By K. B. Bhujle, Advocate
New Page 2
II. Reported :
49 Charitable Trust : Registration u/s.12A
of Income-tax Act, 1961 : Effect of non-passing of order within the time limit :
Non-consideration of the registration application within the time fixed by S.
12AA(2) would result in deemed registration.
[Society for the promotion of Education Adventure Sport &
Conservation of Environment v. CIT, 216 CTR 167 (All.)]
The petitioner is a society running a school. Up to A.Y.
1998-99 it was exempted u/s.10(22) of the Income-tax Act, 1961. Therefore, it
did not seek separate registration u/s.12A of the Act so as to claim exemption
u/s.11. S. 10(22) being omitted by the Finance Act, 1998, the petitioner applied
for registration u/s.12A of the Act, with retrospective effect, that is since
the inception of the petitioner society; i.e., 11-1-1993. The application
was made on 24-6-2003. No order was passed on the application within the time
period of six months as required u/s.12AA(2) of the Act. Therefore, the
petitioner filed writ petition before the Allahabad High Court contending that
the registration should be deemed to have been granted.
The Allahabad High Court allowed the writ petition and held
as under :
“(i) Taking the view that non-consideration of the
registration application within the time fixed by S. 12AA(2) would result in
deemed registration, may at the worst cause loss of some revenue or income-tax
payable by the individual assessee. On the other hand, taking the contrary
view and holding that not taking a decision within the time fixed by S.
12AA(2) is of no consequence would leave the assessee totally at the mercy of
the IT authorities, inasmuch as the assessee has not been provided any remedy
under the Act against non-decision.
(ii) Besides, the above view does not create any
irreversible situation, because, u/s.12AA(3), the registration can always be
cancelled by the CIT, if he is satisfied that the objects of such trust or
institution are not genuine or the activities are not being carried out in
accordance with the objects of the trust or institution. The only drawback is
that such cancellation would operate prospectively.
(iii) Moreover, this view furthers the object and purpose
of the aforesaid statutory provision. For the interpretation of a statute
‘purposive construction’ of the enactment which gives effect to the
legislative purpose/intendment, if necessary must be followed and applied.
Considering the pros and cons of the two views, 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 S. 12AA(2) would be a
deemed grant of registration.
(iv) There is no good reason to make the assessee suffer
merely 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 application for registration even within the large six months
period provided u/s.12AA(2).
(v) Accordingly, the respondents are directed, subject to
any order which may be passed u/s. 12AA(3), to treat the petitioner society as
an institution duly approved and registered u/s. 12AA and to recompute its
income by applying the provisions of S. 11. Accordingly, a formal certificate
of approval will be issued forthwith to the petitioner by respondent No. 2.”
