2017 (7) TMI 1150 - HC - Income Tax

Deemed registration u/s 12AA - whether application for registration by granting or refusing registration before the expiry of six months as provided u/s 12AA (2) of the Income Tax Act, 1961 would result in deemed grant of registration? - Held that - As decided in COMMISSIONER INCOME TAX VERSUS MUZAFAR NAGAR DEVELOPMENT AUTHORITY 2015 (3) TMI 99 - ALLAHABAD HIGH COURT (LB) non-disposal of an application for registration, by granting or refusing registration, before the expiry of six months as provided under s. 12AA (2) of the IT Act, 1961 would not result in deemed grant of registration, The judgment of the Division Bench of this Court in Society for the Promotion of Education Adventure Sport & Conservation of Environment 2008 (4) TMI 700 - ALLAHABAD HIGH COURT does not lay down the correct position of law. We direct Commissioner of Income Tax to pass appropriate order on the application for registration filed under Section 12AA of Act, 1961, if not already passed, within one month and if it has already been passed, communicate to Assessee and Revenue.

Summary

Issues Involved:
Interpretation of Section 12AA of the Income Tax Act, 1961 regarding the time limit for passing orders on registration applications and the consequences of non-compliance.

Detailed Analysis:

1. Interpretation of Time Limit under Section 12AA (2):
The appeal raised questions regarding the application of the time limit of 6 months provided in Section 12AA(2) of the Income Tax Act, 1961. The Court referred to a Full Bench judgment in a similar case and concluded that the non-disposal of an application for registration within the specified time frame does not result in deemed grant of registration. This interpretation clarified the legal position on the time limit issue.

2. Jurisdiction of the Income Tax Appellate Tribunal:
The Court also addressed whether the Income Tax Appellate Tribunal exceeded its jurisdiction by granting deemed registration under Section 12AA without appreciating the statutory power of the Commissioner to grant or refuse registration. The Court held that the Tribunal erred in substituting its own satisfaction for that of the Commissioner, thereby exceeding its jurisdiction. This ruling emphasized the importance of respecting the statutory powers of the Commissioner in such matters.

3. Setting Aside Tribunal's Judgment:
Based on the interpretation of the Full Bench judgment and the findings on jurisdictional issues, the Court set aside the judgment of the Tribunal dated 12.11.2013. The appeal was allowed in favor of the appellant and against the Assessee. The Commissioner of Income Tax was directed to pass an appropriate order on the registration application within one month if not already done, emphasizing the importance of timely decision-making in such matters.

In conclusion, the judgment provided clarity on the interpretation of Section 12AA regarding the time limit for registration applications and highlighted the significance of respecting statutory powers and jurisdictional boundaries in tax matters. The decision to set aside the Tribunal's judgment and direct the Commissioner to take necessary action within a specified timeframe underscored the importance of procedural compliance and timely resolution of tax-related issues.