 2026 in the case of The Chamber of Tax Consultants & Ors. Vs. CIT(E) held that a public charitable trust is deemed irrevocable by operation of law unless the trust instrument expressly provides a power of revocation and directed the Department not to reject applications for registration or renewal under section 12AB or approval under section 80G merely on the ground that the trust deed does not contain an express irrevocability clause.
8. The learned AR submitted that pursuant to the aforesaid judgment, the CIT(E) passed fresh orders dated 18.05.2026 granting registration under section 12AB(1)(b) bearing Registration No. AAATB0700C27MB01 valid for assessment years 2027-28 to 2036-37 and approval under section 80G(5) bearing Approval No. AAATB0700C27MB02 valid for assessment years 2027-28 to 2031-32. It was accordingly contended that the substantive relief sought in the present appeals already stands granted by the CIT(E) and therefore the appeals against the rejection orders have become infructuous.
9. The learned AR further invited our attention to paragraph 15 of the subsequent registration order and the corresponding paragraph in the approval order wherein the CIT(E) observed that the registration/approval was being granted in compliance with the judgment of the Hon’ble Bombay High Court but that the consequential tax benefits would remain subject to the outcome of the proceedings before the Hon’ble Supreme Court. Reliance was placed upon the decision of the co-ordinate bench in the case of ILLA Rajesh Foundation v. CIT(E) in ITA Nos.4488 to 4491/Mum/2026 dated 15.05.2026 and it was submitted that such conditional registration and approval were not sustainable in law.
10. The learned Departmental Representative (DR) fairly did not dispute the factual position brought on record by the learned AR regarding the subsequent judgment of the Hon’ble Bombay High Court in the case of The Chamber of Tax Consultants & Ors. Vs. CIT(E) and the consequential grant of registration under section 12AB and approval under section 80G by the learned CIT(E) vide orders dated 18.05.2026. The learned DR also raised no objection to the contention that, in view of the subsequent grant of registration and approval, the original rejection orders dated 31.01.2026 no longer survive.
11. We have heard the rival submissions and perused the material available on record. It is an undisputed position that the impugned orders dated 31.01.2026 rejected the assessee’s applications for renewal of registration under section 12AB and approval under section 80G on the ground that the trust deed did not contain an express irrevocability clause and that the assessee had allegedly furnished incorrect information in Form No.10AB.It is also not in dispute that during the pendency of the present appeals, the Hon’ble Bombay High Court in the case of The Chamber of Tax Consultants & Ors. Vs. CIT(E) settled the controversy and thereafter the CIT(E) himself passed fresh orders dated 18.05.2026 granting registration under section 12AB and approval under section 80G to the assessee-trust.
12. In view of the aforesaid subsequent development, the very basis of the impugned rejection orders no longer survives. The assessee has already been granted registration under section 12AB and approval under section 80G by the competent authority and, therefore, the substantive relief sought in the present appeals stands granted.
13. As regards the further contention of the learned AR challenging the conditional stipulation contained in the subsequent orders dated 18.05.2026, we find that the said grievance arises from separate and independent orders which are not the subject matter of challenge before us in the present appeals.
14. We have carefully considered the decision of the co-ordinate bench in the case of ILLA Rajesh Foundation v. CIT(E) dated 15.05.2026 relied upon by the learned AR. However, in that case, separate appeals had been filed challenging the conditional registration and conditional approval granted by the CIT(E) and the Co-ordinate Bench was directly concerned with the validity of the conditions imposed therein. In the present case, the appeals before us arise only from the rejection orders dated 31.01.2026. The subsequent orders dated 18.05.2026 granting registration and approval are not under challenge before us. Therefore, we refrain from expressing any opinion on the legality or validity of the conditions incorporated therein.
15. It shall be open to the assessee, if so advised, to avail such remedies as may be available in law against the said orders and to raise all contentions available to it, including those based upon the aforesaid decision of the co-ordinate bench.
16. Since registration under section 12AB and approval under section 80G have already been granted to the assessee vide orders dated 18.05.2026, nothing survives for adjudication in the present appeals arising from the earlier rejection orders dated 31.01.2026.
17. Accordingly, in the result, ITA No.3003/Mum/2026 and ITA No.3004/Mum/2026 filed by the assessee are dismissed as infructuous.
Order pronounced in the open court on 09.06.2026.
Author Bio
