Wp(C)/14974/2020 Of Lions Foundations Kerala v. The Commissioner Of Income-Tax

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE AMIT RAWAL FRIDAY, THE 23RD DAY OF OCTOBER 2020 / 1ST KARTHIKA, 1942 WP(C).No.14974 OF 2020(V) PETITIONER: LIONS FOUNDATIONS KERALALIONS BHAVAN, N.H.BYE-PASS ROAD, THIRUVALLOM, TRIVANDRUM, REPRESENTED BY ITS DIRECTOR, G.HARIHARAN. BY ADVS.SMT.T.S.MAYA (THIYADIL)SRI.D.S.SREEKUMARAN RESPONDENTS: 1THE COMMISSIONER OF INCOME-TAX,AYAKAR BHAVAN, KOWDIAR, TRIVANDRUM, PIN - 695 003. 2THE PRINCIPAL COMMISSIONER OF INCOME TAX (EXEMPTION)REVENUE BUILDING, I.S.PRESS ROAD, KACHERIPADY, ERNAKULAM - 682018. OTHER PRESENT: SRI CHRISTOPHER ABRAHAM SC THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON23.10.2020, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: JUDGMENT Dated this the 23[rd] day of October 2020 The petitioner has approached this Court with thefollowing prayers: i) Declare that the petitioner is deemed to havebeen granted registration under Section 12A ofthe Income Tax Act with effect from 30thSeptember 2007 being the last date of 6months limitation period, statutorily providedfor failure on the part of 1st respondent tofollow the directions given by the Hon'bleIncome Tax Appellate Tribunal in its order inITA No. 884/coch/2007 dated 8/7/2008, toconsider afresh the application filed by thepetitioner on 29.3.2007 in Form No.10A forgrant of registration under Section 12A and topass a speaking order; ii) Issue a writ of mandamus or any otherappropriate writ, order or directioncommanding the 1st respondent to treat thepetitioner as a duly registered society underSection 12A of the Income Tax Act, 1961, effective from 30.9.2007, against theapplication filed before the 1st respondent inForm No.10A on 29.3.2007 by the petitioner, ashe failed to follow the direction of the Hon'bleIncome Tax Appellate Tribunal given by it init's order in ITA No.884/coch/2007 dated8.7.2008, before the statutory time prescribedunder Section 12AA (2) of the Income Tax Act,1961. iii) Issue such other writ directions or ordersas this Hon'ble Court may deem fit andnecessary in the facts and circumstances ofthe case. iv) Petitioner craves for leave to add, to amendor to delete or to withdraw the grounds as maybe permitted by this Hon'ble Court.” 2.It is necessary to refer few facts in respect of the aforementioned prayers. On 2.8.2007, an application forregistration of the Society, under Section 12 A of the Income Tax Act, in form 10A of the Income Tax Act, 1961, wassubmitted. The petitioner Society is an initiative of a groupof members of the Lions Club International belonging to the Southern part of Kerala stretching from Haripad toParassala. The foundation is targeted to have an institutionof Lions to pursue welfare activities for the deserving needy,without differences of distinction of religion, caste, creed orcolor, free from politics and fundamentalism. It is alreadyregistered under the Travancore, Cochin, Literary Scientificand Charitable Societies Registration Act, 1955, evidencedfrom Ext.P1. The objects of the foundation as per theMemorandum of Association is lengthy and it is in thatbackground registration was sought. The aforementionedregistration was rejected by respondent on 2.8.2007 underSection 12A of the Income Tax Act, necessitating thepetitioner to assail the same before Income Tax AppellateTribunal. Learned Income Tax Tribunal vide its order dated8.7.2008, accepted the appeal by issuing directions to theCommissioner of Income Tax for deciding the issue onmerits in accordance with law after affording sufficientopportunity of hearing to the assessee by passing aspeaking order. 3.Learned counsel for the petitioner submits thatalmost twelve years have gone, no action has been taken bythe respondent, necessitating the petitioner to approachthis Court. On 23.07.2020, this Court admitted the matterand on admission Mr.Christopher Abraham, learnedStanding Counsel for respondent Nos.1 & 2 accepted noticeand were directed to file counter affidavit. 4.Today when the case has come up for hearing, thelearned counsel on instructions from the respondentssubmits that the necessary action would be taken on thedirections of the Income Tax Appellate Tribunal. 5.and appraised the paper books. I have heard the learned counsel for the parties 6.On hearing the submission, this Court asked foran explanation of having not taken the action for almosttwelve years and why the deemed exemption under Section12A of the Income Tax Act has not been granted. Duringthe course of the hearing, learned counsel for the petitioner On hearing the submission, this Court asked for WP(C).No.14974 OF 2020 relied upon the judgment of the Supreme Court inCommissioner of Income Tax, Kanpur and Ors. V.Society for the Promn. Of Edn., Allahabad [2016] 382ITR 6(SC) and the Division Bench of this Court in TheCommissioner of Income Tax, Cochin V. TBI EducationTrust (2019) 306 CTR (Ker)295 but no satisfactoryexplanation has come forward nor any counter has beenfiled. Such a laxity on the part of a very responsible officedo not require any pardon or to be accepted in any courtproceedings as almost twelve years had gone by, where noaction has been taken. In the judgments cited above, theDivision Bench of this Court by taking into consideration,the provisions of Section 12A of the Income Tax Act, noticedthat on the submission of the application, if no decision istaken within the period of six months, the application isdeemed to have been allowed. Para 9 of the judgment inCommissioner of Income Tax, Cochin (supra), reads thus: “On a reading of the order passed in (2017) 11 SCC480, we are not convinced that there was any concession made by the learned Additional SolicitorGeneral who appeared in the matter for the Income-Tax Department. As we discern from the order, theCommissioner of Income-Tax, Kanpur had filed anappeal from the deemed registration granted underSection 12A for reason solely of an application underSection 12AA of the Act having not been acted uponfor six months. The appeal arose from the judgmentdated 03.04.2008 of the High Court of Judicature,Allahabad. When the matter was considered by theHon'ble Supreme Court, the Full Bench decision of theAllahabad High Court cited, herein above, by theRevenue was passed and we do not see the saiddecision having been placed before the Hon'bleSupreme Court. Rather than a concession, the learnedAdditional Solicitor General specifically informed theHon'ble Supreme Court that the only apprehension ofthe Department was regarding the date on which thesaid deemed registration, would be effected; whetherit is on the date of application or on the expiry of sixmonths. The Civil Appeal before the Hon'ble SupremeCourt was disposed of expressing the apprehension tobe unfounded, but all the same clarifying that theregistration of the of the application under Section12AA would only take effect from the date of expiry ofsix months from the date of application. The effect ofdisposal of a Civil Appeal as has been laid down in KunhayammedV.StateofKeralaMANU/SC/0432/2000: [(2000) 245 ITR 360 (SC)]hence assumes significance. The Hon'ble SupremeCourt in 2017 (11) SCC 480; in a Civil Appeal,approved the judgment of the Allahabad High courtallowing deemed registration under Section 12AA; butapplicable only from the date of expiry of the sixmonth period as mandated in sub-section (2) ofSection 12AA. The judgment of the High Courtmerges in the judgment of the Hon'ble SupremeCourt. The opinion as expressed by the AllahabadHigh Court, regarding deemed registration underSection 12A for reason only of non consideration of anapplication under Section 12AA within a period of sixmonths from the date of filing, having not beendiffered from by the Hon'ble Supreme Court in theCivil Appeal; the declaration by the High Courtassumes the authority of a precedent by the Hon'bleSupreme Court on the principles of doctrine of merger.Despite the compelling persuasion of the learnedSenior Counsel to interpret the provisions as has beeninterpreted by the Full Bench of the High Court ofAllahabad we find ourselves, incapacitated so to doand obligated to respectfully follow (2017) 11 SCC480.” Commissioner of Income Tax, Kanpur (supra). The relevantportion reads thus: “3.The short issue is with regard to the deemedregistration of an application under Section 12AA ofthe Income Tax Act. The High Court has taken theview that once an application is made under the saidprovision and in case the same is not responded towithin six months, it would be taken that theapplication is registered under the provision. 4.The learned Additional Solicitor Generalappearing for the Appellants, has raised anapprehension that in the case of the Respondent, sincethe date of application was of 24.02.2003, at the worst,the same would operate only after six months from thedate of the application. 5.We see no basis for such an apprehension sincethat is the only logical sense in which the judgmentcould be understood. Therefore, in order to disabuseany apprehension, we make it clear that theregistration of the application under Section 12AA ofthe Income Tax Act in the case of the Respondent shalltake effect from 24.08.2003. 6.Subject to the above clarification and leaving allother questions of law open, the appeal is disposed ofwith no order as to costs.”other questions of law open, the appeal is disposed ofwith no order as to costs.” 8.It is a matter of record that vide order dated 08.07.2008, learned Income Tax Appellate Tribunal setaside the order of the Commissioner resulting into revival ofthe application for seeking exemption under Section 12A ofthe Income Tax Act dated 28.03.2007 submitted on29.03.2007 and almost twelve years have passed, it isdeemed to have been granted registration after the expiryof six months, in view of the ratio culled out in thejudgments referred to above. Accordingly, the applicationof the petitioner for registration of the Society underSection 12A of the Income Tax Act is allowed. Writ petition is disposed of with the aforementioneddirections. vv Sd/- AMIT RAWAL JUDGE APPENDIX PETITIONER'S/S EXHIBITS: EXHIBIT P1 TRUE COPY OF MEMORANDUM OF ASSOCIATION AND RULES AND REGULATIONS OF LIONS FOUNDATION KERALA. EXHIBIT P1(A) TRUE COPY OF CERTIFICATE OF REGISTRATION UNDER TRAVANCORE COCHIN, LITERARY SCIENTIFIC AND CHARITABLE SOCIETIES REGISTRATION ACT 1995 (NO.2951/045 DATED 27/10/2004). EXHIBIT P2 TRUE COPY OF APPLICATION FOR REGISTRATION OF THE SOCIETY UNDER SECTION 12A OF IT ACT IN FORM NO.10A DATED 28/03/2007. EXHIBIT P3 TRUE COPY OF ORDER DATED 8/7/2008 IN ITA NO.884/07 OF INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH ITA NO.884/07 OF INCOME TAX APPELLATE