The Commissioner Of Income Tax, Alwar v. Public Rose Shiksha Samiti, Tijara Road, Alwar

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH ATJAIPUR D.B. Income Tax Appeal No. 650 / 2011 The Commissioner of Income Tax, Alwar ----Appellant Versus Public Rose Shiksha Samiti, Tijara Road, Alwar. ----Respondent _____________________________________________________ For Appellant(s) : Mr. Daksh Pareek for Mr. Sameer JainFor Respondent(s) : Mr. Aditya Bohra for Mr. Gunjan Pathak _____________________________________________________ HON'BLE MR. JUSTICE K.S. JHAVERIHON'BLE MR. JUSTICE VIJAY KUMAR VYASJudgment 07/02/2018 By way of this appeal, the appellant has challenged thejudgment and order of the Tribunal whereby the Tribunal hasallowed the appeal of the assessee. This Court while admitting the matter framed the followingsubstantial question of law:- “Whether the Tribunal was legally justified ingranting the registration u/s 12A with retrospectiveeffect w.e.f. 1.4.2000., on the basis of the photocopy of application dt. 19.3.2001 being withoutjustification as it was submitted at the office ofCommissioner of Income Tax, Bikaner?” Counsel for the appellant contended that while considering the matter, the CIT(A) has considered the basic principles whichare required to be considered for the granting the benefit u/s 12A and he has taken us to the order of CIT(A) which reads as under:- “The assessee was given an opportunity of beingheard before the undersigned or 06.04.2010 videthis office letter no. CIT/Alw/DCIT(Hqrs.)/2009-10/3126 dt., 23.03.2010. The President of thetrust requested for adjournment of the dte ofhearing due to his personal reasons. The casewas re-fixed for tearing before the undersignedon 15.04.2010 vide this office letter no.CIT/Alw/DCIT(Hqrs.)/2010/11/39dated07.04.2010. The Accountant of the trust requested to furtheradjourns the case. Finally, last opportunity wasgiven to the trust on 21.04.2010 on which Sh.Praveen Jain, Accountant the Samiti/trustappeared but he was unable to explain thecoverance of samiti under the charitable purposeand the hearing was adjourned to letter No.CIT/Alw/DCIT(Hqrs.)/2010-11/109dated21.04.2010 addressed to Sh. Rajesh KumarSingh, President of the Trust/Samiti to the fixeddate of hearing. Sh. Rajesh Kumar Singhappeared before the undersigned along with Sh.Praveen Jain, Accountant of the Samiti but theywere unable to explain that the activities of thetrust were to be considered as charitable underthe provision 2(15) of the IT Act, 1961 and theywere unable to explain how the activities carriedout by the trust/samiti are of charitable natureand not profit. Also they unable to themisappropriation of funds of the trust byPresident, Members and other trustees. Having regard to the facts of the case it isapparent that the trust has not been able tobring any evidence on record to establish that itsactivities till now were genuinely taken for anycharitable purpose. The trust/samiti is engagedin activities which cannot be said to be ofcharitable nature and are profit motive. Also, thetrust did not comply with the mandatoryrequirements as requested by this office throughvarious opportunities. The trust on the basis ofpresent format of application is not eligible forregistration u/s 12A(a) and hence its applicationfor registration is hereby rejected.” However, we have gone through the judgment of theTribunal. The Tribunal while considering the matter has observedas under:- Having regard to the facts of the case it isapparent that the trust has not been able tobring any evidence on record to establish that itsactivities till now were genuinely taken for anycharitable purpose. The trust/samiti is engagedin activities which cannot be said to be ofcharitable nature and are profit motive. Also, thetrust did not comply with the mandatoryrequirements as requested by this office throughvarious opportunities. The trust on the basis ofpresent format of application is not eligible forregistration u/s 12A(a) and hence its applicationfor registration is hereby rejected.” However, we have gone through the judgment of theTribunal. The Tribunal while considering the matter has observedas under:- “2.7. We have heard both the parties. The copyof application for registration in form no. 10Awas filed on 19.03.2001 and copy of suchapplication is available at page 1 of the paperbook. The ld. AR contended before us that theassessee filed the original copy of trust deed.However, the copies of the trust deed have beenfiled subsequently. The society is registeredunder the Societies of the Registration Act.Hence, there is no dispute that the society hasnot been constituted and it is not being run asper the constitution of the society. The Hon’bleKarnataka High Court in the case ofSanjeevamma Hanumanthe Gowda CharitableTrust. vs. Director of Income Tax (Exemptions),supra had an occasion to consider the powers ofthe Commissioner of Income Tax in respect ofgranting of registration to the trust. After receiptof application, the Commissioner of Income taxis authorized to call for such documents orinformations from the trust in order to satisfyhimself about the genuineness of the activitiesof the trust or institution. The Commissioner ofIncome tax is not to look into the source ofincome but has to consider as to whether theincome has been applied for charitable orreligious purposes. For arriving at suchsatisfaction, the ld. CIT has to look at the objectof the trust of the trust when the same isreduced into writing in the form of trust deed.The authorities require to grant registration is tosatisfy itself about the genuineness of theactivities of the trust or institution and suchauthority is not required to look into the natureof the activity by which income is derived by thetrust. 2.8. Moreover, the application was filed on19.03.2001 and as per requirement of the Act,the application for registration is to be decidedwithin six months. The Hon’ble Allahabad HighCourt in the case of Society for the Promotion ofEducation Adventure Sport & Conservation ofEnvironment vs. CIT, 216 CTR 167 has held thatregistration should be treated as deemed if theapplication for registration is not disposed offwithin six months of the end of the month in which application is filed. It will be useful toreproduce the held portion from this judgment. 2.8. Moreover, the application was filed on19.03.2001 and as per requirement of the Act,the application for registration is to be decidedwithin six months. The Hon’ble Allahabad HighCourt in the case of Society for the Promotion ofEducation Adventure Sport & Conservation ofEnvironment vs. CIT, 216 CTR 167 has held thatregistration should be treated as deemed if theapplication for registration is not disposed offwithin six months of the end of the month in which application is filed. It will be useful toreproduce the held portion from this judgment. “Held: Taking the view that non-consideration ofthe registration application within the time fixedby Section 12AA(2) would result in deemedregistration, may not at the worst cause loss ofsome revenue or income tax payable by theindividual assessee. On the other hand, takingthe contrary view and holding that not taking adecision within the time fixed by Section12AA(2) is of no consequence would leave theassessee totally at the mercy of the ITauthorities, inasmuch as the assessee has notbeen provided any remedy under the Act againstnon-decision because u/s 12AA(3), theregistration can always be cancelled by the CIT,if he is satisfied that the object of such trust orinstitution are not genuine or the activities arenot being carried out in accordance with theobject of the trust or institution. The onlydrawback is that such cancellation would operateonly prospectively. Therefore, if a view is takenthat non-consideration of the registrationapplication within the time limit fixed by Section12AA(2) would amount to deemed grant ofregistration, the only adverse consequence liketo flow from such a view in respect of any caseof that assessee arising in future would be atbest be some loss of revenue from thatindividual assessee from the date of expiry ofthe limitation u/s 12AA(2) till the date ofcancellation of that registration, if suchcancellation is called for. Moreover, this viewfurthers the object and purpose of the aforesaidstatutory provision. For the interpretation of astatute ‘purpose construction’ of the enactmentwhich gives effect to the legislativepurpose/intendment, if necessary must befollowed and appealed. Consideration the prosand cons of the two views by far the betterinterpretation would be to hold that the effect ofnon-consideration of the application forregistration within the time fixed by Section12AA(2) would be a deemed grant ofregistration. There is no good reason to makethe assessee suffer merely check and control, soas to take timely decisions in such simplematters such as consideration of the applicationsfor registration even within the large six monthsperiod provided by Section 12AA(2). Accordinglythe respondents are directed, subject to anyorder which may be passed u/s 12AA(3) to treat the petitioner society as an institution dulyapproved and registered u/s 12AA and torecompute its income by applying the provisionsof Section 11. Accordingly a formal certificate ofapproval will be issued forthwith to the petitionerby the respondent no. 2 – Chet Ram Vashist vs.Municipal Corporation AIR 1981 SC 653distinguished; R. (Haw) vs. Secretary of Statefor the Home Department (2006) 3 All Er 428applied.” 2.9. The special bench in the case of BhagwadSwarup Shri Shri Devraha Baba Memorial ShriHari Parmarth Dham Trust vs. CIT, 111 ITD 175has held that if the commissioner does notpassed the order, granting or refusingregistration of the trust within the period laiddown in Section 12AA(2) i.e. within period of sixmonths from the end of the month in whichapplication for registration u/s 12A was filedthen registration would be deemed to have beengranted to trust or institution automatically onexpiry of period specified in Section 12AA(2) ofthe Act. In such a case, registration will bedeemed to have been granted as applied for bythe assessee. 2.9. The special bench in the case of BhagwadSwarup Shri Shri Devraha Baba Memorial ShriHari Parmarth Dham Trust vs. CIT, 111 ITD 175has held that if the commissioner does notpassed the order, granting or refusingregistration of the trust within the period laiddown in Section 12AA(2) i.e. within period of sixmonths from the end of the month in whichapplication for registration u/s 12A was filedthen registration would be deemed to have beengranted to trust or institution automatically onexpiry of period specified in Section 12AA(2) ofthe Act. In such a case, registration will bedeemed to have been granted as applied for bythe assessee. 2.10. ITAT Agra bench in the case of ShriHaridevji Gaushala Trust vs. CIT, 119 TTJ 981had held that once there is no dispute about thegenuineness of the activities of the trust then ld.CIT cannot refuse registration u/s 12A of theAct. 2.11. Keeping in view the above discussions andconsidering the orders of the Special Benchy andJaipur Bench, we hold that the assessee isentitled for registration u/s 12A of the Act fromthe date as mentioned in the application i.e.19.03.2001 as registration was neither grantedor rejected within the period of six months fromthe end of the month in which application wasfiled. Thus the assessee will be entitled toregistration from 01.04.2000 as application hasbeen filed within the financial year 2000-01.” We are in complete agreement with the view taken by the Tribunal. Therefore, the issue is answered in favour of the assessee and against the department. The appeal stands dismissed. (VIJAY KUMAR VYAS) J. A.Sharma/101 (K.S. JHAVERI)J.