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Application filed by charitable trust u/s 12A merits deemed registration, once Revenue Authority has not acted upon such application within six months of its receipt: HC
THE ISSUE BEFORE THE DIVISION BENCH IS – Whether application filed by charitable trust u/s 12A merits deemed registration, once Revenue Authority has not acted upon such application within six months of its receipt. YES IS THE VERDICT.
Facts of the case:
The assessee is a charitable trust established for purpose of setting up of an educational institution. During the relevant A.Y, the application filed by assessee seeking registration u/s 12A was rejected on grounds of being delayed. This was done because there was considerable delay in filing such application and there were not sufficient reasons stated for condoning such delay. However, the ITAT on appeal, deemed the application as being condoned and directed the CIT to condone delay and to grant registration to the assessee u/s 12A.
High Court held that,
++ it cannot but be noticed that Section 12AA(2) specifically provides that on an application, an order granting or refusing registration shall be passed before the expiry of the six months of the date on which the application was received. It is seen from the files that the application was filed on Oct 10, 2006, and a report was called for from the ITO which was submitted only after almost nine months. The communication of the CIT based on which such report was made also is seen to be dated Jan 12 2006 referred to in the report of ITO, who has recommended the registration u/s 12AA(2). However an adverse report is seen authored by the Joint CIT addressed to the CIT. There has been some adjournments later and eventually the order impugned before the Tribunal was passed. This Court cannot but notice that there was unreasonable delay insofar as complying with the mandatory provision u/s 12AA(2);
++ the CBDT issued an Instruction No.16/2015 stating that, while processing the application u/s 12AA, the time limit of six months has to be adhered to by the CIT ( Exemptions). The CBDT has thought it fit, obviously from experience of dealing with delayed applications, that the mandatory provision has to be complied with in letter and spirit. The officers of the Department are necessarily bound by the directions so issued by the CBDT; which in the present case is a reiteration of the mandate statutorily prescribed. In the present case, there is failure to comply with the mandatory provision as provided u/s 12AA(2). The instruction by CBDT gives a clear picture of how the Board expected the Officers to treat the mandatory provision u/s 12AA(2) as being scrupulously relevant insofar as a consideration of an application filed u/s 12AA within the time stipulated in sub-section (2);
++ in the present case, the CIT, Kanpur had filed an appeal from the deemed registration granted u/s 12A for reason solely of an application u/s 12AA having not been acted upon for six months. Now, the supreme Court in 2017(11) SCC 480, clarified that the registration of the application u/s 12AA would only take effect from the date of expiry of six months from the date of application. In such circumstance, respectfully following the decision of Supreme Court, the question is answered in favour of assessee. The registration however is applicable only from the date of expiry of the six months from the date of application.