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Judgment
Per Raj Kumar Chauhan, Judicial Member:
The appeal by the assessee is directed against the order dated 13.03 .2026 of ld. CIT(Exemptions), Delhi where in the application filed in Form 10AB for grant of registration u/s 12AB(1)(ac)(ii) of the Income- tax Act, 1961 (hereinafter referred to as ‘the Act’) was rejected on the ground that the applicant has failed to remove the deficiency o f abse nce of dissolution clause in the trust deed of incorporation despite ample opportunity afforded.
Aggrieved by the impugned order, the assessee filed appeal before the Tribunal and has raised the fo llowing grounds:
“1 . That the order pass ed by the l earned C ommissio ner of Inc ome Tax (Exemption), Del hi (“Ld. CIT(E)”) under section 12AB(1)(b)(ii)(B ) of the Inco me-tax Act, 1961 (“the Act”) rej ecting t he appli cation for regis tr ati on in Form No. 10AB is i llegal, arbitrary, bad in l aw and contrary to the fa cts and circumstances of the case.
2.That the Ld. C IT(E) erred i n rej ecting the appl icati on for registrati on under section 12AB solely on the ground tha t t he Tr ust Deed/Memorand um of Association does not contai n a dissolution claus e, without appreciating that the Inc ome-tax Act, 1961 does not prescribe existenc e of such claus e as a manda tory condition f or grant of registr ati on under section 12AB of the Act.
3.That the Ld. C IT(E) failed to appr eciate that t he sc ope of enquiry under section 12AB of the Act is limited to exami nati on of the objec ts of t he trust/i nstitution and genui neness of its activities, both of whic h were duly establ is hed by the Appellant and were never adversely doubt ed by t he Ld. CIT(E).
4.That t he Ld. CIT(E) failed to appreciate that t he Appellant tr ust, constit uted on 23.07.1969, has been carryi ng on genui ne charitabl e activities for s everal decades i n acc ordance wit h its stated objects of relie f of the poor, medic al relief and advanc ement o f ot her obj ec ts of general publ ic utili ty , and had also been granted r egistratio n under section 12A/12AB of t he Act from time to time, incl udi ng registration under section 12A(1)(ac )(i ) vi de order d ated 02.10.2021 for Assessment Years 2022-23 to 2026-27, and si nce there was no c hange in t he obj ects or activities of the Appellant, rejecti on of re gi stration was whol ly unjustifi ed and c ontrary t o l aw.
5.T hat the Ld. CIT(E) err ed in impor ti ng co nditi ons and requirements whi ch a re not contem plated under t he provisions of sect ion 12A/12AB of the Act a nd thereby exceeded the juris diction vested under law.
6.That the r eliance plac ed by the Ld. C IT(E) upon t he doctri ne of c y-pr es and judicial observations r elati ng to public trust property is misco nceived, misplac ed and irrel evant for the purpose of adjudicati ng a n applicat ion for registration under section 12AB of t he Act.
7.That the A ppellant craves leave to add, alter, a mend or withdraw any of the ab ove gr ounds of appeal at or before the time of heari ng.”
We have heard the ld. AR and the ld. DR. The ld. AR at the very outset would sub mit that the impugned or der has been passed illegally and the registration has been denied solely on the ground that the trust deed does no t have a dissolution clause. It is further argued that the Income Tax Act does not prescribe existence of such clause as mandato ry condition for grant of registration u/s 12AB of the Act. Thirdly , the ld. CIT(E) failed to appreciate that the appellant trust constituted on 23.07.1969 has been carrying on genuine charitable activ ities for decades and since there w as no change in the objects or activities of the appellant, rejection of registration was unjustified and contrary to law because the appellant was granted registration on 02.10.20 21 for A.Y. 2022 -23 to 2026-27 and there is no change at all in its activity, objects and income e tc. Fo urthly, insisting on dissolution clause is co ntrary to the scheme of section 12AB and is beyond the scope of inquiry contemplated under the Act for granting registration u/s 12AB of the Act. Fifthly, neither sectio n 12A nor section 12AB of the Act prescribes the existence of a dissolution clause as a mandatory pre-conditio n for grant or co ntinuatio n of registration and the only requirement u/s 12 AB is confined to examination of:
the object of the trust or institution,
the genuineness of its activities.
It is therefore argued that the impugned order has been passed in violation of the settled legal principle and legal precedents and is liable to be set aside and the application for registration should be allowed. In support of his above submissions and the written argume nts, the ld. counsel has relied upon the follow ing case law :
Chamber of Tax Consultants Vs. C IT(Exemptions) (2026) 184 taxmann.co m 374 ( Bom.) , para 31 & 4 6(i) are relevant and extracted below as under:
“31.Mr . Pardi walla is also ri ght whe n he co ntends that the conditions for grant o f registration remai n the same both under sections 12AA and 12AB of the Ac t. When considering the same Trust De ed, r egist rati o n was granted bot h under section 12AA and s ecti on 12AB(1)(a) of the Act (new regime as wel l), t here is no r eason forthcoming to take a different stand when an applicatio n is made fo r r enewal of regist ration. It may be perti nent to note t hat there ar e v ari ous tr usts who are more tha n 20-30 years old and s ome al so 50 years old. They were, with the same Tr ust D eed and same set of activities, granted registr ati on earlier. There is no l ogic, when the conditi ons for rene wal remai n the sam e in s ection 12AB as compared to the earlier provisions i .e. , sec ti on 12AA, then, why different criteri a are applied today to deny registration. On this ground of the Petitioner as raised i n t he petition, nothing has been comment ed i n the r eply a ffidavit . However, in his ar gument, Mr. Gupta contended that there is no estoppel in l aw. Suc h an argument cannot be c ount enanc ed. There bei ng no change i n the requi rements for grant o f r egistratio n, a co mpletely new condition cannot be i nvok ed to put at naught t he e ntire provisions deal ing wi th grant of ex emption to charitable tr usts at the t hr eshol d by denyi ng registration, l eave aside the grant of exempti on. Thi s is also o ne of the r eas ons t o i nterfere with the or ders passed by R espondent No. 1. ...
46.In the result, the Writ Petiti on is allowed. Due to the peculiar facts , as present ed by the Petitioners, we pass the followi ng order:
(i)The R es pondents s hall refrai n fr om rejecti ng applications for registrati on/renewal under sec tion 12AB solely on the ground of t he absence of an explicit irrevocabili ty and/or dissoluti on clause i n t he Trust D eed/instr ument.”
Radisson Ind ia Char itable Foundation Vs. ITO(Exemption) in ITA Nos. 3976 & 3978/Del/2024, order dated 22.01.2025 where identical issue has been decided in favour of the assessee/appellant by directing the ld . CIT(E) to grant registratio n u/s 12AB of the Act. Para 11 to 14 are relevant and extracted b elow as under:
“11.Anot her rea son for rejecti ng t he registrati on is tha t there is no dissolutio n clause i n t he trus t deed of the Assess ee. We ha ve gone t hrough the tr ust dee d, wher ei n i n t he Claus e o f ‘power of truste es’, it is menti oned as under: -
“1 . The Trustees s hall ha ve the followi ng powers:
(a)To start, abol ish, disconti nue , a nd res tart any charity /charitable or ga ni zation or instituti on for the benefit of the ge neral public and impos e conditions t o its subscription or donati ons mad e therei n.
(h)To transfer and hand ov er t he Trust to any ot her trust /soci et y/association/i nstitution on such te rms and conditions as the Trustees shall in their absol ut e discreti on t hi nk fit and prope r.”
12.From the plain readi ng of the above Claus es , tho ugh the tr ustees have power to transfer and hand over the trust to any other tr ust/society/Association/Instit ution, is no menti oni ng regarding t he diss ol ution of t he trus t and t he fate of net asset of the tr ust in cas e of dissoluti on. It is true that t he net asset of the trus t can be transferr ed t o any enti ty si nce, as per t he above Clause in the trust deed, t he trustees have abs ol ute ri ght t o transfe r a nd hand over the Trust to any ot her tr ust/soci et y/associati on/i nstituti on on such terms and conditio ns as the Trustees shall in their absol ute discreti on thi nk fit and proper . Ho wever, after the amendment to provisi on of Secti on 115TD of the Act , which ha s been i ns ert ed by Fi nanc e Act, 2016 w.e.f. 01/06/2016, t he rel evanc e of having dissol uti on c laus e and t he appr ehensi on on the trans fer of net ass et to any ot her enti ty has been taken c ar e by t he said provisions of Section 115TD of the Act. Thus, i n our considered opi nion, the absenc e of dissoluti on claus e and non-mentioni ng of fate of net asset i n the trust deed cannot be a ground to d eny t he registr ati on u/s 12AB of the Act. Thus , t he Ld. CIT(E) c ommitted error i n rej ecti ng the regis tration u/s 12A and 80G of the Ac t.
13.In vie w of the abo ve discussion, we fi nd merit in the Grounds of appeal of t he Ass ess ee, accordi ngl y, we allow the Gr ounds of app eal of the Assessee and s et aside t he impugned orders of t he Ld. C IT(E) dated 12 ITA N os. 3976 and 3978/Del/2024 Radisson India C haritable Fo undation 02/07/2024 and dir ect the L d. C IT(E) grant r egis tra tion u/s 12AB o f t he Act , consequently, also grant Regis trati on u/s 80G of the Ac t.
14.In the resul t, Appeals of the Assessee i n ITA No . 3976/Del /2024 and 3978/D el /2024 are allowed.”
The ld. DR on the other hand would submit that the judgme nt of the Hon’ble Bombay High Court cannot be relied and applicable to the case of the assessee because in Mumbai there is Bombay Trust Act separately dealing with the trust and there is no such Delhi Trust Act. However, with respect to the decisio n of the jurisdictional Tribunal in Radisso n India Char itable Foundation (supra) nothing has been submitted by the ld. DR.
We have considered the r ival submissions and perused the material available on record. In view of observatio n and finding of the jurisdictional Tribunal especially co ntained in para 12, 13 & 14 in ITA No. 3976 & 3978/Del/2024 (supra), w e are of the considered opinion that the facts are identical to the case of jurisdictional Tribunal vis-à-vis the case in hand, therefore we are no t convinced by the arguments of the ld. DR with respect to the non-application of the judgment o f the Hon'ble Bombay High Cour t, w herein Hon'b le High Co urt has categorically held that the respondents shall refrain from rejecting applicatio ns for registration/renewal under section 12AB solely o n the ground of the absence o f an explicit irrevocability and/or dissolution clause in the trust deed/instrument.
Similarly, the observatio n and find ings re turned by the jurisdictional Tribunal in ITA No . 3976 & 3978/Del/2024 (supra) wherein facts are identical and similar and the issue is also identical and same, we are of the co nsidered opinio n that the denial of registr ation in the absence e of dissolution clause in the trust deed incorporation of the assessee/appellant has resulted into miscarriage of justice and is not legally sustainable. Re spectfully, following the order of the jurisdictional Tribunal, we are inclined to allow the appeal and the ground raised by the appellant before the Tribunal. Accordingly, the ld. CIT(E) is directed to grant registration to the assessee under section 12AB of the Act.
In the result, the appeal of the assessee is allowed.