Income Tax Appellate Tribunal - Mumbai
Chemical & Alkali Merchants ... vs Cit (Exem), Mumbai on 8 April, 2026
IN THE INCOME TAX APPELLATE TRIBUNAL
"C" BENCH, MUMBAI
SHRI VIKRAM SINGH YADAV, ACCOUNTANT MEMBER
SHRI RAHUL CHAUDHARY, JUDICIAL MEMBER
ITA No.1025/MUM/2026
(Assessment Year:2027-2028)
Chemical & Alkali Merchants Association Relief Fund
501-504, Himalaya House, Palton Road,
Near Times of India Press, Mumbai - 400001.
Maharashtra.
[PAN:AAATC3972B] ............. Appellant
Vs
Commissioner Of Income Tax
(Exemptions), Mumbai
601, 6th Floor, Cumball Hill MTNL TE Building,
Pedder Road, Dr. Gopalrao Deshmukh Marg,
.............
Cumballa Hill, Mumbai - 400026. Maharashtra Respondent
Appearance
For the Appellant/Assessee : Shri Parth Shah
For the Respondent/Department : Shri R. A. Dhyani
Date
Conclusion of hearing : 02.04.2026
Pronouncement of order : 08.04.2026
ORDER
Per Rahul Chaudhary, Judicial Member:
1. The present appeal preferred by the Assessee is directed against the order, dated 27/12/2025, passed by the Learned Commissioner of Income Tax (Exemption), Mumbai [hereinafter referred to as the 'CIT(E)'] whereby the application filed by the Assessee in Form No.10AB seeking approval under Section 12AB of the Income Tax Act, 1961 [hereinafter referred to as 'the Act'] was rejected.
2. The Assessee has raised following grounds of appeal:
"1. On the facts and in the circumstances of the case and in law, the learned Commissioner of Income-tax (Exemptions) ["CIT(E)"] erred in rejecting the Appellant's application for regularisation of registration under section 12AB of the Income-tax Act, 1961 and ITA No.1025/Mum/2026 Assessment Year 2027-2028 the consequential approval under section 80G, without properly appreciating the statutory scheme, settled legal principles, and the material available on record.
2. On the facts and in law, the learned CIT(E) erred in holding that the absence of an express irrevocability clause in the Trust Deed / MOA is prejudicial to the grant of registration, without appreciating that the Appellant is a public charitable trust registered under the Maharashtra Public Trusts Act, 1950, under which irrevocability is inherent by operation of law and the trust property is statutorily impressed with a permanent charitable character.
3. On the facts and in law, the learned CIT(E) failed to appreciate that neither the settlor nor the trustees have any power under the Trust Deed or under the Maharashtra Public Trusts Act, 1950 to revoke the trust, dissolve it at will, or distribute its assets or surplus for private benefit, and that the trust assets are permanently dedicated to charitable purposes under the supervision and control of the Charity Commissioner.
4. On the facts and in law, the learned CIT(E) erred in insisting upon the presence of an express dissolution or winding-up clause in the Trust Deed, while ignoring the comprehensive statutory framework under the Maharashtra Public Trusts Act, 1950, which governs dissolution, cessation, vesting and application of trust assets and expressly prohibits any reversion of such assets to the settlor, trustees or any private individual.
5. On the facts and in law, the learned CIT(E) erred in treating the Appellant's application as involving a "specified violation" under Explanation (g) to section 12AB(4) of the Act, without establishing any element of deliberate falsehood, conscious misstatement, or suppression of material facts, which alone could justify such invocation.
6. On the facts and in law, the learned CIT(E) further erred in invoking Explanation (g) to section 12AB(4) without demonstrating how the application was "incomplete within the meaning of the statute, when all documents prescribed under Rule 17A of the Income-tax Rules, 1962 had admittedly been furnished by the Appellant during the course of proceedings.
7. On the facts and in law, the learned CIT(E) failed to appreciate that Form No. 10AB does not permit submission of the application unless the question regarding irrevocability is answered in the affirmative, and therefore the Appellant's response in Form No. 10AB was a bona fide declaration compelled by the statutory design of the Form and consistent with the legal position applicable to public charitable trusts.
8. On the facts and in law, the learned CIT(E) erred in treating the 2 ITA No.1025/Mum/2026 Assessment Year 2027-2028 Trustees' Resolution dated 01-05-2025, passed purely by way of abundant caution and good governance, as an admission of revocability or as evidence of false declaration, when the said Resolution merely reaffirmed the existing legal and factual position and did not alter the Trust Deed or the legal character of the Trust.
9. On the facts and in law, the learned CIT(E) has not recorded any adverse finding whatsoever regarding the charitable nature of the objects of the Trust or the genuineness of its activities, which are the core and mandatory parameters for grant of registration under section 12AB(1)(b) of the Act, and therefore rejection of registration is wholly unsustainable.
10. On the facts and in law, the learned CIT(E) erred in travelling beyond the limited scope of enquiry permissible under section 12AB, particularly in proceedings for regularisation of provisional registration, which is confined to examination of the charitable nature of the objects and the genuineness of activities, and in rejecting the application on technical, interpretational and inferential considerations unrelated to these statutory parameters.
11. On the facts and in law, the consequential rejection of approval under section 80G, being solely based on the rejection of registration under section 12AB, is unsustainable and liable to be set aside once the rejection under section 12AB is held to be invalid."
3. We have heard both the sides and have perused the material on record.
4. In the present case the Assessee is aggrieved by the fact that the Learned CIT(E) has rejected the application filed by the Assessee in Form 10AB seeking regulation of provisional registration under Section 12AB of the Act holding as under:
"6. In the view of the above, the application for regularization of provisional registration in Form 10AB filed by the assessee is not allowable non-inclusion of irrevocability or dissolution clause in trust deed/MoA and specified violation as per Explanation (g) to the Section 12AB(4) of the Income tax Act, 1961. However, the applicant is at liberty to pursue the remedies available in Statute, without any prejudice.
7. In conclusion, this application for grant of registration stands rejected."
5. During the course of hearing Learned Authorized Representative for 3 ITA No.1025/Mum/2026 Assessment Year 2027-2028 the Assessee placed on record recent judgment of the Hon'ble Bombay High Court in the case of Chamber of Tax Consultants Vs. Commissioner of Income-tax (Exemptions) [2026] 184 taxmann.com 374, dated 09/03/2026. On perusal of the same, we find that a writ petition was filed under Article 226 of the Constitution of India before the Hon'ble Bombay High Court challenging the action of the Learned CIT(E) rejecting application for renewal under Section 12AB of the Act. The issues requiring determination were recorded in Paragraph 4 of the said judgment which reads as under:
"4. The core issue arising for our determination revolves around a view taken by Respondent No. 1 (which the Petitioners allege is untenable) while processing renewal applications filed in Form 10AB under the registration regime effective from 1st April 2021 in terms of section 12AB of the Act. Respondent No. 1 has rejected the applications for renewal of registration of Petitioner Nos. 3 to 8, primarily, on two grounds:
a. the trust deed or instrument constituting the concerned entities does not contain an explicit clause stating that the trust is "irrevocable" and/or providing for the manner of dissolution;
b. the applicants, in their online Form 10AB, were compelled to answer "Yes" to the question in Row 6, viz., "Whether the trust deed contains clause that the trust is irrevocable?". Since, the trust deeds were silent on this aspect, Respondent No. 1 has treated this reply as furnishing "false or incorrect information," which constitutes a "specified violation" in terms of clause (9) of the Explanation below section 12AB(4) of the Act."
6. The Hon'ble Bombay High Court answered the above issued in favour of the Assessee and quashed the order passed by the Learned CIT(E) while allowing the writ petition giving following directions:
"46. In the result, the Writ Petition is allowed. Due to the peculiar facts, as presented by the Petitioners, we pass the following order:
(i) The Respondents shall refrain from rejecting applications 4 ITA No.1025/Mum/2026 Assessment Year 2027-2028 for registration/renewal under section 12AB solely on the ground of the absence of an explicit irrevocability and/or dissolution clause in the Trust Deed/instrument.
(ii) The Respondents shall not treat the answer "Yes" to Row 6 of Form 10AB, in the absence of any explicit clause of irrevocability, as furnishing "false or incorrect information"
constituting a "specified violation". Further, this shall not be a ground to reject an application for registration under section 12AB of the Act.
(iii) The Respondents shall also amend the utility of Form 10A/10AB to allow applicants to correctly state their position regarding the irrevocability clause without being forced to make an incorrect declaration. This should be done as soon as possible.
(iv) Question number 6 in Form 10AB should be modified to read thus, "Is the trust/institution revocable?".
(v) 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.
(vi) 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.
(vii) 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.
(viii) Respondent No.1 shall decide the applications of the Petitioners and all other similarly situated trusts, whose orders are hereby quashed, afresh and in accordance with the law and the ratio laid down in this judgment, within a 5 ITA No.1025/Mum/2026 Assessment Year 2027-2028 period of six weeks from today. Any order so passed shall be deemed to come into effect from 1 April, 2026,
47. Rule is made absolute in the aforesaid terms and the Writ Petition is also disposed of in terms thereof. However, there shall be no order as to costs."
7. Both the sides agree that the above judgment of the Hon'ble Bombay High Court is applicable to the issued raised in the present appeal. Accordingly, respectfully following the above judgment of the Hon'ble Bombay High Court in the case of Chamber of Tax Consultants Vs. Commissioner of Income-tax (Exemptions) [2026] 184 taxmann.com 374, we set aside the impugned Order, dated 27/12/2025, passed by the Learned CIT(E) with the directions to decide application [CIT(Exemptions), MUMBAI/2025-26/12AA/11301] filed by the Assessee afresh in accordance with the aforesaid judgment of the Hon'ble Bombay High Court. In terms of the aforesaid, all the Grounds raised by the Assessee are allowed for statistical purposes.
8. In result, the present appeal preferred by the Assessee is allowed for statistical purposes.
Order pronounced on 08.04.2026.
Sd/- Sd/-
(Vikram Singh Yadav) (Rahul Chaudhary)
Accountant Member Judicial Member
मुंबई Mumbai; दिन ुं कDated :08.04.2026
Milan, LDC
6
ITA No.1025/Mum/2026
Assessment Year 2027-2028
आदे श की प्रतितिति अग्रे तिि/Copy of the Order forwarded to :
1. अपील र्थी/ The Appellant
2. प्रत्यर्थी/ The Respondent.
3. आयकरआयक्त/ The CIT
4. प्रध न आयकर आयक्त/ Pr.CIT
5. दिभ गीय प्रदिदनदध, आयकर अपीलीय अदधकरण, मुं बई/ DR, ITAT, Mumbai
6. ग र्ड फ ईल / Guard file.
आिे श नस र/ BY ORDER, सत्य दपिप्रदि //True Copy// उप/सह यक पुंजीक र /(Dy./Asstt. Registrar) आयकर अपीलीय अदधकरण, मुं बई / ITAT, Mumbai 7