ITAT Mumbai: Charitable Trust Registration Under Section 12AB and Section 80G Cannot Be Made Conditional on a Proposed Supreme Court Appeal
Overview
The Mumbai Bench of the Income Tax Appellate Tribunal, in the matter of Jamshed & Shirin Guzder Trust Vs CIT (ITAT Mumbai), vide order dated 08/10/2026 in ITA 7732/MUM/2026, delivered a significant ruling concerning the registration of charitable trusts under Section 12AB and the approval under Section 80G of the Income-tax Act, 1961. The Tribunal held that an authority cannot render statutory benefits arising from a duly granted registration conditional upon the outcome of proceedings that the Revenue merely proposes to initiate before the Supreme Court. A binding judgment of the jurisdictional High Court remains operative until it is specifically stayed, reversed, or modified by a superior court — and a mere intention to file a Special Leave Petition does not alter that position in any manner.
Background: The Trust and Its Applications
The assessee, Jamshed & Shirin Guzder Trust, is a charitable trust duly registered under the Maharashtra Public Trusts Act, 1950. The trust filed applications seeking registration under Section 12AB and approval under Section 80G of the Income-tax Act, 1961 before the Commissioner of Income Tax (Exemptions), Mumbai.
The CIT(E) passed two separate orders on 13.04.2026:
- Registration under
Section 12AB(1)(b)— bearing Unique Registration Number AAATJ2630H27MB01 — was granted for Assessment Years 2027-28 to 2036-37. - Approval under
Section 80G(5)— bearing Unique Registration Number AAATJ2630H27MB02 — was granted for Assessment Years 2027-28 to 2031-32.
On the face of it, both the registration and the approval were granted in the assessee's favour. However, each order carried conditions in the accompanying annexure that effectively undermined the certainty of the benefits flowing from such grant. These conditions became the sole subject of the assessee's challenge before the Tribunal.
The Disputed Conditions: What Did CIT(E) Actually Do?
Condition No. 15 — Section 12AB Registration Order
In the annexure to the Section 12AB registration order, the CIT(E) noted that the trust deed did not contain an express clause declaring the transfer of trust property to be irrevocable for all times. Reference was made to Section 332(2)(b) of the Income Tax Act, 2025 in this context.
The CIT(E) acknowledged the ruling of the Bombay High Court in The Chamber of Tax Consultants & Others v. CIT(E), Writ Petition (L) No. 7587 of 2026, which had categorically held that a public charitable trust is deemed to be irrevocable by operation of law unless the trust instrument expressly confers a power of revocation — and that the Department cannot reject applications for registration or renewal solely on the ground that the trust deed lacks an explicit irrevocability clause.
Despite acknowledging this binding ruling and granting registration in what was described as respectful compliance with the High Court's directions, the CIT(E) went on to state — "by way of abundant caution" — that:
"...the applicability and consequential tax benefits of this registration/approval with effect from 01st April, 2026 onwards, remain subject to outcome of the decision of Hon'ble Supreme Court in the matter of the Special Leave Petition the revenue is preferring to move against the Order of the Bombay High Court in the Writ Petition(L) No.7587 of 2026 in the case of The Chamber of Tax Consultants & Ors v. The Commissioner of Income Tax (Exemption)."
Condition No. 5 — Section 80G Approval Order
The Section 80G approval order incorporated a substantially identical stipulation as Condition No. 5, making the consequential tax benefits of the approval equally subject to the outcome of the Revenue's proposed Supreme Court proceedings.