CIT(E) cannot dilute a binding jurisdictional High Court precedent by inserting speculative future Supreme Court appeal caveats in registration orders.

By | July 16, 2026
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CIT(E) cannot dilute a binding jurisdictional High Court precedent by inserting speculative future Supreme Court appeal caveats in registration orders.

Issue

Whether the Commissioner of Income-tax (Exemptions) [CIT(E)], while granting fresh registration and approval under sections 12AB and 80G based on a binding jurisdictional High Court precedent, can legally incorporate a caveat making the grant subject to the outcome of a proposed or speculative future challenge before the Supreme Court.

Facts

  • The assessee-trust filed applications seeking fresh registration under section 12AB and approval under section 80G of the Income-tax Act, 1961.

  • The CIT(E) initially rejected these applications because the trust deed lacked an express clause declaring the trust to be irrevocable.

  • Subsequently, relying on the binding jurisdictional judgment of the Bombay High Court in Chamber of Tax Consultants v. CIT (Exemptions), the CIT(E) granted the registration and approval.

  • However, the CIT(E) inserted a caveat in the grant orders, making them subject to the final outcome of a proposed appeal challenge intended to be filed before the Supreme Court.

  • The assessee challenged the inclusion of these restrictive observations and future conditional caveats in the final grant orders.

Decision

  • Held, yes: The issue was decided in favor of the assessee-trust, and the restrictive caveats were ordered to be deleted.

  • No Dilution of Precedent: Once the CIT(E) accepted the binding authority of the jurisdictional High Court and granted registration, it was legally impermissible to simultaneously dilute the grant by inserting conditions based on speculative future contingencies.

  • Present Law Governs: The validity, efficacy, and legality of a trust registration must be determined based on the law as it exists on the exact date of the grant.

  • Speculation Impermissible: Quasi-judicial authorities cannot issue orders founded upon potential, speculative future legal developments or anticipated higher court reversals.

Key Takeaways

  • Binding Nature of Jurisdictional Precedents: Subordinate tax authorities are bound to apply jurisdictional High Court rulings in letter and spirit without adding qualifiers, hesitations, or conditions.

  • Finality of Current Orders: A registration order must be clean and absolute based on current law; it cannot be kept in a state of suspended animation or conditional limbo via administrative caveats.

  • Remedy Limited to Actual Reversals: If a precedent is later reversed by the Supreme Court, the Revenue must use standard statutory routes (like review or revision) rather than pre-emptively weakening an order with speculative clauses.

IN THE ITAT MUMBAI BENCH ‘E’
Keshavlal Vajechand Kapadia Charity Trust
v.
Commissioner of Income-tax (Exemptions)
Amit Shukla, Judicial Member
and Girish Agrawal, Accountant Member
IT APPEAL Nos. 4403, 4404, 4436 & 4437 (Mum) OF 2026
[Assessment years 2027-28 to 2031-32]
JUNE  24, 2026
Jitendra Sanghavi for the Appellant. Smt. Amrita Singh, CIT DR for the Respondent.
ORDER
1. These four appeals, being ITA Nos. 4404/Mum/2026, 4403/Mum/2026, 4437/Mum/2026 and 4436/Mum/2026, have been preferred by the assessee trust against separate orders passed by the learned CIT (Exemption) in relation to grant of registration under section 12AB and approval under section 80G of the Income Tax Act, 1961. Since the appeals arise out of the same set of proceedings, involve common facts and revolve around an interconnected controversy relating to renewal of registration and approval granted to the assessee trust, they were heard together and are being disposed of by way of this consolidated order.
2. The facts, in brief, are that the assessee trust had applied for renewal of registration under section 12AB as well as approval under section 80G of the Act. The learned CIT (Exemption), vide separate orders dated 14.02.2026, rejected both the applications primarily on the ground that the trust deed did not contain any specific clause declaring the trust to be irrevocable or providing that the trust property stood irrevocably dedicated for charitable purposes. According to the learned CIT (Exemption), in the absence of an express irrevocability clause, the assessee did not satisfy the statutory requirements contemplated under section 332(2)(v) of the Income Tax Act, 2025, and consequently the applications for registration and approval were liable to be rejected. Aggrieved by the aforesaid orders, the assessee preferred ITA Nos. 4404/Mum/2026 and 4403/Mum/2026 before the Tribunal.
3. During the pendency of the aforesaid appeals, the issue relating to rejection of registration applications solely on the ground of absence of an express irrevocability clause in the trust deed came up for consideration before the Hon’ble Bombay High Court in Writ Petition (L) No. 7587 of 2026 in the case of Chamber of Tax Consultants v. CIT (Exemptions)  (Bombay). The Hon’ble High Court, after considering the legal framework governing public charitable trusts, held that a public charitable trust is presumed to be irrevocable by operation of law unless the trust instrument itself contains a specific provision enabling revocation. The Hon’ble High Court further directed the authorities not to reject applications for registration, renewal or approval merely on the ground that the trust deed does not contain an explicit irrevocability clause. The aforesaid judgment thus directly addressed the very foundation on which the assessee’s applications had earlier been rejected.
4. In compliance with the aforesaid judgment of the Hon’ble Bombay High Court, the learned CIT (Exemption) subsequently granted registration under section 12AB and approval under section 80G to the assessee trust. However, while granting such registration and approval, the learned CIT (Exemption) recorded certain observations stating that the Revenue was contemplating challenge to the judgment of the Hon’ble Bombay High Court before the Hon’ble Supreme Court and, therefore, by way of abundant caution, the assessee trust, donor entities and other stakeholders were being informed that the registration, approval and consequential benefits flowing therefrom would remain subject to the ultimate outcome of the proceedings before the Hon’ble Supreme Court. It is against these observations and caveats incorporated in the subsequent grant orders that the assessee has preferred ITA Nos. 4437/Mum/2026 and 4436/Mum/2026.
5. Before us, the learned counsel submitted that once the jurisdictional High Court had conclusively settled the issue and the learned CIT (Exemption) had acted upon such binding directions by granting registration and approval, no qualification or conditional rider could have been attached to the grant itself. It was submitted that the observations made by the learned CIT (Exemption) create an atmosphere of uncertainty regarding the legal status of the registration and approval and are likely to adversely impact the activities of charitable institutions, particularly in relation to receipt of donations from existing and prospective donors. It was further submitted that charitable organisations depend substantially upon public confidence and statutory recognition and any such cautionary remarks in the order granting approval have the potential of creating unwarranted apprehensions amongst stakeholders. Reliance was also placed upon the decision of the Co ordinate Bench in the case of ILLA Rajesh Foundation v. CIT (Exemptions) [IT Appeal Nos. 4488 to 4491 of 2026, dated 15.05.2026], wherein an identical caveat incorporated while granting registration was directed to be deleted.
6. We have carefully considered the rival submissions and have perused the orders placed before us. In so far as ITA Nos. 4404/Mum/2026 and 4403/Mum/2026 are concerned, we find that the grievance originally raised by the assessee in those appeals no longer survives for adjudication. The rejection orders dated 14.02.2026, which formed the subject matter of challenge before us, have effectively lost their operative significance once the learned CIT (Exemption), pursuant to the judgment of the Hon’ble Bombay High Court, granted registration under section 12AB and approval under section 80G. The substantive relief sought by the assessee in those appeals already stands granted. No consequential prejudice now survives arising from the original rejection orders. Accordingly, without entering into the merits of the rejection orders any further, we hold that ITA Nos. 4404/Mum/2026 and 4403/Mum/2026 have become infructuous on account of subsequent events and are dismissed as such.
7. Coming to ITA Nos. 4437/Mum/2026 and 4436/Mum/2026, the issue which requires our adjudication is whether the learned CIT (Exemption), while granting registration and approval in compliance with a binding judgment of the jurisdictional High Court, was justified in attaching a caveat that the registration and consequential benefits would remain subject to the outcome of a proposed challenge before the Hon’ble Supreme Court. In our considered opinion, such an approach is legally unsustainable and cannot be approved.
8. It is a fundamental principle governing judicial discipline that a judgment rendered by the jurisdictional High Court is binding upon all authorities functioning within its territorial jurisdiction so long as it continues to hold the field. The efficacy and binding character of such a judgment do not depend upon whether one of the parties proposes to challenge it before a superior forum. A contemplated appeal, a proposed special leave petition or even a pending challenge before a higher court does not dilute the binding force of the judgment unless its operation is stayed, modified or reversed by a competent judicial authority. Therefore, once the learned CIT (Exemption) accepted the binding nature of the judgment of the Hon’ble Bombay High Court and proceeded to grant registration and approval on that basis, it was not open to simultaneously dilute the effect of such grant by incorporating observations founded merely upon a possible future contingency.
9. We further find that the observations incorporated by the learned CIT (Exemption) travel beyond the scope of the directions issued by the Hon’ble Bombay High Court. The High Court directed that applications should not be rejected solely on the ground of absence of an express irrevocability clause. The learned CIT (Exemption), while implementing those directions, was required to grant or refuse registration in accordance with law and on the basis of the facts before him. Once registration and approval were granted, the statutory recognition so conferred could not be converted into a tentative or conditional recognition by referring to a possible future challenge. Such observations do not emanate from any provision of the Act and are unsupported by any statutory mechanism permitting a registration order to remain perpetually subject to an anticipated future event.
10. We also find considerable force in the submission of the learned counsel that such caveats have wider practical ramifications. Registration under section 12AB and approval under section 80G are not merely procedural recognitions. They constitute the foundation upon which charitable institutions organise their activities, mobilise resources and secure public participation. Donors, contributors and stakeholders often evaluate the legal status of a charitable institution on the basis of the registration and approvals granted under the Act. An observation by the statutory authority itself suggesting that the approval presently granted may remain subject to an uncertain future outcome is capable of creating avoidable ambiguity and hesitation in the minds of stakeholders. Such uncertainty is neither contemplated by the statutory scheme nor warranted by the judicial directions pursuant to which the approval has been granted.
11. We also note that an identical issue had come up before the Co ordinate Bench in the case of ILLA Rajesh Foundation(supra), wherein the Tribunal observed that once registration has been granted pursuant to the binding judgment of the jurisdictional High Court, the authority cannot append qualifying observations based merely upon a proposed challenge before the Hon’ble Supreme Court. The Tribunal accordingly directed deletion of such caveats. The principle emerging from the said decision fully supports the assessee’s grievance before us.
12. Having regard to the entirety of the facts and circumstances of the case, we are of the considered view that the observations made by the learned CIT (Exemption) stating that the registration, approval and consequential tax benefits would remain subject to the outcome of proceedings before the Hon’ble Supreme Court cannot be sustained. Such observations neither emanate from the statutory provisions governing registration under section 12AB and approval under section 80G nor can they coexist with a grant made in compliance with a binding judgment of the jurisdictional High Court. The validity and efficacy of the registration granted to the assessee must be examined with reference to the law as it exists on the date of grant and not on the basis of speculative future developments. Needless to state, if at any future point of time any superior judicial forum lays down a different legal position, the consequences, if any, would follow in accordance with law. However, such hypothetical future possibilities cannot furnish a legal basis for qualifying a registration that presently stands validly granted.
13. Accordingly, while ITA Nos. 4404/Mum/2026 and 4403/Mum/2026 are dismissed as having become infructuous, the impugned observations and caveats contained in the orders granting registration under section 12AB and approval under section 80G, which make such registration and consequential benefits subject to the outcome of a proposed challenge before the Hon’ble Supreme Court, are directed to be deleted. The assessee shall be entitled to registration under section 12AB and approval under section 80G as granted by the learned CIT (Exemption) without any such qualification, restriction or conditional rider.
14. In the result, ITA Nos. 4404/Mum/2026 and 4403/Mum/2026 are dismissed as infructuous, whereas ITA Nos. 4437/Mum/2026 and 4436/Mum/2026 are allowed.