IT : 'Deemed registration' to trust as CIT didn't pursue request even after 6 months from date of ITAT's order
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[2013] 38 taxmann.com 309 (Lucknow - Trib.)
IN THE ITAT LUCKNOW BENCH 'A'
Harshit Foundation
v.
Commissioner of Income-tax*
S.K. Yadav, JUDICIAL MEMBER
AND PRAMOD KUMAR, ACCOUNTANT MEMBER
AND PRAMOD KUMAR, ACCOUNTANT MEMBER
IT Appeal Nos. 104 & 105 (Luck.) of 2012
JUNE 28, 2013
Section 12AA of the Income-tax Act, 1961 - Charitable or religious trust - Registration procedure [Deemed registration] - Whether where Commissioner does not pass any orders even after six months from receipt of Tribunal's order remitting matter of registration under section 12AA to him, registration will be deemed to have been granted - Held, yes [Para 5] [In favour of assessee]
CASE REVIEW
Society for the Promotion of Education, Adventure, Sport & Conservation of Environment v. CIT [2008] 171 Taxman 113 (All.) (para 5) followed.
CASES REFERRED TO
Bhagwad Swarup Shri Shri Devraha Baba Memorial Shri Hari Parmarth Dham Trust v. CIT [2008] 111 ITD 175/[2007] 17 SOT 281 (Delhi) (SB) (para 2) and Society for the Promotion of Education, Adventure, Sports & Conservation of Environment v. CIT [2008] 171 Taxman 113 (All.) (para 2).
Abhinav Mehrotra for the Appellant. Alok Mitra for the Respondent.
ORDER
Pramod Kumar, Accountant Member - ITA No. 104/Luck/2012 : By way of this appeal, the assessee appellant has raised grievance against denial of registration u/s. 12AA of the Income Tax Act 1961, vide order dated 28th October, 2011 passed by the learned Commissioner of Income Tax, Faizabad.
2. When this called out for hearing, Shri Abhinav Mehrotra, learned counsel for the assessee raised a preliminary legal issue. He pointed out that we are at present in second round of proceedings before this Tribunal, and that, in the first round of proceedings, matter was remitted to the file of the learned Commissioner for fresh adjudication on merits. It is also pointed out that even though the Tribunal had passed the order, so remitting the matter to the file of the CIT on 12.12.2008, learned CIT passed the order only on 28.10.2011. This inordinate delay, according to the learned counsel, is contrary to the scheme of things visualized under the law. Our attention was then pointed out to Special Bench decision in case of Bhagwad Swarup Shri Shri Devraha Baba Memorial Shri Hari Parmarth Dham Trust v. CIT [2008] 111 ITD 175/[2007] 17 SOT 281, which is, in principle, approved by Hon'ble Jurisdictional High Court in the case of Society for the Promotion of Education Adventure Sport & Conservation of Environment v. CIT [2008] 171 Taxman 113 (All.). It was thus contended that when a decision is not taken on the request for registration u/s.12AA within a period of six months, the registration is deemed to have been granted. By the same logic, according to the learned counsel, when learned Commissioner does not decide the matter one way or the other within six months even after the matter is restored to him, the registration should be deemed to have been granted. In the present case, learned Commissioner has taken almost three years to dispose of the remanded matter. For this short reason alone, we are urged to grant the registration u/s. 12AA.
3. Learned Departmental Representative does not dispute the factual elements embedded in the above contentions but submits that it will be unrealistic to proceed on this basis due to heavy work load on the Commissioner, and it will seriously affect legitimate interests of revenue. We are thus urged to deal with the matter on merits.
4. In our considered view, plea of the assessee deserves to be accepted in the light of Hon'ble jurisdictional High Court's judgment in the case of Society for the Promotion of Education Adventure Sport & Conservation of Environment (supra), wherein their Lordships have, inter alia, observed as follows:—
"The apex Court has also applied doctrine of purposive interpretation in fiscal statutes that would be evident from its decision in CIT v. Anjum M.H.Ghaswala & Ors. [2001] 171 CTR (SC) 1 : JT 2001 (9) SC 61. Considering the pros and cons of the two views, we are of the opinion that by far the better interpretation would be to hold that the effect of non-consideration of the application for registration within the time fixed by section 12AA(2) would be a deemed grant of registration. We do not find any good reason to make the assessee suffer because the IT Department is not able to keep its officers under check and control, so as to take timely decisions in such simple matters such as consideration of applications for registration even within the large six month period provided by s. 12AA(2) of the Act.
We accordingly direct the respondents, subject to any order which may be passed under s. 12AA(3), to treat the petitioner society as an institution duly approved and registered under s. 12AA and to recomputed its income by applying the provision of s.11 of the Act. Accordingly, a formal certificate of approval will be issued forthwith to the petitioner by the respondent No.2."
5. Applying the principle so laid down, where Commissioner does not pass any orders even after six months from receipt of Tribunal's order remitting the matter to him. The registration will be deemed to have been granted. Of course, this is subject to exercise of Commissioner's power u/s.12AA(3) in appropriate cases, but the registration will be deemed to have been granted.
6. For the reasons set out above, we uphold the preliminary objection raised by the assessee and direct the Commissioner to issue approval of registration forthwith. In this view of the matter, we see no need to deal with other legal and factual issues raised by the assessee.
7. In the result, the appeal in ITA No.104/Luc/2012 is allowed.
ITA No. 105/Luck/2012
By way of this appeal, the assessee appellant has challenged denial of approval u/s. 80G of the Income Tax Act 1961, vide learned Commissioner's order dated 28th October, 2011.
2. The short reason for denying 80G approval was denial of registration u/s.12AA. Now that, vide our order of even date, registration u/s.12AA is granted. The very foundation for denial of approval u/s.80G thus ceases to hold good in law.
3. In view of the above, the order denying approval u/s.80G is reversed. Learned CIT is directed to grant the approval.
4. In the result, this appeal in ITA No.105/Luc/2012 is also allowed.
USP Regards
Prarthana Jalan
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