Trust deed is not compulsory for section 12AB registration renewal, rules Mumbai tribunal

The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) has held that furnishing a trust deed is not a compulsory prerequisite when applying for the renewal of registration under section 12AB of the Income Tax Act. This ruling addresses disputes where tax authorities had previously denied renewal applications due to the absence of the foundational trust document during verification. The specific case details, case numbers, and exact assessment years are not stated in the item. Under the income tax framework, charitable institutions and non-profit organizations must secure registration under section 12AB to claim tax exemptions on their operational surplus and donations.

Previously, authorities often insisted on physical verification of the original trust deed during periodic renewal reviews, creating compliance hurdles for older entities whose documents were misplaced or damaged. This judicial position clarifies that the absence of a trust deed alone cannot be the sole ground to reject a renewal application, provided other statutory conditions are fulfilled. Tax practitioners and chartered accountants representing trusts should incorporate this tribunal precedent in submissions against rejection orders passed under section 12AB.

Professionals must ensure that clients maintain alternate documentary evidence of charitable objects and financial accounts while awaiting formal renewal clearance from the department. Bottom line: Verify your client's alternative compliance documents to safeguard tax-exempt status despite missing foundational records.