Section 12AA(2) Income Tax Act Doesn’t Recognize Deeming Fiction That Registration Application Be Granted If Not Disposed Of In 6 Months: Bombay HC
The Bombay High Court reiterated that Section 12AA(2) of the Income Tax Act, 1961 (IT Act) does not recognize any deeming fiction that the registration application is to be granted if the same is not disposed of within six months.
The Court reiterated thus in an income tax appeal filed by the Commissioner of Income Tax (CIT/revenue) against the order of the Income Tax Appellate Tribunal (ITAT) by which the assessee’s appeal was allowed.
A Division Bench of Justice G.S. Kulkarni and Justice Firdosh P. Pooniwalla observed, “… as held by the Supreme Court in Harshit Foundation Sehmalpur (supra), the clear position in law is to the effect that Section 12AA(2) of the IT 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 (supra) 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 (supra).”
Advocate A.K. Saxena appeared for the appellant while Advocate Gopal Mundhra appeared for the respondent.
Facts of the Case -
The assessee was a public trust running a paediatric hospital at Pune. In February, 2006, it filed an application in Form No. 10A requesting registration under Section 12A of the IT Act. On such application of the assessee, the CIT-IV, Pune passed an order under Section 12AA, refusing registration to the assessee. Being aggrieved by the said order, the assessee preferred an appeal before the Tribunal and the Tribunal by allowed the appeal referring to an earlier decision in the case of Bhagwad Swarup Shri Shri Devraha Baba Memorial Shri Hari Parmarth Dham Trust [2007] 17 SOT 281(SB)(Del.).
The premise on which the Tribunal allowed the assessee’s appeal was considering that the date of assessee’s application seeking registration under Section 12A was February 6, 2006 and the decision on the same of its rejection was rendered on September 15, 2006, which was beyond the prescribed period of six months as stipulated under Section 12AA(2). On such reasoning, the Tribunal directed the Commissioner to grant registration to the assessee with effect from April 1, 2005, namely, first day of the Financial year in which the application was made, considering the provisions of Section 12A(a)(ii). Against this order passed by the Tribunal, the revenue filed an appeal before the High Court.
The High Court after hearing the arguments from both sides, noted, “… having considered both the decisions as rendered by the Supreme Court namely in Society for Promotion of Education (supra) and Harshit Foundation Sehmalpur (supra) and as held by the Division Bench of the Allahabad High Court, in fact, we do not find that there is any situation that both the said decisions are mutually irreconcilable, for the reasons we have noted hereinabove.”
The Court added that, accepting the respondent’s counsel’s argument that such decisions bring about a mutually irreconcilable legal position, would not be a correct reading of these decisions.
Accordingly, the High Court allowed the appeal.
Cause Title- The Commissioner of Income Tax-IV, Pune v. Dr. Kasliwal Medical Care & Research Foundation, Solapur (Neutral Citation: 2024:BHC-OS:17177-DB)
Appearance:
Appellant: Advocate A.K. Saxena
Respondent: Advocates Gopal Mundhra and Rajath Bharadwaj.
