Deemed Registration U/s. 12AA if not granted or refused by CIT within 6 Months

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.

Full Text of the High Court Judgment / Order is as follows:-

Since identical question of law and facts are involved in these appeals hence they are decided by this common judgment.

2. By way of these appeals, the appellant has assailed the judgment and order of the Tribunal whereby the Tribunal has allowed the appeal pre­ferred by the assessee.

3. This court while admitting the appeals framed the following substantial questions of law :–

(i) Appeal No. 32 of 2008

“1. Whether in the facts and circumstances of the case, the Income Tax Appellate Tribunal has not acted illegally and perversely in making observations with regard to grant of exemption under sec­tion 10(23C)(vi) when the Income Tax Appellate Tribunal has no jurisdiction to decide any application/appeal arising out of order passed either granting or rejecting exemption under section 10(23C)(vi) of the Act by the competent authority ?

2. Whether, without prejudice to the facts that the Income Tax Appellate Tribunal did not have jurisdiction to examine the merits of the case, whether it was justified in quashing the findings given by the assessing officer holding that the same are perverse, contrary to facts and against the law, completely ignoring the specific findings that conditions set out in the provisos to section 10(23C) have not been fulfilled ?”

(ii) Appeal No. 29 of 2008

“1. Whether in the facts and circumstances of the case, the Income Tax Appellate Tribunal has not acted illegally and perversely in directing the Commissioner to allow application of the respondent under section 12A(a) of the Act for registration for the purpose of the exemption under sections 11 and 12 of the Act for the claimed assessment year ?”

(iii) Appeal No. 563 of 2009

“(i) Whether in the facts and circumstances of the case, the Income Tax Appellate Tribunal was justified in holding that the respondent-assessee is entitled for exemption under sections 11 and 12 of the Act ?

(ii) Whether in the facts and circumstances of the case, the Income Tax Appellate Tribunal was justified in law in making obser­vations with regard to grant of exemption under section 10(23C)(vi) when the Income Tax Appellate Tribunal has no jurisdiction to decide any application/appeal arising out of the order passed either granting or rejecting exemption under section 10(23C)(vi) of the Act by the competent authority ?”

(iv) Appeal No. 406 of 2011

“1. Whether in the facts and circumstances of the case, the Income Tax Appellate Tribunal was justified in holding that society is entitled for exemption under sections 11 and 12 of the Act ?

2. Whether in the facts and circumstances of the case, the Income Tax Appellate Tribunal has not acted illegally and perversely in mak­ing observations with regard to grant of exemption under section 10(23C)(vi) when the Income Tax Appellate Tribunal has no jurisdic­tion to decide any application/appeal arising out of the order passed either granting or rejecting exemption under section 10(23C)(vi) of the Act by the competent authority ?”

For convenience of the court Appeal No. 29 of 2008 is taken first.

4. In this appeal, counsel for the appellant has contended that registration was made on 30-5-2002 and rejected on 18-11-2005.

5. Mr. R.B. Mathur counsel for the appellant contended that the Tribunal has committed serious error while observing in para No. 2.12 reads as under :–

“2.12 After having gone through the impugned order, we find that the learned Commissioner has denied the above plea of the assessee on the basis that the application dated 30-5-2002 was an invalid application and not meeting with the mandatory requirement of section 12A(a), hence the limitation of section 12AA(2) is not applicable in respect of such invalid application. We do not agree with such findings of the learned Commissioner on the issue because in all the circumstances either due to defect in the application or on the merits of it the learned Commissioner under sub-section (2) of section 12AA is supposed to grant or refuse registration before 6 months from the end of months in which application was received and in the present case since the application was filed on 30-5-2002 the learned Commissioner should have disposed of the application on or before 30-11-2002. The learned Commissioner has however disposed of the application on 18-11-2005, i.e., with the delay of around three years. In the case of Sambandh Organiza­tion v. CIT (supra) relied upon by the learned authorised represent­ative the application under section 12A for registration was filed on 2-8-2002 which was rejected by the learned Commissioner on 7-11-2003. It was held that in view of the provisions of sec­tion 12AA it could be said that the impugned order had been passed beyond statutory period deemed to be allowed. Similar view has been expressed by the Delhi Bench of the Tribunal in the case of Sardarilal Obroi Memorial Cliaritable Trust v. ITO (supra) referred by the learned authorised representative.”

6. Mr. Mahendra Gargieya counsel for the respondent has relied upon the decision of the Supreme Court in CIT v. Society for the Promotion of Edu­cation (2016) 382 ITR 6 (SC) wherein speaking for the Bench the Supreme Court has observed as under (page 7) :–

“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.

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 24-2-2003, at the worst, the same would operate only after six months from the date of the application.

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 24-8-2003.

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

7. The view taken by the Tribunal is very clear that the registration will take effect from the date of application. In our considered opinion, in view of the observation made by the Tribunal, the registration will be granted from 30-5-2002. The issue is answered in favour of the assessee.

8. The appeal stands dismissed.

Appeal No. 32 of 2008

9. In view of the decision in Tax Appeal No. 29 of 2008 the registration will be given accordingly. In that view of the matter, the exemption which is granted under section 10(23C) will be considered on the basis of section 12A registration. The issues are accordingly answered.

10. The appeal stands dismissed.

Appeal No. 406 of 2011

11. Similarly in view of the decision of Appeal No. 29 of 2008, the issue is answered in favour of the assessee and against the Department.

12. The appeal stands dismissed.

Appeal No. 563 of 2009

13. In view of the decision of Appeal No. 32 of 2008, the issue is answered in favour of the assessee and against the Department.

14. Counsel for the assessee has also placed on record the notification dated 13-4-2009 ((2009) 315 ITR (St.) 49) in respect of the assessee passed by the Chief Commissioner, Jaipur which because of this deci­sion taken will not be disturbed.

15. All the appeals are dismissed as indicated above.

16. A copy of this judgment be placed in each file.