Absence of Irrevocability Clause in Trust Deed Not Ground to Deny Registration under Section 12AB-High Court

Case: Chamber of Tax Consultants v. Commissioner of Income-tax (Exemptions)

Court: Bombay High Court

Writ Petition (L) No.: 7587 of 2026

Date of Order: 9 March 2026

Brief Facts:

• The petitioners comprised tax practitioner bodies and several public charitable trusts registered under the Maharashtra Public Trusts Act, 1950 (MPT Act). 

• These trusts had been enjoying registration under sections 12A/12AB and filed applications for renewal of registration under section 12AB through Form 10AB under the new regime effective from 1 April 2021.

• The Commissioner (Exemptions) rejected the applications primarily on two grounds:

• The trust deeds did not contain an explicit irrevocability clause and/or dissolution clause, and 

• The applicants had selected “Yes” in Form 10AB regarding irrevocability, which was treated as furnishing false or incorrect information, constituting a “specified violation” under section 12AB (4). 

• Aggrieved by such rejection orders and the systemic issue affecting multiple trusts, the petitioners filed a writ petition before the Bombay High Court challenging the legality of the action.

Observations:

The Court observed that:

• Section 12AB does not prescribe any requirement that a trust deed must contain an explicit irrevocability or dissolution clause as a precondition for registration. 

• The Commissioner had attempted to read into the statute a condition that does not exist, which was impermissible in law.

• The Court analysed section 63 and held that a transfer is regarded as revocable only if there is an express provision enabling re-transfer of assets or reassumption of control by the transferor. Hence, mere absence of an irrevocability clause does not render a trust revocable; rather, in law, a trust is presumed to be irrevocable unless expressly made revocable.

• Further, relying on the provisions of the MPT Act, the Court emphasised that once property is dedicated to a public charitable trust, the settlor is divested of ownership, and the assets can never revert back to the settlor, even upon revocation or dissolution. Thus, such trusts are inherently irrevocable by operation of law.

• On the issue of Form 10AB, the Court noted that the online utility compelled applicants to select “Yes” for irrevocability, even where the trust deed was silent. Treating such compelled responses as furnishing false information was held to be arbitrary and legally unsustainable, as procedural mechanisms cannot prejudice substantive rights.

• The Court also reiterated that absence of a dissolution clause is not a valid ground for rejection, especially when statutory provisions like section 55 of the MPT Act adequately govern application of trust assets upon dissolution.

Accordingly, the Court quashed the rejection orders, directed the authorities not to deny registration on such grounds, and mandated modification of the Form 10AB utility to allow correct disclosures. The writ petition was allowed in favour of the assessee, with directions for fresh consideration of applications in accordance with law.