Non-Disposal Of Application For Registration U/S 12AA Of IT Act Within 6 Months Doesn't Result In "Deemed Registration”: Bombay High Court

The Division Bench of Justice G. S. Kulkarni and Justice Firdosh P. Pooniwalla clarified that “non-disposal of application for registration by granting or refusing registration, before the expiry of six months as provided u/s 12AA(2), would not result in a deemed grant of registration”.

The Bench observed so while referring to the Full Bench decision of Allahabad High Court in case of Commissioner of Income Tax vs. Muzafar Nagar Development Authority.

Facts of the case

The assessee/ respondent, a public trust running a pediatric hospital, filed an application in Form No. 10A requesting registration of the assessee u/s 12A. The registration was however, refused by the CIT. When the matter reached the Tribunal, it was held that as the CIT did not pass an order granting or refusing registration of assessee u/s 12A(1) within a period of six months as prescribed u/s 12AA(2), the assessee is deemed to have been granted a registration. Challenging the same, the Revenue approached the High Court.

Observation of the High Court

The Bench referred to the decision of the Full Bench in Kamleshkumar Ishwardas Patel case, where considering the provisions of Section 11 of the 'COFEPOSA Act, 1974, it was observed that failure on the part of the detaining authority to consider and decide a representation was fatal to the order of detention, though such failure was not be fatal, if in fact and in effect, the same was finally been considered by an appropriate authority specified under the relevant law.

The Bench thereafter referred to the conflicting decisions of the Supreme Court in CIT Vs. Society for Promotion of Education as well as Harshit Foundation Sehmalpur Vs. CIT.

The controversy in the present proceedings revolves around Section 12A, which provides for “conditions as to registration of trusts, etc.” and Section 12AA which provides for the “procedure for registration”, added the Bench.

The Bench found that the Division Bench of Allahabad High Court in the case of Society for Promotion of Education Vs. Commissioner of Income Tax, has held that non consideration of the application for registration within the time fixed by Section 12AA(2) would amount to a deemed grant of registration.

Later, while considering the correctness of the view of the Division Bench, the Full Bench of Allahabad High Court in case of Commissioner of Income Tax vs. Muzafar Nagar Development Authority, held that consequence of non-consideration of an application for registration, within the time fixed by Section 12AA(2), would not confer a deemed grant of registration to the assessee.

The Bench also noted that the Apex Court in case of Harshit Foundation approved the decision of the Full Bench of the Allahabad High Court that non-disposal of application for registration u/s 12AA(2) within a period of six months, would not result in deemed grant of registration.

The High Court therefore concluded that Sec 12AA(2) does not conceives any deemed grant of registration, if the assessee's application is not decided within six months.

Hence, while refusing to grant deemed registration, the High Court allowed the Revenue's appeal.

Counsel for Petitioner/ Revenue: A.K. Saxena

Counsel for Respondent/ Assessee: Gopal Mundhra and Rajath Bharadwaj

Case Title: The Commissioner of Income Tax versus Dr. Kasliwal Medical Care & Research Foundation

Case Number: Income Tax Appeal No. 4320 OF 2009

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