The Chamber of Tax Consultants & Ors. v. CIT(E)

Case snapshot

Sections / provisions: 12AB

Questions before the Court / Tribunal

• Charitable trust registration and irrevocability clause: The reported Court decision holds that a public charitable trust registration application cannot be rejected merely for absence of an express irrevocability clause where the governing legal framework otherwise establishes the relevant character. Similar matters were directed to be reconsidered.

Material facts and background

The Chamber of Tax Consultants, through its President Mr. Jayant Gokhale having its office at 3, Rewa Chambers, Ground Floor, 31, New Marine Lines, Mumbai 400 020.

Bombay Chartered Accountants’ Society through it Secretary Mrinal Mehta, having its office at 7, Jolly Bhavn No.2, Ground Floor, New Marine Lines, 7, New Marine Lines, Mumbai 400 020.

Mahesh J. Parikh Charitable Trust, a Public Charitable Trust, having its office at 1/3 Shilpa, Vrindavan Society, N S Mankikar Marg, Sion Chunabhatti, Mumbai 400 022.

Dr. Y N Ajinkya East Bombay Lion’s Hospital Society Trust, a Public Charitable Trust, having its office at 32 Pandita Ramabai Road, Mumbai 400 007.

Dilasa Medical Trust and Rehabilitation Centre, a Public Charitable Trust, having its office at 201, Happy Home Plot No.551, Tps Iii 8th Road Old Khar, Khar (W), Mumbai 400 052.

Gaud Brahman Samaj, a Public Charitable Trust ] having its office at 24, Madhunam Premises ] Co.op. Society Ltd. S. V. Road, Goregaon (W), ] Mumbai 400 062. ]

Gavankar Education Trust Saraswati High School] Yeshwant Sadan, Public Charitable Trust, having ] its office at S M Jadhav Marg, Naigaum, ] Dadar (E), Mumbai 400 014. ]..

Appellant / assessee submissions

The judgment copy does not separately set out this component in a distinct section; refer to the full order and the reasoning section below.

Revenue / respondent submissions

The judgment copy does not separately set out this component in a distinct section; refer to the full order and the reasoning section below.

Court / Tribunal analysis and reasoning

reveals that the conditions for grant of registration are an objective satisfaction on the part of the Principal Commissioner regarding (i) the objects of the trust, (ii) the genuineness of its activities, and (iii) compliance with other material laws. The section does not contain any condition that the trust deed must have an explicit clause stating that it is irrevocable before registration is granted, and in our view, such a condition cannot be implied also. Respondent No.1, therefore, is attempting to read a condition into the statute which does not exist. The entire case of Respondent No.1 is built on the premise that section 11 is

transfer of assets." Therefore, the key issue to be determined is what constitutes a "revocable transfer." The definition of “revocable transfer” is to be found in section 63(a) of the Act, which reads as under: "a transfer shall be deemed to be revocable if— (i) it contains any provision for the re-transfer directly or indirectly of the whole or any part of the income or assets to the transferor, or (ii) it, in any way, gives the transferor a right to re-assume power directly or indirectly over the whole or any part of the income or assets;"

Therefore, the question is whether the trustees are competent to do so. In my view, as observed above, "no". The Trust Deed of the settlor is like a last wishwill of the settlor. Once a Trust is created, it is irrevocable unless it is expressly desired by the settlor himself. In view of the admitted fact that two properties mentioned in the trust deed were intended to be the trust properties and the income out of that properties to be utilised for the purpose of fulling the object of the trust and in another words, as desired by the settlor. The source of income of the trust is only the properties coming under the Trust Deed. The Trustees are the custodian of the trust property and they were required to manage the property as per the wish expressed in the Trust Deed. Therefore, it is held that the previous trustees were not at liberty to change the documents by moving the deed of rectification relating to the properties of the trust as described in the Trust Deed. Therefore, the amendment in the said deed of trust properties carried out in pursuance to the said deed of rectification is bad and the order passed by the Dy. Charity Commissioner dated 22nd November, 1965 is bad....

that on the occurrence of the events specified in section 55(1) of the MPT Act, where the Trust assets/ properties cannot be used for the objects specified in the Trust Deed, then, the Office of the Charity Commissioner, by following the process laid down in section 55 of the MPT Act, can pass an order directing the property or income of the public trust or any portion thereof to be applied cypres to any other charitable or religious object. This, therefore, also further strengthens the proposition that once an asset is settled for charitable purposes, such an asset can either be used for the purposes for which it is settled or for other similar purposes in terms of section 55 of the MPT Act, but such assets and properties can never revert back to the settlor of the trust.

framework, the precedents and the interpretation of the Ministry of Finance, makes it legally impossible for the assets of a public charitable trust in Maharashtra to be re-transferred to the settlor. Therefore, the condition for revocability under section 63 of the Act can never be met.

in no uncertain terms, that in the absence of any specific provision in the Act with respect to the existence of a dissolution clause, rejection of an application for registration on this account is neither enforceable nor legally sustainable. Moreover, while justifying the same, reliance was placed on a decision of the Mumbai Bench of the Income-tax Appellate Tribunal in the case of Tara Educational and Charitable Trust. It is relevant to note that it is the same decision of the Tribunal which was affirmed by this Court in Income Tax Appeal No. 247 of 2015 vide the judgment dated 31.07.2017. Thus, it can be seen that absence of a dissolution clause in the Trust Deed was not considered to be a relevant criteria for grant of registration under section 12AA of the Act. As already noted above, the conditions for grant of registration have not materially changed under section 12AB of the Act in so far as this aspect is concerned. Therefore, the aforesaid judgement of this Court and the interpretation of Ministry of Finance in this regard, as set out above, are equally relevant in the context of a registration under section 12AB of the Act.

in almost all the registrations granted to the trusts. The Petitioners are, therefore, right when they contend that there are adequate safeguards put in the conditions for grant of registration to protect the Revenue Page 40 of 48 MARCH 09, 2026 S.R.JOSHI

Operative decision and relief

In the result, the Writ Petition is allowed. Due to the

The impugned orders passed in the case of Petitioner Nos. 3 to 8 rejecting registration under section 12AB of the Income-tax Act, are hereby quashed and set aside.

All such orders where renewal of registration under Section 12AB has been rejected on the grounds discussed above, are also hereby quashed and set aside.

Further, it is also directed that all consequential orders passed denying registration under section 80G of the Act, where such rejection is on the ground that once registration under section 12AB is denied, registration under section 80G also cannot be granted, are also hereby quashed and set aside. This would, of course, apply only to a case where registration under section 12AB has been rejected on the grounds discussed above. The above order that we pass is to avoid any multiplicity of litigation so as to not require the trusts to challenge the orders passed by Respondent No. 1 denying registration under section 12AB and 80G of the Act on the grounds as discussed in this order.

Petition is also disposed of in terms thereof. However, there shall be no order as to costs.

Authorities and precedents appearing in the judgment

• This Court in CIT vs. Tara Educational & Charitable
• Vidarbha vs. Smt. Mangala
• CIT vs. Tara Educational & Charitable Trust (Income Tax Appeal No
• Tara Educational and Charitable Trust vs DIT (ITA no
• Shree Prantij Dash Shrimali Vanik Gyanti Trust vs. DIT (ITA no 407/Ahd/2013 dated June 21
• Shree Chargam Dash PorwadMahamandal vs. DIT

This list is machine-assisted from the judgment text and is not a substitute for checking the full citation chain in the PDF.

Ratio and legal principle

The decision turns on Charitable trust registration and irrevocability clause. The operative result is classified as Quashed Or Set Aside. Read the rule only with the statutory version, factual findings and precedent chain recorded in the full judgment.

Why this judgment matters

The case is relevant to taxpayers, advisers and litigators dealing with Charitable trust registration and irrevocability clause. Its practical value lies in the interaction between the statutory text, the evidentiary record and the procedural route followed in this case.

Practitioner action points

• Keep registration, audit-report, Form 10/10B/10BB and filing timestamps together; many exemption disputes are procedural and depend on when the form existed versus when it was uploaded.
• For litigation, attach the full judgment/order to the working paper and cite the paragraph/page supporting the proposition rather than relying on a headnote alone.

Full judgment and source trail

Read / download the clean local judgment copy

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