ITAT Mumbai Rules Out Conditional Caveats in Section 12AB Registration and Section 80G Approval

Background and Context

The decision in Keshavlal Vajechand Kapadia Charity Trust Vs CIT (ITAT Mumbai) examines whether the Commissioner of Income Tax (Exemption) [CIT(E)] can legally attach a conditional rider to registration under Section 12AB and approval under Section 80G of the Income Tax Act 1961, making such benefits subject to the future outcome of proposed litigation before the Hon’ble Supreme Court.

Four appeals were filed by the assessee trust, all linked to a common set of proceedings concerning:

  • Renewal of registration under Section 12AB, and
  • Renewal/continuation of approval under Section 80G.

Since the factual matrix and legal controversy were identical, the Income Tax Appellate Tribunal, Mumbai Bench, decided all four appeals through a consolidated order.

Factual Matrix

Initial Rejection by CIT (Exemption)

The assessee, a public charitable trust, had approached the CIT(E) seeking:

  • Renewal of its registration under Section 12AB, and
  • Approval under Section 80G.

By separate orders dated 14.02.2026, the CIT(E) refused both applications. The principal basis of rejection was that the trust deed:

  • Did not contain a specific clause declaring the trust to be irrevocable, and
  • Did not expressly state that the trust assets were irrevocably earmarked for charitable purposes.

According to the CIT(E), the absence of such explicit language meant that the assessee allegedly failed to satisfy the requirement under Section 332(2)(v) of the Income Tax Act, 2025. On this reasoning, registration and approval were denied.

The assessee challenged these rejection orders before the ITAT through:

  • ITA No. 4404/Mum/2026, and
  • ITA No. 4403/Mum/2026.

Intervention of the Bombay High Court

While these appeals were pending, the core legal issue – whether authorities could insist on an express irrevocability clause in the trust deed for granting registration/approval – came up before the Hon’ble Bombay High Court in Chamber of Tax Consultants & 86 Others vs. CIT (Exemption) in Writ Petition (L) No. 7587 of 2026.

The Bombay High Court held that:

  • In the case of a public charitable trust, irrevocability is presumed in law,
  • Unless the trust instrument itself expressly permits revocation, and
  • Hence, registration or approval cannot be denied merely because the trust deed does not contain an explicit irrevocability clause.

The High Court further directed that authorities must not reject applications for registration/renewal/approval solely on the ground that the trust deed lacks an explicit statement of irrevocability.

This judgment directly undermined the very foundation on which the CIT(E) had rejected the assessee’s applications.

Subsequent Grant of Registration and Approval with Caveats

Following the binding decision of the Bombay High Court, the CIT(E) revisited the assessee’s case and thereafter:

  • Granted registration under Section 12AB, and
  • Granted approval under Section 80G.

However, while issuing these fresh orders of grant, the CIT(E) inserted specific caveats, to the effect that:

  • The Revenue proposed to challenge the Bombay High Court judgment before the Hon’ble Supreme Court;

  • Therefore, by way of “abundant caution”, it was being indicated that:

    • The Section 12AB registration,
    • The Section 80G approval, and
    • All consequential benefits

    would remain subject to the final outcome of such contemplated proceedings before the Supreme Court.

Aggrieved by these conditional caveats, the assessee filed separate appeals:

  • ITA No. 4437/Mum/2026, and
  • ITA No. 4436/Mum/2026.

Issues Before the Tribunal

The ITAT was required to resolve two distinct questions:

  1. Effect of Subsequent Grant on Earlier Rejection Appeals
    Whether the original appeals challenging the rejection orders dated 14.02.2026 (relating to Section 12AB and Section 80G) survived once the CIT(E) had subsequently granted registration and approval.