ITAT Mumbai Expunges Conditional Rider from Section 12AB Registration: Proposed Supreme Court Challenge Cannot Override Binding Jurisdictional High Court Judgment

Overview of the Dispute

In a significant ruling touching upon the finality of trust registrations granted under Section 12AB of the Income Tax Act, 1961, the Mumbai Bench of the Income Tax Appellate Tribunal, in Subh Prabhat Educational Trust Vs CIT (Exemptions) (ITAT Mumbai), Appeal No. ITA 7760/MUM/2026, pronounced on 08/10/2026, held that a registration already granted in compliance with a binding jurisdictional High Court judgment cannot be rendered conditional or uncertain merely on the ground that the Revenue intends to pursue a Special Leave Petition before the Supreme Court.

The Tribunal's intervention was surgical in nature. The registration itself, bearing Registration No. AAATS0670E27MB01, granted under Section 12AB(1)(b) for Assessment Years 2027-28 to 2036-37, was not disturbed. What was expunged was an anticipatory qualification inserted by the Commissioner of Income Tax (Exemptions) that sought to make the registration's applicability and consequential tax benefits contingent upon the outcome of proposed proceedings before the Supreme Court.

Background: Registration Granted but Burdened with a Contingent Condition

Application and Grant of Registration

Subh Prabhat Educational Trust applied for registration under Section 12AB of the Income Tax Act, 1961. The CIT(E), Mumbai, by an order dated 04/04/2026 issued in Form No. 10AD, duly granted registration under Section 12AB(1)(b) covering AYs 2027-28 to 2036-37.

However, the registration order was accompanied by an annexure containing several conditions. Condition No. 15 proved to be the bone of contention.

The Substance of Condition No. 15

Condition No. 15 noted that the trust's instrument did not include an express clause affirming that the transfer of property to the trust was irrevocable in perpetuity. The CIT(E) acknowledged the Bombay High Court's ruling in The Chamber of Tax Consultants & Ors. v. CIT(E), Writ Petition (L) No. 7587 of 2026, reported at [2026] 184 taxmann.com 374, which had categorically held that:

A public charitable trust is deemed to be irrevocable by operation of law unless the instrument of trust expressly provides for a power of revocation. Registration or renewal cannot be rejected merely for absence of an explicit irrevocability clause.

Having accepted this binding precedent as the basis for granting registration, the CIT(E) nonetheless proceeded to add a rider: the applicability and consequential tax benefits of the registration, with effect from 01/04/2026, would remain subject to the outcome of proceedings that the Revenue proposed to initiate before the Supreme Court against the above High Court judgment.

Arguments Before the Tribunal

Trust's Submissions

The authorised representative for the trust clarified at the outset that the assessee harboured no grievance against the grant of registration itself. The challenge was confined entirely to the conditional qualification embedded within Condition No. 15.

The key arguments advanced were: