ITAT Mumbai Clarifies: No Conditional 12AB and 80G Relief Based on Prospective Supreme Court Litigation

1. Background and Context

The Mumbai Bench of the Income Tax Appellate Tribunal in Kshitij Foundation Vs CIT (ITAT Mumbai) has settled an important issue on the scope of powers of the Commissioner of Income Tax (Exemptions) while granting registration under Section 12AB and approval under Section 80G(5) of the Income Tax Act 1961.

The central question examined was whether the CIT(E), while allowing registration and approval, can make their effectiveness and corresponding tax benefits contingent upon the result of litigation proposed to be filed by the Revenue before the Hon’ble Supreme Court.

The Tribunal has held that:

  • Statutory registration under Section 12AB and approval under Section 80G must be granted in accordance with the law as it stands on the date of the order.
  • Authorities cannot “reserve” or “dilute” a statutory benefit by tying it to the uncertain outcome of future proceedings before a higher court.
  • Once the assessee satisfies the statutory conditions, registration/approval cannot be put in a state of suspended uncertainty merely because the Department intends to challenge a binding High Court ruling.

2. Facts of the Case

2.1 Nature of the assessee and registrations granted

  • The assessee, Kshitij Foundation, is a public charitable trust registered under the Maharashtra Public Trusts Act, 1950.
  • The CIT(E) passed two orders dated 28/03/2026:
    • Granting registration under Section 12AB(1)(b) for Assessment Years 2027-28 to 2036-37, and
    • Granting approval under Section 80G(5) for Assessment Years **2027-28 to 2031-32`.
  • The CIT(E) specifically recorded the nature of the activities of the assessee as “Charitable”.

2.2 Objection regarding irrevocability clause

During examination of the applications:

  • The CIT(E) noticed that the trust deed did not contain an explicit clause stating that the transfer of property to the trust was “irrevocable for all times”.
  • At the same time, the CIT(E) relied upon the judgment of the Hon’ble Bombay High Court in The Chamber of Tax Consultants & Ors. vs. CIT(E), Writ Petition (L) No. 7587 of 2026.
  • In that decision, the High Court had held that:
    • A public charitable trust is treated as irrevocable by operation of law unless the instrument of trust itself confers a specific power of revocation.
    • Registration or renewal cannot be refused merely because the trust deed does not carry a specific irrevocability clause.

Proceeding in line with the High Court ruling, the CIT(E) did grant registration under Section 12AB and approval under Section 80G(5).

2.3 Disputed conditions linked to future Supreme Court proceedings

Despite granting both benefits, the CIT(E):

  • Inserted a condition in the Section 12AB order (Condition No. 15) and a similar condition in the Section 80G order (Condition No. 5) that:
    • The “applicability” of the registration/approval and
    • The “consequential tax benefits” with effect from 01/04/2026
      would remain subject to the outcome of proceedings that the Revenue proposed to pursue before the Hon’ble Supreme Court against the above Bombay High Court judgment.

The assessee challenged these conditions before the ITAT, not the substantive grant of registration or approval.

3. Delay in Filing Appeals and Its Condonation

3.1 Reason for delay

Both appeals were filed with a delay of 59 days. The assessee explained that:

  • Initially, the trustees believed that since registration under Section 12AB and approval under Section 80G had already been granted, there was no need to appeal only against the qualifying condition.
  • Subsequently, when the assessee faced practical challenges in receiving donations because donors were hesitant in light of the conditional wording, professional advice was obtained and appeals were then filed.
  • This explanation was backed by affidavits of the trustee.

The Tribunal referred to: