Trust Deed Clause on Funds Utilization Outside of India Rectified by Amendment and Undertaking: ITAT Sets Matter for Review by CIT(E) on Merits [Read Order]
ITAT restores matters back to CIT(E) as appellant had rectified the reason for denial of registration. An undertaking filed in support of the history of unutilised funds outside India tipped the appeal in their favour.
![Trust Deed Clause on Funds Utilization Outside of India Rectified by Amendment and Undertaking: ITAT Sets Matter for Review by CIT(E) on Merits [Read Order]](https://images.taxscan.in/h-upload/2026/02/11/2124590-trust-deed-clause-funds-utilization-outside-india-rectified-amendment-undertaking-itat.webp "Trust Deed Clause on Funds Utilization Outside of India Rectified by Amendment and Undertaking: ITAT Sets Matter for Review by CIT(E) on Merits [Read Order]")
The Income Tax Appellate Tribunal (ITAT), Mumbai Bench, sent a matter back to the Commissioner of Income Tax-Exemption (CIT(E)) regarding utilisation of funds outside India clause in a trust deed which disqualifies it for registration. The assessee, Your Neighbour Church Association, applied for registration under Section 12AB of the Income Tax Act, 1961 but was rejected on the ground that...
The Income Tax Appellate Tribunal (ITAT), Mumbai Bench, sent a matter back to the Commissioner of Income Tax-Exemption (CIT(E)) regarding utilisation of funds outside India clause in a trust deed which disqualifies it for registration.
The assessee, Your Neighbour Church Association, applied for registration under Section 12AB of the Income Tax Act, 1961 but was rejected on the ground that the trust deed clauses are in violation of provisions of Section 11 as they indicate that the trust intends to apply/receive funds outside India. The assessee challenged the order passed on 25.09.2025 by the Commissioner of Income Tax (Exemption), Mumbai.
The counsel for the assessee submitted that they had already removed and amended those clauses in the Memorandum of Articles (MoA) of Association. Further, it was submitted by means of an undertaking that no activity involved in utilization of funds outside India had been carried out or even proposed to be carried out. The Department argued for enforcement of the orders passed.
The two member bench drew reliance from the case of Rotary Club of Mumbai Sobo Charitable Trust v. CIT(E) which dealt with an identical issue and ruled that concrete steps had been taken to rectify the clause as deletion had been initiated with respective authorities. Additionally, the undertaking submitted deems the denial of registration against the principles of natural justice and settled jurisprudence for Section 12AB.
The bench, consisting of Bijayananda Pruseth (Accountant Member) and Sandeep Gosain (Judicial Member), set aside the impugned order and restored the file back to the CIT(E) to examine afresh on merits. The tribunal made note of the fact that reasonable opportunity has been given to the assessee-appellant and further adjournment on any frivolous grounds shall not be entertained. Conclusively, the appeal was allowed for statistical purposes.
