Deemed Registration if CIT fails to dispose off sec. 12AA application within 6 months

Visvesvaraya Technological University Vs CIT (Exemptions) (ITAT Bangalore)

Assessee has moved an application for registration under section 12A on 25.05.1999, but this application was not disposed of by the CIT and it was kept pending and assessee was persuaded by the Revenue to file another application for registration. Vide letter dated 2 1.01.2002, the assessee has also requested the CIT to grant registration under section 12A on the basis of its application filed on 25.05.1999 w.e.f. 01.04.1998 and delay in filing of application for registration of less than 2 months may kindly be condoned. This application of the assessee was also not adjudicated upon by the CIT. Other applications for registration under section 12A was rejected by the CIT on technical grounds despite the fact that at the relevant point of time, assessee was enjoying the recognition under section 80G of the Act. Subsequently, the registration under section 12A was granted to the assessee after making a detailed verification of the records and enquiry. At no point of time, the Revenue has made out a case that assessee was not engaged in educational activities. Assessee is a university established by the Government of Karnataka and Act of State Legislature i.e., VTU Act, 1994, for the purpose of ensuring proper and systematic instructions, teaching, training and research & development of engineering technology and allied sciences in the state of Karnataka and matters connected therewith. Even the Apex Court, while adjudicating the issue of exemption under section 10(23)(c)(IIIAB) of the Act, has categorically observed in para 9 of its judgment that the surplus accumulated over the period has been ploughed back for the educational purposes and the University exists solely for the educational purpose and not for the purpose of profit. The contention of the assessee that as of now 203 engineering colleges located throughout the state of Karnataka are affiliated to the assessee universtiy and more than 4 lakh students are studying in various under graduate and post graduate course are not disputed by the Revenue. The registration was finally granted to the assessee under section 12A w.e.f. 01.04.2016 without recording the reasons for not acceding to the university’s request for grant of registration with retrospective effect from 01.04.1998 though assessee has specifically requested for registration in his application. Till date, the Commissioner has not adjudicated the application for registration under section 12A filed on 25.05.1999. They have chosen to remain silent on this application. During the course of hearing, the Revenue could not answer the query of the Bench as to why this application was not disposed off. The Revenue cannot take the benefit of its own wrong. As per the provisions of section 1 2AA, which was brought on statute by the Finance Act, 1996 w.e.f. 01.04.1997, all applications filed before 1^st day of June 1998 shall stand transferred on that day to the Principal Commissioner/Commissioner and the Principal Commissioner/Commissioner may proceed to such application under that sub section from the stage at which they were on that day and as per provisions of sub section 2 of sub section 12AA, every order granting or refusing registration under clause (b) of sub section 1 shall be passed before the expiry of 6 months from the end of the month in which the application was received under section 12A of the Act. As per provisions of section 1 2A (i)(a), application for registration of trust or institution in the prescribed form should be filed within a period of one year from the date of creation of the trust or the establishment or the institution. Undisputedly, the trust was created on 01.04.1998 and application was moved on 25.05.1999. There was delay of 1 month 25 days for which assessee has moved an application requesting therein that the delay may be condoned and registration may be granted from the date of its inception. Though the Revenue was required to dispose off the application for registration under section 12A within a period of 6 months but it was not done. In the light of these facts and the judgments of the Apex Court in the caseof CIT Vs. Society for promotion of Education (supra), the registration is deemed to have been granted from the date of inception of the University as the delay in filing of the application was only 1 month and 25 days for which request for condonation of delay was moved. Therefore, we set aside the order of CIT and direct him to grant registration w.e.f. 01.04.1998. Accordingly, the appeal of the assessee stands allowed.

FULL TEXT OF THE ITAT JUDGMENT

This appeal is preferred by the assessee against the order of the CIT, inter alia, on the following grounds:

1. The impugned order passed by the learned Commissioner of Income-Tax (Exemptions), Bengaluru [hereinafter referred to as the CIT(E)] under section 12A of Income-Tax Act, 1961 (hereinafter referred to as the I-T Act), to the extent it is not retrospective in effect, is arbitrary, erroneous, unreasonable and opposed to the facts and circumstances of the case and the law.

2. The learned CIT(E) has erred in not considering the fact that the Appellant’s case is covered under the Proviso to section 12A(1)(a)(i) of the I-T Act, inasmuch as the Appellant had filed its first application for registration under section 12A of the Act on 25,05.1999 and clause (i) of the Proviso to section 12A(1)(a) stood attracted to its case.

3. The learned CIT(E) has erred in not considering the fact that the amendments to the VTU Act, which were wrongly insisted upon by the department as a precondition for grant of registration, had been enacted by the State Legislature with retrospective effect from 01.04.1998 and, as the earlier applications filed by the Appellant were not considered favourably only for want of such amendments, registration under section 12A ought to be granted from the date from which the amendments are effective, and not prospectively.

4. The learned CIT(E) has erred in failing to appreciate that grant of registration from a prospective date would lead to miscarriage of justice and cause loss to the public at large, by resulting in an absurd situation where the income of the Appellant, which is a public institution, would be exempt from tax in the years to come, but taxable in earlier years, even though there has been no change in the charitable nature of its objectives or activities since its

5. The learned CIT(E), having been satisfied, on the basis of the documents submitted to him, that the Appellant deserves to be treated for purposes of income-tax as a charitable trust, has erred in not granting registration to the Appellant University with retrospective effect from 01.04.1998, without bringing anything on record to show that the Appellant’s objectives or activities were any different in earlier years.

2. Though various grounds are raised but they all relate to denial of registration with retrospective with effect from 01.04.1998. The checkered history of this case is that the assessee is a university established on 01.04.1998 under an Act of State Legislature i.e., Visveswaraya Technological University Act, 1994 for the purpose of ensuring proper and systematic instruction, teaching, training and research and development of engineering, technology and allied sciences in the State of Karnataka and matter connected therewith. Being a not for profit institution engaging in promoting engineering and technological education which is a charitable purpose within the meaning of section 2(15) of IT Act, 1961 (hereinafter called as an “Act”), the university has been existing solely for the purpose of education according to the assessee. Surpluses, if and when generated from such activities, are re-invested in one of the modes specified in section 11(5) of the Act and continue to remain so invested till date, for furtherance of the objects of the University. The University is headed by the Chancellor (Governor of the State of Karnataka) and is managed by the Officers of the University consisting of the Pro-Chancellor (Minister in charge of higher education in the Government of Karnataka), the Vice-Chancellor, the Registrar (Academic), the Registrar (Evaluation) etc. The funds of the University consist of a General Fund, the Development Fund and such other funds as may be prescribed from time to time by the statutes of the Government of Karnataka which makes non lapsable lump sum grants to the University each year to cover the net expenditure incurred, the expenditure incurred on the pay and allowances of its staff, contingencies, supplies and services, and such non-recurring and additional items of expenditure as the Government may deem necessary for the proper functioning and development of the University. The annual accounts are audited by authorities appointed by the Government of Karnataka and the accounts and the audit report are laid before both the Houses of the State Legislature. Thus the function of the University including the quantum of fees charged to the students is wholly controlled by the Government of Karnataka. As of now, 203 engineering colleges located throughout the State are affiliated to the University and more than four lakh students are studying therein in various under-graduate and post-graduate courses, including inter alia, Bachelor of Engineering, Bachelor of Technology, Bachlor of Architecture, Master of Engineering, Master of Technology, etc.

3. The University had filed an application on 08.10.1998 seeking registration on the ground that university is exempted from income tax under section 10(23C)(iiiab). The learned CIT vide letter dated 18.07.2002 not only accepted the University’s claim of being exempt under section 10(23C)(iiiab) and granted recognition under section 80G for a period of 5 years from 01.04.1998 to 31.03.2003 but also renewed recognition twice for a period of 3 years from22 06.2004 to 31.03.2007 and subsequently for a period from 01.04.2007 to 31.03.2010 vide order dated 30.03.2007. However, when the University filed an application on 28.04.2010 requesting for renewal of the recognition under section 80G beyond 01.04.2010, the learned CIT vide its order dated 18.03.2011 rejected the application and withdrew the recognition by holding that University was neither eligible for exemption under section 10(23C)(iiiab) nor for registration under section 12A of the Act. Being aggrieved, assessee preferred an appeal before the Panaji Bench of the Tribunal and Tribunal vide its order dated 26.08.2011 restored the recognition under section 80G to the University. The Tribunal held that in terms of amendment made to section 80G(5)(vi) by the Finance Act, 2009 w.e.f. 01.10.2009, Registration already held by an assessee shall have automatic renewal unless specifically withdrawn by the CIT and the CIT cannot take advantage of the wrong committed by the assessee in making an application for renewal when it was not required to do so. The order of the Tribunal was later on approved by the jurisdictional High Court vide its judgment dated 11.01.2013. The Hon’ble High Court had however given liberty to the department to initiate proceedings and provide an opportunity of being heard to the assessee and then pass appropriate order in accordance with law for withdrawal of recognition under section 80G of the Act. The CIT thereafter issued a show cause notice for withdrawal of recognition under section 80G with immediate effect on the ground that University did not have Registration under section 12A and the Hon’ble High Court has already held in its judgment dated 23.12.2013 that University was not eligible for exemption under section 10(23C)(iiiab) of the Act.

4. Since the assessee is engaged in the activity of imparting education since its establishment, it moved two applications, one on 08.10.1998 seeking recognition under section 80G of the Act and other on 25.05.1999 seeking registration under section 12A with effect from 01.04.1998. However, while granting recognition under section 80G on 18.07.2002, the CIT did not take any action on application filed for registration under section 1 2A of the Act. Though the assessee had written a letter to CIT vide letter dated 21.02.2002 for grant of registration under section 12A and recognition for exemption under section 80G but no action was taken by the CIT. Later on the assessee has moved a new application for registration under section 12A on 26.05.2012 but this application was rejected by the CIT vide its order dated 26.12.2012 on sole ground that the University had failed to incorporate certain clauses in the VTU Act. The appeal filed against the said order of the CIT was also dismissed for the same reason. The AO has also reopened the assessment under section 147 of the Act for the assessment years 2008-09 and 2009-10, 2004-05 to 2007-08 and 2010-11 to 2013-14. During the reassessment proceedings, the assessee has again filed the third application for registration under section 12A on 5.11.2014 along with the resolution passed by the Execute Council of the University approving certain amendments to the VTU Act, as desired by the CIT. However, the CIT insisted on production of the amendments enacted by the state legislature. According to the assessee, this constrained him to withdraw the application on 27.05.20 15 with a liberty to file a fresh application. The amendment came to be eventually enacted by the state legislature on 13.08.2015 and shortly thereafter on 25.08.2015 the assessee filed its 4^th application for registration under section 12A of the Act. After the amendments approved by the University’s Executive Council, enactment was made by both Houses of the State Legislature with retrospective effect from 01.04.1998 and having received the Hon’ble Governor’s assent on 13.08.20 15, the Government of Karnataka notified the same as the VTU (Amendment)Act, 2015 (the Amendment Act), vide its notification dated 18.08.2015. Again the assessee made another application for registration under section 12AA and this application was duly accompanied by certified copies of the VTU Act, the Amendment Act and other documents such as (i) list of officers of the University; (ii) a note on the University’s activities; (iii) certificate of non-infringement of section 13(1 )(c); (iv) returns of income and financial statements for AYs 2012-13 to 2014-15; (v) reasons for delay in filing the application; (vi) details of investments; and (vii) details of centres of the University. Through this application, assessee sought registration with retrospective effect from 01.04.1998. After making detailed verification, the CIT granted the registration vide its order dated 08.12.2015 w. e. f. 01.04.2016 without recording the reasons for not acceding the University’s request for grant of registration with retrospective effect from 01.04.1998. Before the CIT(A), assessee has placed all the relevant evidences with regard to the objects of the University and its activities and the CIT was satisfied with the statement of accounts and the activities conducted by the assessee but it has granted the registration from prospective date i.e., from 01.04.2016 and not from retrospective date i.e., from 01.04.1998 without recording reasons. Against this order, the assessee preferred the present appeal.

5. The learned counsel for the assessee has invited our attention to the first application moved for registration on 25.05.1999 w.e.f. 01.04.1998. Copy of this application is placed at page 128 of the compilation but this application was not acted upon by the CIT. Thereafter, the assessee wrote a letter to CIT on 21.02.2002 requesting him to grant registration under section 12A of the Act and recognition under section 80G(5)(vi) of the Act. This letter was also not considered by the CIT. The learned Counsel for the assesse further contended that though the assesse has approached the CIT for disposal of his earlier application for registration under section 1 2A w.e.f. 01.04.1998, but the assessee was advised by the CIT to move a fresh application. Consequently, the assesse has moved an application for registration under section 12A on 26.05.20 12 which was rejected by the CIT on the ground that certain provisions were not incorporated in the VTU Act. Later on when the requisite amendment was done in the VTU Act w.e.f. 01.04.1998 and fresh application was filed along with required documents, the Registration under section 12A ought to have been granted with retrospective effect i.e., the date of inception of University. The learned Counsel for the assesse further contended that assessee is a University and is governed by the statutory provisions of the VTU Act. Since the Revenue has not specifically made out a case that University is engaged in other than the charitable activities i.e., imparting education, the Registration under section 12A should not have been denied from the retrospective effect. It was further contended that assessee case is covered with the proviso to section 12A(1)(a)(i) of the IT Act in as much as the application for Registration under section 12A have been filed as for back as 25.09.1999. In support of his contention, he placed reliance upon the order of the Tribunal in the case of Darshan Goswamy Vs. ITO (2003) 127 Taxmann.com 54 wherein it was held that the proviso attached to section 12A empowers the CIT to admit the application for the Registration of trust or institution after the expiry of period specified in section 12A(1)(a) if there are sufficient reasons. The learned counsel for the assesse further contended that if the CIT does not decide the application for Registration within a period of 6 months, the registration deemed to have been granted to the assesses and in support of his contention, he placed reliance upon the order of the Tribunal, Special Bench, in the case of Bhagwat Swaroop Swamy, Shri Devendra Baba Memorial vs. CIT 11 ITD 175 in which it was held that proviso to clause (1)(a) of section 12A empowers the CIT to admit the application even after the period specified in section 12A(1)(a) if there are sufficient reasons. The learned counsel for the assessee further contended in the light of these facts the registration should be granted w.e.f. 01.04.1998 since the inception of University. The learned counsel for the assessee has also placed the reliance upon the following judgments in support of his contentions:

• Sindhi Youth Association Ladies Wing v. ITO
• CIT v. Xavier Kelavani Mandal (P.) Ltd.
• CIT v. Devradhan Madhavlal Genda Trust
• Swajan Pariwar Trust v. ACIT(E)
  [1997] 57 TTJ 77 (Mum. Trib.)
• CIT v. Annapoorneswari Trust
• CIT v. R.M.S. Trust
• New Life in Christ Evangelistic Association v. CIT [2000] 111 Taxman 16 (Mad.)
• CIT v. State Urban Development Agency
• CIT v. R.K. Deivendra Nadar Trust [2014] 52 com168 (Mad.)
• DIT (E) v. Vanchhara Tirthadhipati Chintamani
• Paraswaprabhu [2015] 59 com417 (Guj.)
• CIT v. Tapagachha Sangh Mota [2015] 59 com204 (Guj.)
• Andhra Pradesh Pollution Control Board v. DIT(E) _ [2015] 59 taxmann.com 412 (Hyd. Trib.) 
• Improvement Trust v. CIT
• Edith Wilkins Hope Foundation v. DIT(E)
• Kailashanand Mission Trust v. ACIT
• Ramkishin Textiles (P.) Ltd. v. ITO
• Kadayanallur Cholia Brahmana Mahajana Trust v. ITO
• CIT v. O.P.Jindal Global University
• PIMS Medical 86 Education Charitable Society v. CIT
• Dashnam Goswami Bawa Trust v. ITO
• Sanatan Dharm Mahaveer Dal v. CIT [2002] 120 Taxman 674 (Raj.)
• Chotak Singh Memorial Society v. ITO [2012] 20 com114 (Luck. Trib.)
• DIT(E) v. Karnataka Golf Association
• ADIT v. Shushrutha Educational Trust [2016] 75 com194 (Beng. Trib.)
• CIT v. IILM Foundation Academy [2016] 75 com214 (P&H)
• CIT v. Vijay Vargiya Vani Charitable Trust [2015] 58 com335 (Raj.)
• Gayatri Charitable Trust v. CIT
• ITA No.3815/A hd/2007, Order dated 26.02.2010
• Ghaziabad Development Authority v. CIT [2016] 75 com226 (Del. Trib.)
• CIT v. Society for Promotion of Education, Adventure Sport and Conservation of Environment, Allahabad [2016] 67 taxmann.com 264 (SC)
• Society for the Promotion of Education, Adventure Sport 86
• Conservation of Environment v. CIT [2008] 171 Taxman 113 (All.)
• Karnataka Golf Association v. DIT [2004] 91 ITD 1 (Beng. Trib.)
• Poorna Prajna Vidya Peetha Prathisthana v. DDIT(E) I.T.A. No. 531 to 534/Bang/2015, dated 21.10.2016
• Harshit Foundation v. CIT [2013] 38 taxmann.com 309 (Luck. Trib.)
• Nosegay Public School Management Committee v. CIT
• [2013] 33 taxmann.com 516 (Jodh. Trib.)
• Father Trust Oscar Colasco Memorial Medical
• Association v. CIT [2009] 31 SOT 1 (Mum. Trib.)
• Bhagwad Swarup Shri Shri Devraha Baba Memorial
• Shri Hari Parmarth Dham Trust v. CIT [2008] 111 ITD 175 (Del. SB)
• Vishwa Hindu Parishad Sankat Mochan Ashram v. DDIT [2000] 75 ITD 455 (Del. Trib.)
• CIT v. Sisters of Our Lady of Providence Education Society [2016] 67
• taxmann.com 187 (All.)
• CIT v. Jeevan Deep Public School Society [2013] 40 com32 (All.) CIT v. School of Management Sciences [2013] 38 taxmann.com 173 (All.)
• CIT v. Society of Advanced Management Studies [2013] 34 com135 (All.)
• CIT v. Jeevan. Deep Charitable Trust
  [2012] 28 com242 (All.)
• Sunbeam English School Society v. CIT [2011] 129 ITD 299 (All.)
• CIT v. Market Committee [2008] 166 Taxman 392 (P&H)
• Sonepat Hindu Educational v. CIT [2005 147 Taxman 1 (P&H)
• K. Educational Society v. CIT [20151 56 taxmann.com154 (Vizag Trib.)
• Virudhunagar S. Vellaichamy Nadar Polytechnic College v. ITO [2014] 44 com334 (Chen. Trib.)
• Institute 86 Electronics Engineers Inc. v. DIT(E) [2013] 38 com211 (Hyd. Trib.)
• Shri Gian Ganga Vocational 86 Educational Society v. CIT [2013] 35 com17 (Del. Trib.)
• Make the Future of Country Educational Society v. CIT [2012] 20 com586 (Del. Trib.)
• Ananda Marga Pracharaka Sangha v. CIT [1994] 76 Taxman 88 (Cal.)  
• Church of Our Lady of Grace v. CIT [2009] 34 SOT 315 (Mum. Trib.)
• CIT v. Krishi Utpadan Mandi Samiti
• [2013] 38 taxrnann.com 116 (All.)
• Council of Scientific 8s Industrial Research v. DIT(E) [2010] 123 ITD 401 (Del. )
• Shrimanta Shankar Academy v. ITO
• [2007] 107 ITD 99 (Gau. Trib.)
• Sree Sree Ramkrishna Samity v. DCIT [2015] 64 tax 330(Kol. Trib.)

The learned DR placed a reliance upon the order of the CIT.

6. Having given a thoughtful consideration to the rival submissions and from the careful perusal of the record, we find that undisputedly assessee is a University established by the Government of Karnataka on 01.04.1998 under an Act of the State Legislature i.e., VTU Act, 1994 for the purpose of ensuring proper and systematic instructions/training and research and development of engineering technology and allied sciences in the State of Karnataka and matters connected therewith. According to assessee, it has now 203 engineering colleges located throughout the State of Karnataka which are affiliated to the University and more than 4 lakh students are studying therein in various under graduate and post graduate courses including inter alia BE, B. Tech, B. Arch, ME, M. Tech, MBA and MCA. It is also an undisputed fact that assessee was granted recognition under section 80G of the Act on the ground that the University was exempted from income under section 10(23)(C)(iiiAB) of the Act w.e.f. 01.04.1998 for a period of 5 years. The recognition was further renewed for 3 years w.e.f. 22.06.2004 to 31.03.2007. The recognition certificates are available at page 82 as Annexure II and at page 84 as Annexure III. The recognition under section 80G of the Act was further extended upto 31.03.2010 vide order dated 30.03.2007. The certificate is available at page No. 86 as Annexure IV of the compilation. The recognition under section 80G was extended by the Revenue timely on applications moved by the assessee for renewal of recognition. On the expiry of the period of recognition, the assessee moved a further application for renewal of recognition under section 80G of the Act on 01.04.2010 vide its application dated 28.04.2010. This application was rejected by the CIT and withdrew the recognition altogether by holding that the University was neither eligible for exemption under section 10(23)(C) nor for registration under section 12A of the Act. The order of the CIT was challenged before the Tribunal and the Tribunal held that in terms of amendment made to section 80G(5)(vi) by the Finance Act, 2009 w.e.f. 01.10.2009, registration already held by an assessee shall have automatic renewal unless specifically withdrawn by the CIT and the CIT could not take advantage of mistake committed by the assessee in making an application for renewal of registration when it was not required to do so. The Revenue went in appeal before the High Court and the High Court confirmed the order of the Tribunal. The High Court however gave a liberty to the department to initiate separate proceedings to issue notice providing opportunity of hearing and then pass appropriate orders in accordance with law relating to withdrawal of recognition under section 80G of the Act vide its judgment dated 11.01.2013. Consequently, the CIT issued a show cause notice under section 293C of the Act and thereafter withdrew the recognition granted under section 80G of the Act with immediate effect on the ground that University did not have registration under section 12A and the Hon’ble High Court has also held in its judgment dated 10.12.2013 that University was not eligible for exemption under section 10(23)(C) of the Act. The recognition under section 80G was again granted to the assessee by the Revenue vide order dated 08.12.2015 w.e.f. 08.12.2015 having noted that registration under section 12AA was granted to the assesse. These facts are illustrated herein above only with an intention to understand the nature of activities undertaken by the assessee and also recognized by the Revenue though grant or non grant of recognition under section 80G is not an issue in dispute.

7. So far as registration under section 12A are concerned, we find that assessee has moved an application for registration under section 12A on 25.05.1999 seeking registration from 01.04.1998 from the inception of the University. But this application was not taken cognizance by the CIT and it was kept pending with him. Thereafter, assesse has wrote a letter to the CIT vide letter dated 21.02.2002 requesting him to grant registration w.e.f. 01.04.1998 as the delay in application dated 25.05.1999 was only for 2 months which may kindly be condoned since the University was initially in the stage of setting up and formation. The copies of these letters are placed on record as Annexure 10 at page 128 and as Annexure 11 at page 133 of the compilation of the assessee. During the course of hearing, the learned DR has disowned the application form filed on 25.05.1999 with the submission that it was never filed before the CIT. Since the acknowledging authority of both the applications and letter dated 21.02.2002 was same, we asked the assessee to file the original copies of these documents. Original letter dated 21.02.2002 was filed during the course of hearing and the same was also confronted to the DR. At that time, the learned DR could not controvert the receipt of this letter. The acknowledging authority of the letter and application is the same, therefore, contention of learned DR that this application was never filed by the assessee cannot be accepted. Accordingly, we hold that assessee has filed the first application for registration under section 12A of the Act on 25.05.1999 which was never acted upon by the CIT despite the reminder on 21.02.2002. Had the CIT not received that application for registration under section 12A of the Act, he could have responded to the letter dated 21.02.2002 filed for the grant of registration under section 12A on the basis of their application dated 25.05.1999. The learned Counsel for the assessee has emphatically argued that instead of adjudicating its application for registration dated 25.05.1999, the Revenue persuaded the assessee to file a fresh application and accordingly the assessee has filed a fresh application for registration on 26.05.20 12 claiming registration. This application was rejected on some technical grounds that the assessee could not file certain documents and the assessee was again persuaded by the Revenue to file another application for registration and accordingly, the assessee has filed an application for registration on 05.11.2014. The CIT asked the assessee that there are certain provisions to be incorporated in the VTU Act. Though it was incorporated but it was not adopted in the Legislature and assent was not granted by the Governor of the State. Since the application was to be disposed off within a specific period of time, the assessee was again persuaded to withdraw the application and file a fresh one as and when the amendment is incorporated in the Act and assent was granted by the Governor of the State. The assessee accordingly withdrew the application. The amendments approved by the University’s Executive Council on 24.11.2012 were eventually adopted by both the houses of the State Legislature with retrospective effect from 01.04.1998 and received the assent of Hon’ble Governor of Government of Karnataka on 01.08.2015. The Government of Karnataka has notified the same as a VTU Amendment Act 2015 (Amendment Act). Within a week of the amendment being enacted, the University filed its 4th application in form No. 10A before the learned CIT on 25.08.2015 seeking registration with retrospective effect from 01.04.1998. Copy of the application is placed on record at page 172 as Annexure 22. The relevant requisite documents were filed along with this application with a specific request for grant of registration with retrospective effect from 01.04.1998. The learned CIT vide its order dated 31.08.2015 asked the assessee to furnish some more documents and accordingly the requirements was complied with and the CIT, after making detailed investigation and enquiry, was convinced with the activities of the assesses and finally granted the registration to the assesseee but only from prospective dated w.e.f. 01.04.2016 without recording any reasons for not acceding the University’s request for grant of registration w.e.f. 01.04.1998. The registration certificate granted by the CIT is available on record at page 241 of the compilation as Annexure 29. The correspondence and the evidence submitted by the CIT is also placed on record at page 174 to 240.

8. Aggrieved with the order of the CIT, the assessee is before us with the submission that at no point of time, the activities undertaken by the assessee were never doubted by the The registration under section 12A was denied to the assessee on technical grounds whereas the recognition under section 80G was granted to the assessee since the inception of the University till 30.05.20 14 when it was withdrawn by the CIT.

9. Keeping in view the facts, the Hon’ble Apex Court in the assessee’s own case while adjudicating the issue, whether assessee is entitled for exemption under section 10(23)(c)(iiiAB) of the Act, has held “There can, however no manner of doubt the surplus accumulated over the years has ploughed back for educational purposes. In such situation, following the consistent principles laid down by this court referred to earlier and specifically what has been said in paragraphs 19 in Queen’s educational (supra), extracted above, it must be held that first requirement of section 10(23)(C)(iiiB), namely, that appellant University exist “solely for an educational purpose and not for the purpose of profit is satisfied. The exemption granted in respect of University under section 80G of the Act, qua the donations made to it also cannot be ignored in view of inbuilt recognition in such exemption with regard to charitable nature of the institution i.e., appellant University”. Copy of the judgment is available at page Nos.413 to 419 of the compilation.

10. We have also examined the judgment of jurisdictional High Court in the case of CIT Annapoorneshwari Trust (2015) 53 Taxmann.com527 (Karnataka) in which it has been held that once the object of trust is fulfilled, the trust cannot be denied the benefit under section 12AA. If there are deviations it is open to the authorities to take appropriate action. But that cannot be ground for denying registration under section 1 2AA of the Act. In that case, assessee was engaged in educational activities and their Lordship have held “where the entire objects of the Trust is clearly set out, the number of classes conducted by the Trust and also the fact that there 80% persons who constitute teaching and non teaching staff in the said institution .”

11. In the case of CIT Vs. RMS Trust, 326 ITR 310, the Hon’ble High Court of Madras has held that condition precedent mentioned for registration under section 12A is that the application for registration should be made in time and the account of institution should be audited and enquiry into object of institution cannot be made under section 12A. The production of amended trust deed is not a pre-requisite and it is also not a pre-requisite condition for registering the applicant as a trust. The relevant catch note is extracted hereunder for the sake of reference:

“Where while considering the assessee trust’s application under section 12A the Commissioner noticed that the requisite clause indicating that any amendment to the trust deed would be carried out after obtaining approval from the Commissioner, had not been incorporated, and on that ground directed the assessee-trust to file an amended deed, which was duly registered, along with notes on the activities of the trust with regard to various expenses debited in the income and expenditure account, the requisition made by the Commissioner was an extra-statutory requisition and the Tribunal rightly set aside the Commissioner’s order rejecting the application for registration and remanded matter to him.”

12. Similarly, in the case of New Life in Christ Evangelistic Associaiton (NLC) Vs. CIT [2000] 111 Taxman 16 (Mad.), the Hon’ble Madras High Court has held that “at the stage of grant of certificate under section 12A, the only enquiry which could possibly be made would be whether the Society has actually made an application in time and whether the accounts of society can be maintained in the manner as suggested by the sub section. Beyond that, the scope of enquiry would not go. In insisting upon the society in changing or amending its bye laws and refusing to consider the application on the ground that those bye laws had not been changed so as to exclude the religious aspect from those bye-laws, the Commissioner had clearly over-stepped his limits”. In the case of CIT Vs. State Urban Development Agency [2013] 37 taxmann.com193 (Allahabad), the Hon’ble High Court of Allahabad has held “Non-maintenance of accounts properly could not be reason for denying registration under section 12A, particularly when accounts, management, control, etc., of assessee were fully controlled by State Government. Where a trust/institution fulfils all conditions mentioned in section 12A/12AA, registration cannot be denied on ground that some conditions of sections 11 and 12 are not fulfilled”. The reliance was also placed upon the judgment of the Punjab and Haryana High Court in the case of CIT Vs. Jindal Open University [2013] 38 taxmann.com366 (P&H) in which it has been held that University is a body corporate and established for the cause of education. It is, thus, a Institution eligible for registration within the meaning of Section 12AA of the Act. In the earlier writ petition, a categorically finding has been recorded that the university has been established solely for educational purpose and not for profit therefore, it is a charitable institution r.w.s. 15(2) of the Act”. Further reliance was placed upon the order of the Tribunal in the case of PIMS Medical & Education Charitable Society Vs. CIT reported at [2013] 31 taxmann.com 371 (Chandigarh – Trib.) in which it has been held that it is incumbent upon Commissioner to decide issue of granting or decline of registration only within statutory period as laid down under section 12A r.w.s. 1 2AA of the Act. Satisfaction of statutory conditions of sections 11, 12 and 13 is not relevant for purpose of grant of registration under section 12A r.w.s. 12AA. He should satisfy himself only about genuineness of activities of trust in accordance with its objects and not about credential, capacity and qualification, etc., of trust.

13. Our attention was also invited to judgments of Apex Court in the case of CIT Vs. Society for promotion of education [2016] 67 Taxmann.com264 (SC.) in which their Lordship have held that where the application for registration is not responded to within six months, application for registration was deemed to have been taken effect from the end of the 6 month from the date of filing of application. The relevant observation of the Hon’ble Apex Court is extracted hereunder for the sake of reference:

“3. The short issue is with regard to the deemed registration of an application under Section 12AA of the Income Tax Act. The High Court has taken the view that once an application is made under the said provision and in case the same is not responded to within six months, it would be taken that the application is registered under the provision.

4.  The learned Additional Solicitor General appearing for the appellants, has raised an apprehension that in the case of the respondent, since the date of application was of 02.2003, at the worst, the same would operate only after six months from the date of the application.

5. We see no basis for such an apprehension since that is the only logical sense in which the judgment could be understood. Therefore, in order to disabuse any apprehension, we make it clear that the registration of the application under Section 12AA of the Income Tax Act in the case of the respondent shall take effect from 24.08.2003.

6. Subject to the above clarification and leaving all other questions of law open, the appeal is disposed of with no order as to costs.”

14. On the point of delay in filing of application, the learned Counsel for the assessee has invited our attention to judgment of jurisdictional High Court in the case of Karnataka Golf Association Vs. Director of Income-tax reported at [2014] taxmann.comin which their Lordship has held, following the judgment of the Apex Court in the case of West Bengal Infrastructure Development reported at 334 ITR 269 and Concorde of India Insurance Co. Ltd., Vs. Smt. Nirmala Devi 118 ITR 507 that condonation of delay should be allowed where public interest is involved.

15. Turning to the facts of the case, we find that assessee has moved an application for registration under section 12A on 25.05.1999, but this application was not disposed of by the CIT and it was kept pending and assessee was persuaded by the Revenue to file another application for registration. Vide letter dated 2 1.01.2002, the assessee has also requested the CIT to grant registration under section 12A on the basis of its application filed on 25.05.1999 w.e.f. 01.04.1998 and delay in filing of application for registration of less than 2 months may kindly be condoned. This application of the assessee was also not adjudicated upon by the CIT. Other applications for registration under section 12A was rejected by the CIT on technical grounds despite the fact that at the relevant point of time, assessee was enjoying the recognition under section 80G of the Act. Subsequently, the registration under section 12A was granted to the assessee after making a detailed verification of the records and enquiry. At no point of time, the Revenue has made out a case that assessee was not engaged in educational activities. Assessee is a university established by the Government of Karnataka and Act of State Legislature i.e., VTU Act, 1994, for the purpose of ensuring proper and systematic instructions, teaching, training and research & development of engineering technology and allied sciences in the state of Karnataka and matters connected therewith. Even the Apex Court, while adjudicating the issue of exemption under section 10(23)(c)(IIIAB) of the Act, has categorically observed in para 9 of its judgment that the surplus accumulated over the period has been ploughed back for the educational purposes and the University exists solely for the educational purpose and not for the purpose of profit. The contention of the assessee that as of now 203 engineering colleges located throughout the state of Karnataka are affiliated to the assessee universtiy and more than 4 lakh students are studying in various under graduate and post graduate course are not disputed by the Revenue. The registration was finally granted to the assessee under section 12A w.e.f. 01.04.2016 without recording the reasons for not acceding to the university’s request for grant of registration with retrospective effect from 01.04.1998 though assessee has specifically requested for registration in his application. Till date, the Commissioner has not adjudicated the application for registration under section 12A filed on 25.05.1999. They have chosen to remain silent on this application. During the course of hearing, the Revenue could not answer the query of the Bench as to why this application was not disposed off. The Revenue cannot take the benefit of its own wrong. As per the provisions of section 12AA, which was brought on statute by the Finance Act, 1996 w.e.f. 01.04.1997, all applications filed before 1^st day of June 1998 shall stand transferred on that day to the Principal Commissioner/Commissioner and the Principal Commissioner/Commissioner may proceed to such application under that sub section from the stage at which they were on that day and as per provisions of sub section 2 of sub section 12AA, every order granting or refusing registration under clause (b) of sub section 1 shall be passed before the expiry of 6 months from the end of the month in which the application was received under section 1 2A of the Act. As per provisions of section 1 2A (i)(a), application for registration of trust or institution in the prescribed form should be filed within a period of one year from the date of creation of the trust or the establishment or the institution. Undisputedly, the trust was created on 01.04.1998 and application was moved on 25.05.1999. There was delay of 1 month 25 days for which assessee has moved an application requesting therein that the delay may be condoned and registration may be granted from the date of its inception. Though the Revenue was required to dispose off the application for registration under section 12A within a period of 6 months but it was not done. In the light of these facts and the judgments of the Apex Court in the caseof CIT Vs. Society for promotion of Education (supra), the registration is deemed to have been granted from the date of inception of the University as the delay in filing of the application was only 1 month and 25 days for which request for condonation of delay was moved. Therefore, we set aside the order of CIT and direct him to grant registration w.e.f. 01.04.1998. Accordingly, the appeal of the assessee stands allowed.

16. In the result, appeal of the assessee stands allowed.

Pronounced in the open court on 04^th June, 2018.