Section 12A Registration Cannot Be Denied for Absence of Irrevocability Clause: ITAT Delhi

Shri Gurudev Ashram Trust Vs CIT (ITAT Delhi)

The Income Tax Appellate Tribunal (ITAT), Delhi, allowed the assessee’s appeal for statistical purposes and set aside the order of the Commissioner of Income Tax (Exemptions) [CIT(E)] rejecting the trust’s application in Form 10AB for registration under Section 12A of the Income-tax Act.

The CIT(E) had rejected the application on the ground that paragraphs 17 and 18 of the trust deed did not specify whether the trust was revocable or irrevocable, nor did they provide for the transfer of the trust’s assets in the event of dissolution. Before the Tribunal, the assessee relied on the judgment of the Bombay High Court in The Chamber of Tax Consultants v. CIT (Exemption) & Ors., dated 9 March 2026. The High Court had held that a public charitable trust is deemed irrevocable by operation of law unless the trust deed expressly provides otherwise. It further held that the absence of an express irrevocability clause cannot be a ground for rejecting or refusing renewal of registration under Section 12AB, and that answering “Yes” in Form 10AB in such circumstances cannot be treated as furnishing false or incorrect information.

When confronted with this legal position, the Departmental Representative did not controvert the assessee’s submission.

After considering the submissions, the Tribunal observed that, apart from the issue relating to the irrevocability clause, the CIT(E) had not examined or carried out the necessary verification regarding the genuineness of the trust’s activities, its charitable objects, or the commencement of its activities. The Tribunal held that registration should not be denied on the ground of the absence of an irrevocability clause. However, it clarified that the CIT(E) was at liberty to examine other relevant aspects, including the genuineness of the activities, the charitable nature of the objects, and the commencement of the trust’s activities.

FULL TEXT OF THE ORDER OF ITAT DELHI

This appeal by the assessee is directed against the order of learned CIT(Exemptions), Delhi dated 19th March, 2026 whereby the application of the assessee in Form 10AB for registration under Section 12A of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) was rejected.

2. At the outset, the learned Counsel for the assessee stated that the assessee’s application in Form No.10AB seeking registration under Section 12A was rejected by the learned CIT(Exemption) for the reason that in paragraph Nos.17 & 18 of the trust deed, there is no provision that the trust is revocable or irrevocable and how the assets of the trust are to be transferred in case of dissolution of the trust. The learned Counsel stated that Hon’ble Bombay High Court in the case of The Chamber of Tax Consultants Vs. CIT(Exemption) & Ors. in Writ Petition (L) No.7587 of 2026, judgement dated 9t^h March, 2026, has held that a public charitable trust is deemed irrevocable by operation of law unless the trust deed expressly provides otherwise, and that absence of an explicit irrevocability clause cannot be ground for rejection of registration or renewal under Section 12AB. It was further directed by the Hon’ble High Court that applications for registration under Section 12AB shall not be rejected solely on the ground of absence of an irrevocability clause and that answering “Yes” in Form 10AB in such circumstances cannot be treated as furnishing false or incorrect information.

3. When these facts were confronted to the learned CIT-DR, he could not controvert the above fact situation.

4. After going through the arguments of both the sides as well as the case law of Hon’ble Bombay High Court cited by the learned Counsel for the assessee in the case of The Chamber of Tax Consultants (supra) and also the order of learned CIT(Exemption), we noted that apart from irrevocability clause, learned CIT(Exemption) has not examined and has not carried out necessary verification in support of the genuineness of the activities, charitable objects and commencement of its activities. Hence, we set aside the order of learned CIT(Exemption) with a direction that he will not deny registration on the issue of irrevocability clause but, he can examine other aspects like genuineness of the activities, charitable objects and commencement of the activities, etc. In terms of the above, the order of learned CIT(Exemption) is set aside and the matter is restored back to the file of learned CIT(Exemption) for deciding the same de-novo after providing sufficient opportunity of being heard to the assessee.

5. In the result, the appeal of the assessee is allowed for statistical purposes.

Decision pronounced in the open Court on conclusion of hearing on 22nd June, 2026.