ITAT Rules in favour of Trusts who have been granted ‘Conditional Renewal’ of tax exemption & tax deduction
While processing 12AB and 80G renewal applications of public charitable trusts the Income tax department found that in several cases the trust deed did not explicitly state that it was an “Irrevocable Trust.” In the absence of this clause, the Commissioner of Income Tax (Exemptions) [CIT(E)] rejected/cancelled the renewal applications made by several such trusts. Subsequently, the Hon’ble Bombay High Court in the case of Chamber of Tax Consultants vs. Commissioner of Income Tax (Exemption) reported in [2026] 184 taxmann.com 374 (Bom) laid down that registration under sections 12AB and 80G could be granted subject to compliance with specified conditions. Pursuant to the aforesaid judgment of the Hon’ble Jurisdictional High Court, the CIT(E) passed several orders around 4th April 20026 granting conditional renewal of registration to such trusts.
Consequently, some of these trusts have appealed before the Income Tax Appellate Tribunal, Mumbai Bench challenging the imposition of such conditional registration.
These trusts appealed that while registration and approval have admittedly been granted by the CIT(E) the consequential benefits flowing there from cannot be kept in a suspended or conditional state merely because the revenue proposes to challenge the judgment of the Jurisdictional High Court before the Supreme Court. So long as the judgment of the Bombay High Court continues to hold the field, the authorities functioning within the jurisdiction of the Hon’ble Bombay High Court are duty bound to follow the same in letter and spirit.
So far, the Income Tax department has not gone into appeal before the Supreme Court of India.
ITAT found merit in the submissions made that the impugned conditions are adversely affecting the day-to-day functioning of these trusts and creating uncertainty in relation to its charitable activities, donor confidence and statutory compliances. Such conditions, which are not contemplated under the statute, cannot be permitted to continue.
ITAT observed that registration granted under section 12AB and approval granted under section 80G are not perpetual or lifelong registrations. Under the prevailing statutory scheme, such registrations are granted only for the prescribed period of five years and remain subject to renewal in accordance with law. Therefore, adequate safeguards are already available with the revenue authorities under the Act itself in the event of any future violation, non-genuine activity or any change in the legal position arising from a judicial pronouncement of a higher forum. Hence, imposition of additional contingent conditions by the CIT(E) is wholly unnecessary and beyond jurisdiction.
In view of the aforesaid facts and respectfully following the judicial precedents discussed, ITAT has direct the CIT(E) to delete/vacate the impugned conditions imposed while granting registration under section 12AB and approval under section 80G of the Act.
Case:
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH ‘C’ MUMBAI
BEFORE SHRI ANIKESH BANERJEE, JUDICIAL MEMBER AND SHRI MAKARAND VASANT MAHADEOKAR, ACCOUNTANT MEMBER
ITA No.4488/Mum/2026 (Assessment year: 2027-28 to 2031-32)
ITA No.4489/Mum/2026 (Assessment year: 2027-28 to 2036-37)
ITA No.4490/Mum/2026 (Assessment year: 2027-28 to 2031-32)
ITA No.4491/Mum/2026 (Assessment year: 2027-28 to 2036-37)