ITAT New Delhi Sets Aside Rejection Of Trust Registration Over Missing Irrevocability Clause

The New Delhi Bench of the Income Tax Appellate Tribunal (ITAT) on 30 April held that absence of an irrevocability clause in a Trust Deed is not, by itself, fatal to registration where the defect is subsequently cured and set aside the rejection of registration of a charitable Trust.

A Bench of Judicial Member Raj Kumar Chauhan and Accountant Member Brajesh Kumar Singh allowed the appeal filed by Social Welfare Public Trust and set aside the orders dated 3 December 2025 passed by the Commissioner of Income Tax (Exemption), Delhi, rejecting registration under the Income Tax Act and consequent approval for tax-deductible donations. It observed:

“...in view of the fact, that the assessee has incorporated the 'Irrevocable' clause in the trust deed, the matter is set aside to the file of the CIT(E) to consider the registration of the assessee, in view of the incorporation of the above clause after necessary verification and pass necessary order… in accordance with law.”

The Commissioner had rejected the Trust's application for registration under Section 12A on the ground that the Trust deed did not contain an irrevocability clause, which ensures that the Trust's assets remain dedicated to charitable purposes and are not diverted. He had also denied approval under Section 80G, which allows donors to claim deductions on contributions.

The Trust contended that its charitable activities were not in dispute and that courts have held that absence of an irrevocability clause alone should not defeat registration. It also submitted that it had executed a supplementary Trust Deed incorporating the clause.

The Revenue supported the impugned order but accepted that the matter could be remanded for verification of the amended Trust Deed.

Accepting this position, the Tribunal noted that the amended deed containing the irrevocability clause was on record and restored the issue of registration under Section 12A to the Commissioner for fresh consideration after verification.

Since approval under Section 80G was contingent on registration, the Tribunal also set aside that issue to the Commissioner for reconsideration.

Accordingly, the ITAT allowed the appeal.