Vipassana Research Institute Vs CIT (ITAT Mumbai)
SECTION 12AB & 80G: A PROPOSED SLP IS NOT A STAY ORDER—CIT(E) CANNOT GRANT REGISTRATION WITH “TERMS & CONDITIONS APPLY LATER”
Registration granted—but relief kept in suspense
The CIT(E) granted the assessee renewal of registration u/s 12AB & approval u/s 80G(5). However, he attached special conditions to both orders.
Condition No. 15 in the section 12AB order recorded that the trust instrument did not contain an express clause declaring that the transfer of property to the trust was irrevocable for all times.
The CIT(E) referred to section 332(2)(b) of the Income-tax Act, 2025 & the Bombay High Court’s judgment in The Chamber of Tax Consultants & Ors. v. CIT(E) [2026] 184 taxmann.com 374 (Bom.).
Although registration was formally granted in compliance with that judgment, the CIT(E) recorded that the Revenue proposed to file an SLP before the Supreme Court. He therefore made the operation of the registration & consequential tax benefits from 01.04.2026 subject to the outcome of the proposed Supreme Court proceedings.
An identical qualification was inserted as Condition No. 5 in the approval granted u/s 80G(5).
Thus, the assessee received registration certificates—but with their tax efficacy placed under a future-litigation cloud.
A public charitable trust is irrevocable unless positively made revocable
The Bombay High Court in Chamber of Tax Consultants had conclusively decided the controversy concerning the absence of an express irrevocability clause.
The High Court held that a public charitable trust is deemed irrevocable by operation of law unless its governing instrument expressly reserves a power of revocation.
There is a clear distinction between a trust being legally irrevocable & its instrument containing a separately worded declaration that it is irrevocable.
Mere silence in the trust deed does not make the trust revocable. Revocability must arise from a positive clause permitting re-transfer of the trust property or reassumption of control by the transferor within the meaning of sections 60 to 63.
Consequently, the absence of an explicit irrevocability or dissolution clause cannot, by itself, justify rejection of registration or renewal u/s 12AB.
Income-tax Act, 2025 does not demand magic words
The High Court had also considered section 332(2)(b) of the Income-tax Act, 2025.
It held that the provision requires the property to be held under an irrevocable trust. It does not require every trust instrument to contain a particular sentence expressly declaring that the trust is irrevocable.
The statutory enquiry concerns the legal character of the trust—not the presence or absence of ritualistic language in its governing document.
Therefore, the very issue on which the CIT(E) inserted the impugned conditions stood authoritatively settled by the jurisdictional High Court.
A binding judgment cannot be applied with an asterisk
The ITAT held that every administrative & quasi-judicial authority functioning within the territorial jurisdiction of the Bombay High Court was bound to apply its judgment fully & unreservedly.
The binding operation of a judgment does not remain suspended merely because the losing party proposes to challenge it or even files further proceedings.
Unless the judgment is stayed, modified or reversed by a superior Court, it continues to govern the field.
The CIT(E) could not profess compliance with the High Court’s judgment while simultaneously attaching a condition which postponed, diluted or rendered uncertain the statutory benefit flowing from it.
Such conditional compliance effectively amounted to placing an administrative reservation upon a binding judicial declaration.
Proposed litigation creates no present legal disability
The mere possibility that the Revenue may file an SLP does not create any legal restraint upon the operation of the High Court’s judgment.
Even the filing or admission of an SLP would not, by itself, amount to a stay unless the Supreme Court specifically orders otherwise.
Any future consequence arising from a Supreme Court judgment would necessarily be governed by that judgment & the law applicable at the relevant time. However, an uncertain future event cannot be converted into a present fetter upon registration or approval validly granted under the law presently in force.
The CIT(E)’s attempt to safeguard Revenue against a possible future reversal therefore lacked statutory authority.
Revenue already has enough statutory armour
The ITAT also rejected the suggestion that such conditions were necessary to protect Revenue.
Registration u/s 12AB does not grant automatic or unconditional exemption for every assessment year. The actual claim remains open to examination by the AO under sections 11 to 13 & other applicable provisions.
Similarly, the Act contains independent provisions concerning specified violations, cancellation of registration & taxation of accreted income.
If the assessee violates the statutory conditions, Revenue can invoke those provisions. There was therefore no justification for burdening the registration & approval with an additional condition which neither arose from the statute nor conformed to the binding High Court judgment.
Conditions expunged—not merely softened
The ITAT held that Condition No. 15 in the order u/s 12AB was legally unsustainable insofar as it made the registration & consequential tax benefits from 01.04.2026 dependent upon proposed Supreme Court proceedings.
The corresponding Condition No. 5 in the order u/s 80G(5) suffered from the same defect.
Both conditions were directed to be expunged.
The CIT(E) was directed to issue suitably modified orders or certificates deleting the offending qualifications. The registration & 80G approval would operate according to their respective terms, the remaining lawful conditions & the law currently in force.
Decision
The ITAT held that a proposed SLP cannot suspend or dilute the binding effect of the jurisdictional High Court’s judgment.
Registration u/s 12AB & approval u/s 80G(5) could not be made contingent upon the outcome of proceedings which had not resulted in any stay, modification or reversal of the governing judgment.
Both appeals were allowed, the impugned conditions were expunged & the CIT(E) was directed to issue modified certificates without those qualifications.
Cases Discussed
- The Chamber of Tax Consultants & Ors. v. CIT(E), Writ Petition (L) No. 7587 of 2026, reported in [2026] 184 taxmann.com 374 (Bom.).
FULL TEXT OF THE JUDGMENT/ORDER OF ITAT MUMBAI
The aforesaid appeals have been preferred by the assessee against the respective orders passed by the learned Commissioner of Income-tax (Exemptions), Mumbai, granting renewal of registration under section 12AB and approval under section 80G(5) of the Income-tax Act, 1961. Since both the appeals arise from the same set of facts and involve an identical legal issue, they were heard together and are being disposed of by this consolidated order.
2. The grievance of the assessee is confined to the special conditions incorporated by the learned CIT(E) while granting the aforesaid registration and approval. In the order granting registration under section 12AB, condition No. 15 records that the instrument of trust does not contain an explicit clause affirming that the transfer of property under the trust is irrevocable for all times. Reference has thereafter been made to section 332(2)(b) of the Income-tax Act, 2025 and, while noticing the judgment of the Hon’ble jurisdictional Bombay High Court in The Chamber of Tax Consultants & Ors. v. CIT(E), Writ Petition (L) No. 7587 of 2026, reported in [2026] 184 taxmann.com 374 (Bom), the learned CIT(E) has stated that the Revenue proposes to prefer a Special Leave Petition before the Hon’ble Supreme Court. Consequently, although registration has been granted in purported compliance with the judgment of the Hon’ble Bombay High Court, its applicability and the consequential tax benefits with effect from 01.04.2026 have been made subject to the outcome of the proceedings before the Hon’ble Supreme Court. An identical qualification has been incorporated as condition No. 5 in the order granting approval under section 80G(5).
3. Before us, the learned counsel for the assessee submitted that once the Hon’ble jurisdictional High Court has authoritatively decided the issue, the learned CIT(E) was bound to give complete effect to the judgment and could not render the registration or its consequential benefits contingent upon the outcome of a proposed proceeding before the Hon’ble Supreme Court. It was further submitted that there is neither any order staying the operation of the judgment nor any subsequent decision modifying or reversing the law declared therein. The impugned conditions, therefore, introduce an uncertainty contrary to the binding judicial mandate and materially prejudice the assessee notwithstanding the formal grant of registration and approval.
4. The learned CIT-DR, on the other hand, relied upon the impugned orders and submitted that registration and approval have, in fact, been granted to the assessee and the impugned conditions merely safeguard the interest of the Revenue in the event of the judgment of the Hon’ble Bombay High Court being interfered with by the Hon’ble Supreme Court.
5. We have heard the rival submissions and examined the material placed on record. The limited question before us is whether, after granting registration under section 12AB and approval under section 80G in compliance with a binding judgment of the Hon’ble jurisdictional High Court, the learned CIT(E) could make their efficacy and the consequential statutory benefits subject to the outcome of a proposed Special Leave Petition. The issue concerning the absence of an express irrevocability clause in the instrument of trust stands conclusively determined by the Hon’ble Bombay High Court in The Chamber of Tax Consultants v. CIT(E) (supra). The Hon’ble High Court has held that a public charitable trust is deemed irrevocable by operation of law unless its governing instrument expressly reserves a power of revocation. A clear distinction has been drawn between a trust being irrevocable and its instrument containing an express declaration to that effect. Mere silence of the instrument does not render the trust revocable; revocability must emanate from a positive provision permitting re-transfer of the trust property or reassumption of power over it by the transferor within the meaning of sections 60 to 63 of the Act. It has further been held that the absence of an explicit irrevocability or dissolution clause cannot constitute a ground for rejecting an application for registration or renewal under section 12AB. Significantly, the Hon’ble High Court also considered section 332(2)(b) of the Income-tax Act, 2025 and held that what the provision requires is that the property be held under an irrevocable trust and not that the instrument must invariably contain a separately worded clause declaring its irrevocability.
6. Once the Hon’ble jurisdictional High Court has declared the law upon an issue, every authority functioning within its territorial jurisdiction is bound to apply that declaration in its entirety. The binding force of a judgment does not remain in abeyance merely because the aggrieved party proposes to challenge it or has instituted further proceedings. Unless its operation is stayed, or the judgment is reversed or modified by a superior court, it continues to govern the field and must be implemented without reservation. An administrative or quasi-judicial authority cannot, while professing compliance with a binding judgment, append a qualification which effectively postpones, attenuates or renders uncertain the relief flowing from it. The possibility that the Revenue may prefer an SLP, or that such SLP may subsequently be entertained, furnishes no legal basis for curtailing a subsisting statutory benefit. Any consequence arising from a future judgment of the Hon’ble Supreme Court would necessarily be governed by that judgment and the law applicable at the relevant time; an uncertain future eventuality cannot, however, be converted into a present fetter upon registration and approval otherwise validly granted under the existing law.
7. The statutory scheme, in any event, contains adequate safeguards against misuse. Registration under section 12AB does not confer an unconditional entitlement to exemption for every assessment year, and the actual claim remains subject to examination by the Assessing Officer under sections 11 to 13 and the other applicable provisions of the Act. Likewise, the provisions relating to specified violations, cancellation of registration and taxation of accreted income continue to operate wherever their respective statutory conditions are fulfilled. Therefore, no legitimate interest of the Revenue requires the registration or approval to be burdened by a condition which neither emanates from the statute nor accords with the law declared by the Hon’ble jurisdictional High Court.
8. Accordingly, in ITA No. 6404/Mum/2026, condition No. 15 incorporated in the order granting registration under section 12AB, insofar as it makes the applicability and consequential tax benefits of the registration with effect from 01.04.2026 subject to the outcome of the proceedings proposed to be instituted before the Hon’ble Supreme Court, is legally unsustainable and is hereby expunged. Similarly, in ITA No. 6403/Mum/2026, condition No. 5 incorporated in the order granting approval under section 80G(5), making the approval and its consequential benefits subject to the outcome of the proposed proceedings before the Hon’ble Supreme Court, is also expunged. The learned CIT(E) is directed to issue suitably modified orders/certificates under section 12AB and section 80G(5), deleting the aforesaid qualifications. The registration and approval shall operate in accordance with their respective terms and the law presently in force, subject, of course, to the remaining lawful conditions contained therein and the applicable provisions of the Act.
9. In the result, both the appeals of the assessee are allowed in the terms indicated above.
Order pronounced in open Court on 8th September, 2026.
