Case Law Details
Aditya Birla Education Trust Vs CIT (Exemption) (ITAT Mumbai)
Section 12AB Renewal Rejection Set Aside as Earlier ITAT Directions Were Binding: ITAT Mumbai
The appeal before the Income Tax Appellate Tribunal (ITAT), Mumbai Bench “A”, arose from the order dated 30.03.2026 passed by the Commissioner of Income Tax (Exemption), Mumbai rejecting the assessee’s application for renewal of registration under Section 12AB of the Income-tax Act, 1961. The appeal related to the renewal application filed under Section 12A(1)(ac)(ii) after the registration originally granted on 28.05.2021 was approaching expiry.
Following the statutory amendments requiring re-registration of charitable institutions, the assessee had applied under Section 12A(1)(ac)(i) on 22.04.2021 and obtained registration under Section 12AB on 28.05.2021 for five years up to Assessment Year 2026-27. During the subsistence of this registration, the trustees passed a resolution on 28.01.2022 modifying certain clauses of the trust deed to expressly incorporate and clarify objects relating to medical relief, which had earlier been pursued under the broader object of advancement of general public utility. The amended trust deed received approval from the Charity Commissioner on 02.09.2024, following which the assessee filed an application on 24.12.2024 under Section 12A(1)(ac)(v) seeking approval of the modified objects.
The Commissioner (Exemption), by order dated 30.06.2025, rejected the application and cancelled the registration primarily on three grounds: (i) the assessee had allegedly applied funds outside India for carrying out charitable activities outside India; (ii) its activities were allegedly intended to benefit a particular Marwadi community; and (iii) certain workshops, training programmes and allied activities did not constitute “education” within the meaning of the Act.
The assessee challenged that order before a Coordinate Bench of the Tribunal. By order dated 19.09.2025, the Tribunal set aside the Commissioner’s order, approved the modification of objects and directed continuation of registration under Section 12AB. The Tribunal held that the foreign remittances were made solely in furtherance of educational activities carried on in India; any preference given to Hindi-speaking or Marwadi students did not amount to conferring benefits on a particular religious community or caste within the meaning of Section 13(1)(b); and workshops, seminars and developmental programmes were ancillary and incidental to the principal charitable object of education. The Tribunal further observed that while considering an application under Section 12A(1)(ac)(v), the scope of enquiry was confined to examining whether the amended objects were charitable and did not extend to adjudicating alleged violations of Sections 11 or 13. It therefore directed grant of approval to the modified objects and continuation of registration.
The earlier Tribunal order recorded that the assessee imparted Cambridge and IB curriculum in India and that foreign remittances represented examination fees, subscriptions and educator training expenses for imparting education in India. It observed that payments to overseas educational institutions were towards educational and charitable activities carried out in India and did not amount to application of funds outside India. On the issue of preference to Marwadi students, the Tribunal observed that the trust deed merely provided discretion to give preference to deserving Hindi-speaking or Marwadi students, while scholarships and admissions were granted to students from varied religions and communities. It also held that developmental programmes, workshops, seminars and webinars formed an extension of the main educational activity or, at best, activities in the nature of general public utility. It further observed that, at the stage of considering modification of objects under Section 12A(1)(ac)(v), examination of application of income under Section 11 or alleged violations under Section 13 fell outside the scope of those proceedings. On that basis, it held the rejection of the application for modification of objects and consequential denial of registration under Section 12AB to be unjustified, set aside the order and directed approval of the modified objects and continuation of registration subject to verification of procedural compliance.
Thereafter, on 29.09.2025, the assessee filed an application under Section 12A(1)(ac)(ii) seeking renewal of registration under Section 12AB. While considering this application, the Commissioner (Exemption) again relied upon the same allegations forming the basis of the earlier order dated 30.06.2025 and concluded that the assessee had violated Sections 11 and 13(1)(b) and committed specified violations under the Explanation to Section 12AB(4). Although the Commissioner acknowledged that the Coordinate Bench had set aside the earlier rejection and directed grant of registration, he rejected the renewal application on the ground that the Department had preferred an appeal before the High Court against the Tribunal’s earlier order and, according to him, the application was liable to be rejected on the same facts in the interest of consistency. Accordingly, the application in Form 10AB was rejected.
Before the Tribunal, the assessee contended that the Commissioner’s action violated settled principles of judicial discipline. It was submitted that once the Coordinate Bench had adjudicated the controversy and issued specific directions, the Commissioner was bound to implement those directions unless the Tribunal’s order had been stayed or suspended by a superior forum. The assessee also submitted that the issues relating to foreign remittances, alleged community preference and modification of objects had already been decided in its favour and could not be reopened. The Revenue relied on decisions including Jamaliya Patidar Panch v. CIT (Exemption), Ahmedabad [2025] 177 taxmann.com 113 and Sila for Change Foundation v. Commissioner of Income Tax (Exemption) [2025] 173 taxmann.com 694 in support of its submissions.
The Tribunal observed that the controversy lay within a narrow compass. It noted that the Coordinate Bench, by its order dated 19.09.2025, had already examined the very grounds that formed the basis of the rejection order dated 30.06.2025 and had directed continuation of registration under Section 12AB. It held that those findings remained binding between the parties unless modified, reversed or stayed by a superior judicial forum. The Tribunal found that the Commissioner had consciously declined to follow the earlier directions solely because the Department had filed an appeal before the High Court. It held that mere filing of an appeal did not eclipse, suspend or dilute the binding nature of a judicial order and that, unless specifically stayed by the appellate forum, such an order continued to bind subordinate authorities. During the hearing, the Departmental Representative could not produce any material showing that the High Court had granted a stay against the earlier Tribunal order.
The Tribunal further held that rejection of registration on account of modification of the object clause had already been adjudicated by the Coordinate Bench while deciding the earlier appeal under Section 12A(1)(ac)(v). Since those findings had attained operative finality and remained unstayed, the Commissioner was not justified in reviving the same grounds while deciding the renewal application under Section 12A(1)(ac)(ii). It also noted that the earlier Tribunal order had already ruled on the allegations regarding application of funds outside India, alleged benefit to a particular Marwadi community and the contention that workshops, training programmes and allied activities did not constitute education. Consequently, the impugned order could not be sustained.
Accordingly, following the binding precedent of the Coordinate Bench in the assessee’s own case, the Tribunal set aside the order of the Commissioner (Exemption) and restored the matter to his file with a direction to grant renewal of registration under Section 12AB in conformity with the binding directions contained in the Tribunal’s order dated 19.09.2025 and in accordance with law, preferably within eight weeks from receipt of the order after affording the assessee a reasonable opportunity of being heard. The appeal was allowed for statistical purposes.
Cases Discussed:
- Jamaliya Patidar Panch v. CIT (Exemption), Ahmedabad [2025] 177 taxmann.com 113.
- Sila for Change Foundation v. Commissioner of Income Tax (Exemption) [2025] 173 taxmann.com 694.
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