Section 12AB Registration Cannot Be Conditioned on Future Supreme Court Outcome: ITAT Mumbai Strikes Down Restrictive Clause
Case Overview
Case Name: Mumbai Marathi Granthasangrahalaya Vs CIT (Exemptions) (ITAT Mumbai)
Appeal Number: ITA No. 6413/MUM/2026
Date of Order: 30/09/2026
Court: Income Tax Appellate Tribunal, Mumbai
Background: A Registration Grant With an Unwelcome Rider
Mumbai Marathi Granthasangrahalaya, a charitable institution, had approached the Commissioner of Income-tax (Exemptions) seeking renewal of its registration under Section 12AB of the Income Tax Act, 1961. The CIT(E), by way of an order dated 28 March 2026, did grant the registration — but not without attaching a significant qualification to it.
The condition imposed was that the registration so granted, along with all consequential tax benefits flowing from it, would remain contingent upon and subject to the final outcome of a Special Leave Petition pending before the Hon'ble Supreme Court. This SLP had been filed against the judgment of the Bombay High Court rendered in the case of Chamber of Tax Consultants Vs CIT (Exemptions), (2026) 184 Taxman.com 374 (Bombay).
Importantly, the application for renewal had not been rejected. The CIT(E) had, after examining the application and compliance material on record, found the assessee's submissions satisfactory enough to warrant a grant. The grievance that prompted the appeal before the Tribunal was not the grant itself but the conditional nature of that grant — a qualification that effectively suspended the practical utility of the registration until an unrelated piece of litigation reached its conclusion at the Supreme Court level.
Grounds of Appeal Raised by the Assessee
The assessee placed the following grounds before the Tribunal:
The learned Commissioner of Income Tax Exemptions erred in not appreciating that a public charitable trust is deemed irrevocable by operation of law unless the instrument of trust expressly provides a power of revocation.
The learned Commissioner of Income Tax Exemptions erred in not appreciating that the absence of an explicit clause of irrevocability is not a ground for rejecting the renewal application under section 12AB of the Income Tax Act, 1961/Section 332 of the Income Tax Act, 2025.
The learned Commissioner of Income Tax Exemptions erred in making the grant of registration subject to the outcome of the proposed SLP against the Order of the jurisdictional High Court, as imposing such a condition was beyond his jurisdiction and illegal.
The appellant craves leave to add, alter OR amend any of the grounds of the appeal, at any time before OR at the time of hearing.
The Assessee's Core Legal Argument
Before the Tribunal, the authorised representative of the assessee pressed a focused statutory argument. The submission was that the powers available to the CIT(E) under Section 12AB of the Income Tax Act, 1961 are specifically and narrowly defined. The authority is empowered to examine three core aspects when processing a registration application:
- The objects of the institution
- The genuineness of its activities
- Compliance with other applicable laws relevant to achieving those objects
Once this prescribed statutory inquiry is completed and the authority arrives at a state of satisfaction, the logical and legally mandated outcome is either a grant or a rejection. The assessee's counsel contended that nowhere within the framework of Section 12AB does the statute vest power in the CIT(E) to introduce an extraneous condition tying the registration's efficacy to the resolution of a separate and independently evolving piece of litigation — particularly one pending before the Supreme Court. Such a condition, the assessee argued, was not merely irregular but was wholly outside the jurisdictional competence of the authority.
The Revenue, on the other hand, chose to rest on and rely upon the CIT(E)'s order itself without advancing any independent counter-argument before the Tribunal.
The Tribunal's Analysis: Statutory Satisfaction Already Established
The ITAT Mumbai bench confined its adjudication to the narrow but critical question: whether the CIT(E) was legally empowered to impose a future-contingency condition while granting registration under Section 12AB(1)(b) of the Act.
The Tribunal's first observation was foundational. It noted that the CIT(E) had clearly not rejected the application. On the contrary, having examined both the application and the accompanying compliance material, the CIT(E) had proceeded to grant registration. This act of granting itself was an expression of the authority's satisfaction with the assessee's compliance and conduct. There was, therefore, no infirmity in the application or the institution's credentials that could justify any hedging or qualification.
Despite having reached this state of satisfaction, however, the CIT(E) had simultaneously restricted the practical operation of the very registration it granted by subjecting it to an external litigation outcome. The Tribunal found this to be legally untenable.
Key Finding: The provisions governing registration and approval under
Section 12ABdo not confer upon the CIT(E) any power to grant registration or approval subject to conditions premised on future contingencies.