ITAT Mumbai: Absence of Irrevocability Clause Not Ground to Deny 12AB Registration; Orders Set Aside

The Income Tax Appellate Tribunal (ITAT), Mumbai Bench “A”, has allowed appeals filed by Amita Memorial Trust, holding that absence of an explicit irrevocability or dissolution clause in the trust deed cannot be a valid ground to deny registration under Sections 12AB and 80G of the Income-tax Act, 1961.

The dispute arose from the rejection of the trust’s application for renewal of registration under Section 12AB and approval under Section 80G by the Commissioner of Income Tax (Exemptions). The rejection was based on two grounds: first, the trust deed did not contain explicit clauses on irrevocability and dissolution; and second, the assessee’s response in Form 10AB indicating the trust as “irrevocable” was treated as furnishing false information, constituting a “specified violation” under Section 12AB(4).

The Tribunal examined the issue in light of recent binding precedent of the jurisdictional Bombay High Court in The Chamber of Tax Consultants & Ors. v. CIT(E), which clarified that public charitable trusts are deemed irrevocable by operation of law unless expressly made revocable. The High Court further held that absence of an explicit irrevocability clause cannot justify rejection of registration and that procedural constraints in Form 10AB compelling applicants to select “Yes” cannot be treated as furnishing false information.

Relying on this judgment, the Tribunal held that the action of the CIT(E) was contrary to statutory provisions and binding judicial precedent. It further observed that denial of registration on such technical grounds is unsustainable, particularly where the trust was already registered under earlier regimes and there was no change in facts.

Accordingly, the Tribunal quashed the orders rejecting registration and directed the grant of registration under Section 12AB as well as consequential approval under Section 80G.