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2024 (10) TMI 1159 - HC - Income TaxDeemed registration u/s 12AA - specific deeming provision in the I.T. Act, 1961 - HELD THAT - There is much substance in the contention as urged on behalf of the Revenue that the decision of Harshit Foundation Sehmalpur 2022 (5) TMI 179 - SC ORDER would be required to be held to be the law declared by the Supreme Court u/Article 141 of the Constitution, on the interpretation of the interplay between Section 12A and Section 12AA (2) on the issue whether sub-section (2) of Section 12AA conceives any deemed grant of registration, if the assessee s application is not decided within six months. This decision considers the applicability and interpretation of the said provisions and accords an approval to the view taken in Muzafar Nagar Development Authority 2015 (3) TMI 99 - ALLAHABAD HIGH COURT (LB) and as in Harshit Foundation Sehmalpur 2022 (5) TMI 179 - SC ORDER which had also distinguished the applicability of the decision of the Supreme Court in Society for Promotion of Education 2016 (2) TMI 672 - SC ORDER We find ourselves in agreement with the observations made in Harshit Foundation Sehmalpur 2022 (5) TMI 179 - SC ORDER including to distinguish the applicability of the decision, the Supreme Court in Society for Promotion of Education 2016 (2) TMI 672 - SC ORDER On a reading of the decision of the Supreme Court in Harshit Foundation Sehmalpur (supra) it is clear that the Supreme Court has considered the legal effect which emanated from Section 12AA (2) of the IT Act and as considered by the Full Bench of the Allahabad High Court in Muzaffar Nagar Development Authority 2015 (3) TMI 99 - ALLAHABAD HIGH COURT (LB) when it upheld the decision of the Division Bench in Harshit Foundation Sehmalpur 2022 (5) TMI 179 - SC ORDER while approving the decision of the Full Bench. In this view of the matter, considering the reasoned orders passed by the Supreme Court although in dismissing the SLP applying the principles as laid down in Kunhayammed and others vs. State of Kerala Anr. 2000 (7) TMI 67 - SUPREME COURT (LB) it would be required to be held that the Revenue is right in its contention that the decision of the Supreme Court in Harshit Foundation Sehmalpur (supra) is the law declared by the Supreme Court under Article 141 of the Constitution. Having considered both the decisions as rendered by the Supreme Court namely in Society for Promotion of Education 2016 (2) TMI 672 - SC ORDER and Harshit Foundation Sehmalpur 2022 (5) TMI 179 - SC ORDER and as held by the Division Bench of the Allahabad High Court, in fact, we do not find that there is any situation that both the said decisions are mutually irreconcilable, for the reasons we have noted hereinabove. In our opinion, accepting Mr. Mundhra s argument that these decisions bring about a mutually irreconcilable legal position, would not be a correct reading of these decisions. Thus, as held by the Supreme Court in Harshit Foundation Sehmalpur 2022 (5) TMI 179 - SC ORDER the clear position in law is to the effect that Section 12AA (2) of the IT Act does not recognize any deeming fiction, that an application for registration is deemed to be granted, if it is not disposed of within six months, as succinctly held by the Full Bench of the Allahabad High Court in Muzafar Nagar Development Authority (supra) when it observed that the Parliament has carefully and advisedly not provided for such deeming fiction and as approved by the Supreme Court in Harshit Foundation Sehmalpur 2022 (5) TMI 179 - SC ORDER Allow the Revenue s appeal in answering the question of law in favour of the Revenue and against the assessee.
Issues Involved:
1. Whether the Income Tax Appellate Tribunal (ITAT) was justified in granting a deemed registration under Section 12AA of the Income Tax Act, 1961, despite the absence of a specific deeming provision in the Act. Issue-wise Analysis: 1. Deemed Registration under Section 12AA: The primary issue in this case revolves around whether the ITAT was justified in granting the assessee a deemed registration under Section 12AA of the Income Tax Act, 1961, due to the Commissioner of Income-tax's (CIT) failure to decide the application within the prescribed six-month period. Background and Tribunal's Decision: The assessee, a public trust running a pediatric hospital, applied for registration under Section 12A on 6 February 2006. The CIT refused registration on 15 September 2006, beyond the six-month period prescribed under Section 12AA(2). The ITAT, relying on a previous decision in Bhagwad Swarup Shri Shri Devraha Baba Memorial Shri Hari Parmarth Dham Trust, held that the failure to decide within six months resulted in a deemed registration. The Tribunal quashed the CIT's order and directed registration from 1 April 2005. Revenue's Argument: The revenue, represented by Mr. Saxena, argued that the Tribunal's decision contradicted Section 12AA(2), which does not provide for deemed registration. He cited the Full Bench decision of the Allahabad High Court in Commissioner, Income Tax vs. Muzafar Nagar Development Authority, which held that the absence of a decision within six months does not imply deemed registration. This view was supported by subsequent decisions, including Commissioner of Income-tax vs. Harshit Foundation Sehmalpur, where the Supreme Court left the question of law open. Assessee's Argument: Mr. Mundhra, representing the assessee, countered by citing the Supreme Court's decision in Commissioner of Income Tax, Kanpur vs. Society for the Promotion of Education, which suggested that non-response within six months results in deemed registration. He argued that this earlier decision should be binding, supported by principles from cases like Sundeep Kumar Bafna vs. State of Maharashtra. Court's Analysis: The court examined the conflicting decisions from different benches of the Supreme Court and the interpretation of Section 12AA(2). It noted the Full Bench of the Allahabad High Court's reasoning that the statute does not create a deeming fiction for registration. The court also acknowledged the Supreme Court's decision in Harshit Foundation Sehmalpur, which supported the view that no deemed registration occurs if the CIT fails to decide within six months. Conclusion: The court concluded that the ITAT's decision was incorrect. It held that Section 12AA(2) does not provide for deemed registration, aligning with the Full Bench's interpretation and the Supreme Court's subsequent affirmation in Harshit Foundation Sehmalpur. The appeal was allowed in favor of the revenue, and the question of law was answered against the assessee.
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