2018 (6) TMI 364 - AT - Income Tax

Deemed registration u/s 12AA - non granting of registration from original date of application for registration made u/s 12A - Held that - The Revenue was required to dispose off the application for registration u/s 12A within a period of 6 months but it was not done - thus in the light of these facts and the judgments of the Apex Court in the case of CIT Kanpur Vs. Society for Promotion of Education(2016 (2) TMI 672 - SUPREME COURT) the registration is deemed to have been granted from the date of inception of the University as the delay in filing of the application was only 1 month and 25 days for which request for condonation of delay was moved - thus we set aside the order of CIT and direct him to grant registration w.e.f. 01.04.1998 - Decided in favor of assessee.

Issues Involved:
1. Denial of retrospective registration under section 12A of the Income Tax Act, 1961.
2. Consideration of the appellant's case under the proviso to section 12A(1)(a)(i).
3. Impact of amendments to the VTU Act on the registration.
4. Potential miscarriage of justice due to prospective registration.
5. Satisfaction of CIT(E) with the appellant’s documents but refusal to grant retrospective registration.

Detailed Analysis:

1. Denial of Retrospective Registration under Section 12A:
The appellant, a university established on 01.04.1998, sought registration under section 12A of the Income Tax Act, 1961, with retrospective effect from its inception. The CIT(E) granted registration prospectively from 01.04.2016, without recording reasons for not granting retrospective effect from 01.04.1998. The Tribunal noted that the university had consistently engaged in charitable activities, specifically education, since its establishment. The Tribunal concluded that the delay in processing the original application filed on 25.05.1999 was due to the CIT's inaction, and thus, the university was entitled to retrospective registration from 01.04.1998.

2. Consideration under Proviso to Section 12A(1)(a)(i):
The appellant argued that its case fell under the proviso to section 12A(1)(a)(i), which allows for condonation of delay in filing the application for registration if there are sufficient reasons. The Tribunal agreed, citing the appellant’s initial application filed on 25.05.1999 and subsequent reminders, which were not acted upon by the CIT. The Tribunal referenced several judgments supporting the view that the CIT has the authority to condone delays and that non-response within six months results in deemed registration.

3. Impact of Amendments to the VTU Act:
The appellant contended that amendments to the VTU Act, enacted with retrospective effect from 01.04.1998, should have been considered by the CIT when granting registration. The Tribunal acknowledged that the amendments were eventually enacted and received the Governor’s assent on 13.08.2015. The appellant filed a fresh application on 25.08.2015, which included all required documents and amendments. The CIT granted registration prospectively from 01.04.2016, without considering the retrospective effect of the amendments.

4. Potential Miscarriage of Justice Due to Prospective Registration:
The appellant argued that prospective registration would result in an absurd situation where its income would be exempt in future years but taxable in earlier years, despite no change in its charitable nature. The Tribunal found merit in this argument, noting that the university's activities had consistently been charitable and educational. The Tribunal emphasized that denying retrospective registration would lead to a miscarriage of justice.

5. Satisfaction of CIT(E) with Appellant’s Documents but Refusal to Grant Retrospective Registration:
The Tribunal observed that the CIT(E) was satisfied with the appellant’s documents and activities but failed to provide reasons for not granting retrospective registration. The Tribunal referenced several judgments, including those from the Supreme Court and High Courts, which supported the view that once the genuineness of activities is established, registration should not be denied on technical grounds.

Conclusion:
The Tribunal concluded that the appellant was entitled to registration under section 12A with retrospective effect from 01.04.1998. The Tribunal set aside the CIT’s order and directed the CIT to grant registration from the date of the university’s inception. The appeal was allowed in favor of the appellant.

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