2017 (1) TMI 1654 - HC - Income Tax

Deemed grant of registration u/s 12AA (2) - Non-disposal of application for registration within a period of six months - HELD THAT - As decided in 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 Section 12AA (2) of the Income Tax Act 1961 would not result in a deemed grant of registration and 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. Merger of decision of High Court with Supreme Court - against Judgment of HC, Supreme Court dismissing appeal stating leaving all other questions of law open - HELD THAT - We find that Supreme Court in the judgment 2016 (2) TMI 1175 - SUPREME COURT OF INDIA , has held that all other questions of law are left open, meaning thereby question of law raised in appeal by C.I.T. has not been decided, but left open, hence, it cannot be said that judgement of this Court has merged with the judgment of Supreme court on the above question of law, which was decided by this Court in Society for the Promotion of Education, Allahabad 2008 (4) TMI 700 - ALLAHABAD HIGH COURT . In view of Full Court Judgment in Commissioner Income Tax vs. Muzafar Nagar Development Authority, 2015 (3) TMI 99 - ALLAHABAD HIGH COURT (LB) ; the question formulated above is answered against Assessee.

Summary

Issues Involved:
Interpretation of Section 12AA(2) of the Income Tax Act, 1961 regarding the deemed grant of registration within six months.

Analysis:
The judgment in question pertains to an appeal under Section 260A of the Income Tax Act, 1961, arising from a decision by the Income Tax Appellate Tribunal, Lucknow Bench 'A'. The primary issue addressed was whether the non-disposal of an application for registration within six months would result in a deemed grant of registration under Section 12AA(2) of the Act.

A Full Bench of the Court was referred two crucial questions regarding the interpretation of Section 12AA(2) based on previous judgments. The Full Bench, in its judgment, clarified that the non-disposal of an application within the stipulated time frame does not lead to a deemed grant of registration. It explicitly stated that the previous judgment, which suggested otherwise, was not legally correct and overruled it.

The Court highlighted a Division Bench judgment that contradicted the Full Bench decision by upholding the deemed grant of registration if the application is not decided within six months. However, the Court noted that this judgment was rendered without considering the Full Bench decision and, therefore, was not binding due to being per incurium.

Furthermore, a Supreme Court judgment was presented, where the Court clarified that the registration of an application under Section 12AA would take effect from a specific date. The appellant argued that this Supreme Court decision confirmed the deemed grant of registration, but the Court pointed out that other legal questions were left open, indicating that the issue was not conclusively decided.

Ultimately, the Court, relying on the Full Bench judgment, answered the question against the Assessee. Consequently, the appeal was allowed, and the Tribunal's decision was set aside. The judgment provides a detailed analysis of the legal interpretation of Section 12AA(2) and the implications of the deemed grant of registration within the specified time frame.