ITAT Mumbai: Proposed SLP Cannot Restrict Effect of Section 12AB Registration Granted Pursuant to Jurisdictional High Court Judgment

Background and Core Issue

In Amrut Baug Charity Trust Vs CIT (ITAT Mumbai) (ITA 7710/MUM/2026, order dated 08/10/2026), the Mumbai Bench of the Income Tax Appellate Tribunal examined whether the Commissioner of Income Tax (Exemptions) [CIT(E)] could lawfully grant registration under Section 12AB while inserting a condition that the registration and its tax consequences would be subject to the outcome of a Special Leave Petition (SLP) proposed to be filed before the Hon’ble Supreme Court against a binding Bombay High Court decision.

The Tribunal held that:

  • A binding judgment of the jurisdictional High Court must be followed in full, unless stayed, reversed or modified by a superior court.
  • A mere proposal by the Revenue to file an SLP cannot reduce or postpone the binding nature of such a judgment.
  • Once registration under Section 12AB is granted in compliance with a High Court direction, its operation cannot be made contingent on a possible future Supreme Court outcome.

Accordingly, the ITAT directed deletion of the conditional rider, while clarifying that the registration would continue to be governed by all applicable statutory conditions.

Facts in Brief

Application and Grant of Registration

  • The assessee, Amrut Baug Charity Trust, is a charitable trust that applied for registration under Section 12AB.
  • The CIT(E), Mumbai, through an order dated 06/04/2026 in Form No. 10AD, granted registration to the assessee under Section 12AB(1)(b) for the period relevant to Assessment Years **2027-28 to 2036-37`.
  • This order included various conditions listed in an annexure. The assessee’s appeal before the ITAT was confined to Condition No. 15 in that annexure.

Content of the Disputed Condition

Condition No. 15 recorded that:

  • The trust deed did not contain an express clause that the transfer of property to the trust was irrevocable for all time.
  • Reference was made to section 332(2)(b) of the Income-tax Act, 2025 and the decision of the Hon’ble Bombay High Court in **"The Chamber of Tax Consultants & Ors. v. CIT(E), Writ Petition (L) No. 7587 of 2026"`.
  • The Bombay High Court had directed that the Department must not reject applications for registration or renewal merely due to absence of an explicit irrevocability clause in the trust instrument.

In “respectful compliance” with the Bombay High Court’s decision, the CIT(E) granted registration. However, the CIT(E) added a further stipulation that:

  • Since the Revenue proposed to file an SLP before the Hon’ble Supreme Court against the above High Court judgment,
  • The applicability of the registration and the consequential tax benefits would be subject to the final decision of the Hon’ble Supreme Court in that proposed SLP.

This “future contingency” clause attached to the registration order was the sole subject of challenge before the ITAT.

Grounds Raised by the Assessee

The assessee set out the following grounds before the Tribunal:

  1. The CIT(E) erred in granting approval by making it subject to the outcome of an SLP proposed to be filed by the Revenue before the Hon’ble Supreme Court against the judgment of the Hon’ble Bombay High Court in “The Chamber of Tax Consultants & Ors. v. CIT(E), Writ Petition (L) No. 7587 of 2026”.
  2. The CIT(E) erred in making the approval conditional in this manner, particularly where the earlier denial was solely due to the absence of an express irrevocability clause in the trust deed, which the Bombay High Court had specifically held could not be a ground for refusal.

Submissions on Behalf of the Assessee

The authorised representative argued that: