Is an irrevocable clause mandatory in a trust deed for registration under Section 12A(1)(ac)(iii) of the Income Tax Act?

Yes. The Tribunal held that Section 62(1)(i) and the public trust doctrine require a charitable trust to be irrevocable to qualify for exemption under Section 11. Absence of such a clause in the original deed at the time of application is a valid ground for rejection under Section 12A(1)(ac)(iii).

Can a supplementary deed executed after rejection cure a defect in the original trust deed for Section 12A registration?

A supplementary deed may be considered for fresh consideration, but only if remanded to the CIT(E) for verification. The Tribunal cannot grant registration directly based on documents not before the lower authority at the time of rejection.

Does the doctrine of cy-près override the requirement of an irrevocable clause in a trust deed?

No. While the doctrine of cy-près ensures charitable property remains dedicated to public benefit, it does not substitute statutory requirements. The Tribunal affirmed that statutory compliance under Section 12A, including an irrevocable clause, is mandatory regardless of equitable doctrines.

Section 12A IT Act irrevocable clause Form 10AB ITAT Delhi

The Income Tax Appellate Tribunal, Delhi, has clarified that the absence of an irrevocable clause in a trust deed at the time of filing Form 10AB for registration under Section 12A(1)(ac)(iii) of the Income Tax Act, 1961, is a valid ground for rejection. However, it permitted the assessee to seek reconsideration after rectifying the defect through a supplementary deed, reinforcing procedural fairness in tax exemptions for charitable entities.

Background & Facts

The Dispute

The Social Welfare Public Trust, a charitable entity registered under the Indian Trusts Act, 1882, applied for registration under Section 12A(1)(ac)(iii) of the Income Tax Act, 1961, and for approval under Section 80G, using Form 10AB filed on 03.04.2025. The Commissioner of Income Tax (Exemption) rejected both applications on 03.12.2025, citing two material deficiencies in the trust deed: the absence of an irrevocable clause and the absence of a dissolution clause. The rejection of Section 12A registration automatically led to the rejection of Section 80G approval.

Key Facts

The trust was established by a deed executed on 15.01.1981, which did not contain an irrevocable clause or a dissolution clause.
The trust engaged in charitable activities, including education and welfare, which were not disputed by the Revenue.
The trust was granted provisional registration under Section 12A vide order dated 30.11.2022, with Unique Registration Number AAATS4033ME20221, valid for AY 2023-24 to AY 2025-26.
On 05.06.2025, the Ld. CIT(E) issued a questionnaire seeking clarifications on the trust deed’s compliance with Section 12A.
The trust submitted responses but did not amend the deed prior to the rejection order.
The Ld. CIT(E) held that Section 62(1)(i) of the Act requires a trust to be irrevocable to qualify for exemption under Section 11, and that the absence of an irrevocable clause violates the public trust doctrine as affirmed in Intellectuals Forum, Tirupathi v. State of A.P. (AIR 2006 SC 1350).
The Ld. CIT(E) further held that the trust’s undertaking in Form 10AB (Point 6) claiming irrevocability was false and constituted a specified violation under Section 12AB(4).
On 28.11.2025, the trust filed a draft supplementary deed incorporating an irrevocable clause.
The supplementary deed was executed on 01.12.2025 before the Sub-Registrar, Delhi, and submitted to the Tribunal on 29.04.2026.

Procedural History

15.01.1981: Original trust deed executed.
03.04.2025: Form 10AB filed for registration under Section 12A(1)(ac)(iii) and approval under Section 80G.
05.06.2025: Ld. CIT(E) issued questionnaire seeking clarifications.
24.11.2025: Assessee informed Ld. CIT(E) of appointment with Sub-Registrar for deed amendment.
28.11.2025: Draft supplementary deed submitted to Ld. CIT(E).
01.12.2025: Supplementary deed executed and registered.
03.12.2025: Ld. CIT(E) rejected both applications.
03.12.2025: Provisional registration under Section 12A cancelled with retrospective effect.
29.04.2026: Hearing before ITAT Delhi.
30.04.2026: Judgment pronounced.

Relief Sought

The assessee sought:

Setting aside of the rejection orders dated 03.12.2025.
Direct grant of registration under Section 12A(1)(ac)(iii) and approval under Section 80G.
Restoration of provisional registration with effect from AY 2023-24.
In the alternative, remand to Ld. CIT(E) for fresh consideration with the supplementary deed.

The Legal Issue

The central question was whether the absence of an irrevocable clause in a trust deed at the time of filing Form 10AB under Section 12A(1)(ac)(iii) of the Income Tax Act, 1961, constitutes a fatal defect warranting rejection, and whether a supplementary deed executed after rejection but before appeal can be considered for granting registration.

Arguments Presented

For the Appellant/Petitioner

The assessee contended that:

The charitable purpose of the trust was for an indefinite period, making revocation practically and morally implausible.
Judicial precedents, including Commissioner of Income-tax (Exemption) v. Reham Foundation (Allahabad HC), held that mere absence of an irrevocable clause does not disqualify a trust if its objects are genuinely charitable.
The supplementary deed executed on 01.12.2025, prior to the Tribunal hearing, cured the defect.
The Ld. CIT(E) failed to provide a proper opportunity of hearing and acted without issuing a show cause notice.
The Tribunal could directly grant registration if satisfied with the corrected deed, as held in Reham Foundation.

For the Respondent/State

The Revenue supported the Ld. CIT(E)’s order but conceded that:

The supplementary deed was filed for the first time before the Tribunal.
Following Commissioner of Income Tax v. Kush Innovative Foundation (Delhi HC, 12.02.2026), where new documents were submitted before the Tribunal, the matter should be remanded for fresh consideration.
The Revenue did not oppose remand but insisted on verification of the supplementary deed’s authenticity and compliance.

The Court's Analysis

The Tribunal acknowledged that Section 12A(1)(ac)(iii) requires a trust to be established for charitable purposes and to be irrevocable, as inferred from Section 62(1)(i) and the public trust doctrine. The Ld. CIT(E) correctly relied on the principle that a charitable trust’s assets must be permanently dedicated to public benefit, and revocability undermines this foundational requirement.

"As per Section 62(1)(i), section 61 shall not apply to a person, where transfer is done by way of trust, which is not revocable. Thus for a settler to create a public charitable trust, it is necessary that said charitable trust is irrevocable."

The Tribunal noted that the supplementary deed, executed on 01.12.2025, clearly incorporated an irrevocable clause, stating: "the Trust constituted under the Principal Deed is and shall remain irrevocable in all respects."

However, the Tribunal held that this document was not before the Ld. CIT(E) at the time of rejection. The Tribunal cannot act as a first appellate authority to evaluate evidence not presented to the lower authority. The Delhi High Court’s ruling in Kush Innovative Foundation was applied to reinforce that new documents filed for the first time before the Tribunal must be remanded for verification by the original authority.

The Tribunal distinguished Reham Foundation on the ground that in that case, the High Court found the CIT(E)’s order perverse based on the same record. Here, the defect was curable and the evidence was newly produced.

The Tribunal emphasized that while the trust’s charitable intent was not in question, procedural compliance with statutory requirements is mandatory. The supplementary deed, if verified, may satisfy the conditions for registration.

The Verdict

The appeals were allowed for statistical purposes. The orders rejecting registration under Section 12A(1)(ac)(iii) and approval under Section 80G were set aside. The matter was remanded to the Ld. CIT(E) for fresh consideration, with directions to verify the supplementary deed executed on 01.12.2025 and pass a fresh order within 60 days of receipt of this order. The provisional registration cancelled on 03.12.2025 shall remain suspended pending fresh decision.

What This Means For Similar Cases

Irrevocability Is a Mandatory Pre-Condition

Practitioners must ensure that trust deeds filed for Section 12A registration contain an express irrevocable clause at the time of application.
Oral assurances or post-filing amendments will not cure defects in the original application.
Form 10AB’s undertaking on irrevocability must match the deed; false declarations may attract penalties under Section 12AB(4).

Post-Filing Amendments Require Procedural Caution

If a defect is identified during scrutiny, applicants should seek to amend the trust deed before the final order is passed.
If amendments are made after rejection but before appeal, they must be formally submitted to the lower authority first.
Tribunals will not substitute their judgment for that of the CIT(E) on evidentiary matters not part of the original record.

Remand Is the Norm, Not Exception

The ITAT will not grant registration directly unless the lower authority’s order is perverse or based on no evidence.
Courts and tribunals increasingly treat procedural compliance under Section 12A as non-negotiable, even for bona fide charitable entities.
Legal advisors should advise clients to include irrevocable and dissolution clauses in all new trust deeds to avoid future disqualification.

Section 12A(1)(ac)(iii) IT Act | Irrevocable Clause Must Exist at Time of Form 10AB Application : ITAT Delhi Allows Fresh Consideration Post-Amendment