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2020 (6) TMI 199 - HC - Income TaxExemption u/s 11 - Deemed registration under Section 12AA - as per tribunal objects of the assessee is of general public utility and is entitled to registration under Section 12AA - HELD THAT - Admittedly, an application under Section 12A of the Act on 17.09.1999 and order on the aforesaid application has been passed beyond a period of six months i.e., on 30.10.2001. Therefore, in view of law laid down in SOCIETY FOR PROMN. OF EDN., ALLAHABAD 2016 (2) TMI 672 - SC ORDER the registration under Section 12A of the Act shall be deemed to have taken effect after six months from the date of presentation of the application i.e., 18.03.2000. In any case, the registration has already been granted in favour of the assessee under Section 12A of the Act vide order dated 03.06.2003. Therefore, it is not necessary for us to examine the validity of the order passed by the tribunal and therefore, in our opinion, the substantial questions of law framed by a bench of this court have been rendered academic. Therefore, it is not necessary to answer the same. However, the appeal is disposed of with the observation that the mere grant of registration to the assessee shall not result in grant of benefit to it ipso facto under Sections 11 and 12 of the Act and if any, regular assessment is pending, the same may be completed in accordance with law.
Issues involved:
1. Registration under Section 12AA of the Income Tax Act. 2. Compliance with the mandatory provision of passing orders within six months. 3. Validity of the tribunal's decision on registration. 4. Entitlement to benefits under Sections 11 and 12 of the Act. 5. Impact of pending regular assessment proceedings. Issue 1: Registration under Section 12AA of the Income Tax Act: The appellant, a society registered under the Karnataka Societies Registration Act, sought registration under Section 12AA of the Income Tax Act for exemption under Section 10(22). The appellant's application for registration was filed in 1999, but the order was passed in 2001. The Director of Income Tax (Exemptions) rejected the application citing irregularities in financial transactions and diversion of funds. The Tribunal, however, set aside the rejection, emphasizing the mandatory requirement of passing orders within six months of application submission. The High Court noted that the registration was deemed effective from a later date and was eventually granted in 2003, making the appeal on this issue academic. Issue 2: Compliance with the mandatory provision of passing orders within six months: The Tribunal's decision to set aside the rejection of registration was based on the failure to comply with the statutory requirement of passing orders within six months of the application submission. The High Court acknowledged this lapse but ultimately found the registration to have been granted later, rendering the issue moot. Issue 3: Validity of the tribunal's decision on registration: The Tribunal's decision to grant registration to the appellant was challenged by the revenue, arguing that the Tribunal did not consider the matter on merits and merely relied on a previous decision involving a different entity. The revenue contended that registration alone does not automatically confer the benefits under Sections 11 and 12 of the Act. The appellant, on the other hand, highlighted the delay in decision-making and the existing registration granted in 2003. The High Court, considering the registration already in place, did not delve into the validity of the Tribunal's decision, deeming the substantial questions of law academic. Issue 4: Entitlement to benefits under Sections 11 and 12 of the Act: The appellant's entitlement to benefits under Sections 11 and 12 of the Act was a point of contention. The revenue argued that mere registration does not guarantee these benefits, while the appellant pointed out the existing registration and pending regular assessment proceedings. The High Court emphasized that registration does not automatically confer benefits and that pending assessments should proceed in accordance with the law. Issue 5: Impact of pending regular assessment proceedings: The High Court highlighted the importance of completing any pending regular assessment proceedings in accordance with the law, regardless of the registration status. It noted that if any assessment proceedings were initiated, they should adhere to the law of limitation. In conclusion, the High Court disposed of the appeal, emphasizing that registration does not automatically grant benefits under Sections 11 and 12 of the Act and directing any pending regular assessment proceedings to proceed lawfully.
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