The Bombay High court has held that Section 12AA of the Income Tax Act does not recognize any deeming fiction, that an application for registration is deemed to be granted, if it is not disposed of within six months.
The bench of Justice G. S. Kulkarni and Justice Firdosh P. Pooniwalla has relied on the decision of Supreme Court in the case of Harshit Foundation Sehmalpur in which the clear position in law is to the effect that Section 12AA(2) of the Income Tax Act does not recognize any deeming fiction, that an application for registration is deemed to be granted, if it is not disposed of within six months, as succinctly held by the Full Bench of the Allahabad High Court in Muzafar Nagar Development Authority when it observed that the Parliament has carefully and advisedly not provided for such deeming fiction and as approved by the Supreme Court in Harshit Foundation Sehmalpur.
Table of Contents
Background
The respondent/assessee is a public trust running a pediatric hospital at Pune. On 6 February, 2006, the assessee filed an application in Form No. 10A requesting registration of the assessee under Section 12A of the I.T. Act.
On the application of the assessee, the CIT passed an order under Section 12AA on 15 September, 2006 refusing registration to the assessee.
Being aggrieved by the order, the assessee preferred an appeal before the Tribunal. The Tribunal by an order has allowed the appeal referring to an earlier decision of the Tribunal in the case of Bhagwad Swarup Shri Shri Devraha Baba Memorial Shri Hari Parmarth Dham Trust.
The premise on which the Tribunal allowed the assessee’s appeal is considering that the date of assessee’s application seeking registration under Section 12A was 6 February, 2006 and the decision on the same of its rejection was rendered on 15 September, 2006, which was beyond the prescribed period of six months as stipulated under Section 12AA(2).
The Tribunal directed the Commissioner to grant registration to the assessee with effect from 1 April, 2005, namely, first day of the Financial year in which the application was made, considering the provisions of Section 12A(a)(ii).
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Arguments
The appellant/department contended that the view taken by the Tribunal in fact is opposed to the very content and wording of Section 12AA(2) of the Income Tax Act, which does not make any provision or allowance for a deemed registration to be granted, when it prescribes that ‘Every order granting or refusing registration under clause (b) of sub-section (1) shall be passed before the expiry of six months from the end of the month in which the application was received under clause (a) of Section 12A’.
The department contended that once the Legislature itself has refrained from expressly providing a deeming provision qua grant of a registration after the expiry of six months, it would not be appropriate to read in the said provisions any deeming fiction, as read by the Tribunal in the provisions of sub-section (2) of Section 12AA.
The assessee contended that Section 12AA(2) would be required to be read to contain a deeming provision of the application for registration being granted, if the same is not decided within the prescribed period of six months from the date of making of the application.
Conclusion
The court while allowing the department’s appeal held that non-disposal of the application of registration by granting or refusing the registration before the expiry of six months as provided under Section 12AA(2), would not result in a deemed grant of registration.
Case Details
Case Title: The Commissioner of Income Tax Versus Dr. Kasliwal Medical Care & Research Foundation
Case No.: Income Tax Appeal No. 4320 Of 2009
Date: 21/10/2024
Counsel For Appellant: A.K. Saxena
Counsel For Respondent: Gopal Mundhra