Sisters of Charity of St. Anne Vs CIT (Exemption) (ITAT Mumbai)
Summary: The Income Tax Appellate Tribunal (ITAT), Mumbai Bench “G”, in Sisters of Charity of St. Anne Vs Commissioner of Income Tax (Exemption), ITA Nos. 5920 and 5921/Mum/2026, decided on 4 September 2026 for Assessment Year 2026-27, considered whether the Commissioner of Income Tax (Exemption) could impose a condition linking the operation of registration under Section 12AB and approval under Section 80G of the Income Tax Act, 1961, to the outcome of a proposed appeal before the Supreme Court. The assessee was an educational trust registered under the Maharashtra Public Trusts Act, 1950, on 14 January 1969 and had consistently undertaken educational and charitable activities. It applied for registration and approval under Sections 12AB and 80G. By separate orders dated 28 March 2026, the CIT(E) granted both applications but observed that the trust instrument did not expressly state that the transfer of trust property was irrevocable.
The CIT(E) referred to Chamber of Tax Consultants Vs Commissioner of Income-tax (Exemptions), [2026] 184 taxmann.com 374 (Bombay), in which the Bombay High Court held that a public charitable trust is deemed irrevocable by operation of law unless the trust instrument expressly provides a power of revocation. In compliance with that ruling, the CIT(E) granted registration and approval. However, referring to Section 332(2)(b) of the Income Tax Act, 2025, and the Revenue’s contemplated Special Leave Petition against the High Court judgment, the CIT(E) stipulated that the applicability and consequential tax benefits of registration and approval from 1 April 2026 would remain subject to the outcome of the Supreme Court proceedings. The assessee challenged this stipulation rather than the grant of registration or approval itself.
The assessee relied upon three coordinate Bench decisions: Keshavlal Vajechand Kapadia Charity Trust Vs CIT (Exemption), Shri Ramanlal Shah (Pradipkumar & Co.) Charitable Trust Vs CIT (Exemption), and ILLA Rajesh Foundation Vs CIT (Exemption). It argued that the jurisdictional High Court judgment remained binding unless set aside or modified by the Supreme Court. The assessee further submitted that the disputed condition could discourage potential donors and undermine the practical benefits of registration and approval. The Revenue contended that the approvals were not conditional in substance and that the assessee had no cause to appeal. However, the Departmental Representative did not dispute that the Revenue had not challenged the Bombay High Court judgment before the Supreme Court as of the hearing.
The Tribunal observed that registration and approval had already been granted and that the controversy concerned only the additional stipulation. It noted that Section 80G approval enables charitable trusts to receive donations while allowing eligible donors to claim the appropriate deduction. The Tribunal held that an order of a competent court continues to operate unless set aside or varied by a superior court. Since the Bombay High Court’s decision in Chamber of Tax Consultants had not even been challenged at that stage, the CIT(E) could not restrict the operation of the approvals merely by referring to a contemplated Supreme Court appeal. Following the coordinate Bench decision in Keshavlal Vajechand Kapadia Charity Trust, the Tribunal directed that the registration and approval already granted to the assessee would operate without any stipulation, restriction or conditional rider. The impugned condition was deleted, and both appeals were disposed of accordingly. The Tribunal did not remand the matter or require fresh applications.
Cases Discussed
- Chamber of Tax Consultants Vs Commissioner of Income-tax (Exemptions) (Bombay High Court), [2026] 184 taxmann.com 374; Writ Petition (L) No. 7587 of 2026 — The High Court held that a public charitable trust is irrevocable by operation of law unless its trust instrument expressly permits revocation. The CIT(E) granted approval in compliance with this decision but imposed the disputed condition because the Revenue contemplated challenging it.
- Keshavlal Vajechand Kapadia Charity Trust Vs Commissioner of Income-tax (Exemption) (ITAT Mumbai), 187 taxmann.com 1010 — Relied upon by the assessee and expressly followed by the Tribunal for deletion of the condition linking registration and approval to a future Supreme Court decision.
- Shri Ramanlal Shah (Pradipkumar & Co.) Charitable Trust Vs Commissioner of Income-tax (Exemption) (ITAT Mumbai), ITA No. 1985/Mum/2026 — Cited by the assessee as a coordinate Bench decision supporting removal of the conditional stipulation.
- ILLA Rajesh Foundation Vs Commissioner of Income-tax (Exemption) (ITAT Mumbai), ITA Nos. 4488 to 4491/Mum/2026 — Cited by the assessee for the principle that Section 12AB registration and Section 80G approval cannot be subjected to an additional condition based on proposed Supreme Court litigation.
FULL TEXT OF THE ORIGINAL JUDGMENT/ORDER
Both these appeals by the appellant-trust can be conveniently disposed of by this common order.
2. The appellant had filed application for registration/approval under Section 12AB and 80G of the Income Tax Act, 1961 (‘Act’ for short). The appellant happens to be an educational trust registered under the Maharashtra Public Trusts Act, 1950 (erstwhile Bombay Public Trusts Act, 1950). The trust was registered way back on 14.01.1969 as per the Certificate of Registration (page 7 of the Paper Book). The trust has been consistently engaged in educational and charitable activities.
3. The learned CIT(Exemption) has considered both these applications. A perusal of the orders, both dated 28.03.2026, indicate that the learned CIT(Exemption) found that the instrument of trust does not contain any explicit clause affirming that the transfer of property under trust is an irrevocable transfer.
4. On behalf of the appellant reliance is placed on the decision of Bombay High Court in Chamber of Tax Consultants vs. Commissioner of Income-tax (Exemptions) [2026] 184 taxmann.com 374 (Bombay) wherein the High Court has, inter alia, held that any public charitable trust is deemed to be irrevocable by operation of law unless the instrument of trust expressly provides power of revocation. Taking note of the said decision, the learned CIT(Exemption) has granted the registration/approval both under Section 12AB and 80G of the Act. However, the learned CIT(Exemption) has observed that the Revenue is contemplating to challenge the decision of the Bombay High Court before the Supreme Court and in that view of the matter has granted the registration/approval subject to the stipulation that the applicability and consequential tax benefits of the registration/approval w.e.f. 01.04.2026 onwards shall be subject to the outcome of the decision of Supreme Court.
5. The following para 5 of the order is relevant for the purpose :-
“5. In this case, the instrument of trust does not contain any explicit clause affirming that the transfer of property under trust is an irrevocable transfer for all times. Section 332(2)(b) of the Income Tax Act, 2025 inter-alia lays down that a public trust is eligible for registration, only if the trust properties are held for the benefit of the general public under an irrevocable trust. The date of commencement of Income Tax Act, 2025 is 1st April 2026 i.e the same date from which renewal of registration/approval has been sought by the applicant. Therefore, the eligibility conditions prescribed in the Statute for registration/approval are not satisfied in this case. However, Hon’ble Bombay High Court in the Writ Petition(L) No.7587 of 2026 in the case of The Chamber of Tax Consultants & Ors Vs The CIT(E) has held that a public charitable trust is deemed irrevocable by operation of law unless the instrument of trust expressly provides a power of revocation and directed the Department to refrain from rejecting applications for registration/renewal under section 12AB/80G solely on the ground of the absence of an explicit irrevocability clause in the Trust Deed/instrument. Revenue is preferring to move a Special Leave Petition before the Hon’ble Supreme Court against the said order. In the background of these facts, this renewal of registration/approval is being granted in respectful compliance to the binding judicial directions of Hon’ble Bombay High Court. However, the applicant Trust, doner entities and other stakeholders are hereby informed, by way of abundant caution, that the applicability and consequential tax-benefits of this registration/approval w.e.f. 01.04.2026 onwards, remain subject to outcome of the decision of Hon’ble Supreme Court.”
(Emphasis supplied)
6. The present appeals are filed by the appellant feeling aggrieved by the stipulation as aforesaid.
7. We have heard parties. Perused record.
8. The learned AR has placed reliance on the following decisions of co-ordinate benches of this Tribunal :-
i) Keshavlal Vajechand Kapadia Charity Trust v. Commissioner of Income-tax (Exemption), 187 taxmann.com 1010 (Mumbai-Trib.)
ii) Shri Ramanlal Shah (Pradipkumar & Co.) Charitable Trust v. Commissioner of Income-tax (Exemption), ITA No. 1985/Mum/2026
iii) ILLA Rajesh Foundation v. Commissioner of Income-tax (Exemption), ITA Nos. 4488 to 4491/Mum/2026
9. It is submitted that this Tribunal has deleted the relevant stipulation as aforesaid relating to the registration/approval subject to the outcome of the Supreme Court decision. It is submitted that the Revenue has not yet challenged the order of the Bombay High Court in the Chamber of Tax Consultants (supra) and, that apart, the order of the jurisdictional High Court holds the field unless set aside or modified by the Supreme Court. It is submitted that notwithstanding the grant of registration/approval, such a stipulation is bound to dissuade the donors and eventually the appellant would not be able to take benefit of the registration/approval in accordance with law. Thus, the stipulation strikes at the root of the grant of the approval/registration.
10. The learned DR has submitted that the approval is not conditional. Once the approval is granted, there is no reason for the appellant to come up in appeal. The learned DR, however, did not dispute that as yet the Revenue has not filed any challenge before the Supreme Court in the case of Chamber of Tax Consultants (supra).
11. We have carefully considered the circumstances and the submissions made. It is necessary to note that the registration/approval already stands granted. The appellant seems to be aggrieved only by the stipulation. The registration/approval under Section 80G of the Act is with the object that the charitable activity of any trust can get donation and, at the same time, the donors are also able to claim the appropriate benefit on account of such donation as admissible in law. Once the learned CIT(Exemption) had allowed the application granting registration/approval, the appellant-trust and the potential donors, if any, should get appropriate benefit as admissible in law. It is trite that any order subsists until it is set aside or varied by a superior forum/court. As noticed earlier, the judgment in the case of Chamber of Tax Consultants (supra) has not even been challenged as yet. In that view of the matter, and placing reliance on the co-ordinate bench order passed in Keshavlal Vajechand Kapadia Charity Trust (supra) we hereby dispose of the present appeals. We direct that the registration/approval granted to the appellant shall operate without any stipulation, restriction or conditional rider. The impugned stipulation stands deleted.
12. In the result, the appeals are disposed of in the aforesaid terms.
Order pronounced in the open court on 04.09.2026.
