9911796707
TMI Blog2015 (3) TMI 99X X X X Extracts X X X X X X X X Extracts X X X X ..... . Commissioner of Income Tax (2008) 216 CTR (All) 167 holding that the effect of non consideration of the application for registration within the time fixed by Section 12AA(2) would be deemed grant of registration, is legally correct. The Division Bench has prima facie doubted the correctness of an earlier judgment of a Division Bench in Society for the Promotion of Education Adventure Sport & Conservation of Environment vs. Commissioner of Income Tax & Ors. (supra). Section 11 of the Act provides that certain categories of income of charitable and religious trusts shall not be included in the total income of the assessee. Section 12A stipulates that Sections 11 and 12 of the Act shall not apply in relation to the income of any trust or institution unless certain conditions are fulfilled. Amongst the other conditions in clause (a) of Section 12A, the conditions are that (i) the person in receipt of the income has made an application for registration of the trust or institution in the prescribed form and manner to the Commissioner within one year of the creation of the trust or the establishment of the institution; and (ii) such trust or institution is registered under Section 12A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sub-section (1) of Section 12AA provides that the Commissioner, upon receipt of an application for registration of a trust or institution, shall call for documents or information in order to satisfy himself about the genuineness of the activities of the trust or institution. The Commissioner is also empowered to make such inquiry as he deems necessary. Thereupon, after satisfying himself of the objects of the trust or institution and the genuineness of its activities, the Commissioner shall pass an order in writing registering the trust or institution or, if he is not so satisfied, pass an order in writing refusing to register it. Sub-section (2), upon which the dispute of interpretation revolves, provides that every order granting or refusing registration "shall be passed before the expiry of six months" from the end of the month in which the application was received. An order passed by a Commissioner under Section 12AA is subject to an appeal to the appellate tribunal under Section 253 (1) (c). A Division Bench of this Court in Society for the Promotion of Education Adventure Sport & Conservation of Environment (supra) held that where the Commissioner fails to consider an applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hall' was regarded as mandatory wherever it has been used; (v) in other provisions of the Act, such as Sections 250 (6A) and 254 (2A), the legislature, by using the expression 'may' has indicated that the period within which an appeal has to be decided by the Commissioner (Appeals) or by the Tribunal is directory. In contrast, the period which is prescribed in Section 12AA(2) must be regarded as mandatory; and (vi) the period of six months in Section 12AA(2) should be treated as mandatory, otherwise the assessee would be subject to grave prejudice by an inordinate delay on the part of the Commissioner in disposing of such applications. Otherwise, the period which has been prescribed would be rendered redundant. On the other hand, learned counsel appearing on behalf of the revenue has submitted that the period of six months is clearly directory and the legislature has not provided any consequence, such as a deeming fiction to the effect that the application would be treated as being granted, if it is not disposed of within six months. The learned counsel submitted even if this is regarded as a casus omissus, the Court in pursuance of well settled principles of law has n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s he may deem necessary in that behalf. The Commissioner is thereupon empowered to pass an order in writing either registering an institution or, if he is not satisfied about the objects of the trust or institution and of the genuineness of its activities, to pass an order in writing refusing to register the trust or institution. An order of refusal has to be preceded by a reasonable opportunity of being heard and is subject to an appellate remedy under Section 253(1)(c). Sub-section (2) of Section 12AA requires that every such order granting or refusing permission under clause (b) of sub-section(1) shall be passed before the expiry of six months from the end of the month in which the application was received. The use of the expression 'shall' in sub-section (2) is, by itself, not dispositive of whether the period of six months is mandatory. The legislature has not imposed a stipulation to the effect that after the expiry of a period of six months, the Commissioner would be rendered functus officio or that he would be disabled from exercising his powers. Similarly, the legislature has not made any provision to the effect that the application for registration should be deem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plication which is not dealt with within the prescribed period would be deemed to have been allowed or that sanction would be deemed to have been accorded. The observations of the Supreme Court in that regard were as follows: "Sub-secs. (3) and (5) of S 313 prescribe a period within which the Standing Committee is expected to deal with the application made under sub-s. (1). But neither sub-section declares that if the Standing Committee does not deal with the application within the prescribed period of sixty days it will be deemed that sanction has been accorded. The statute merely requires the Standing Committee to consider the application within sixty days. It stops short of indicating what will be the result if the Standing Committee fails to do so. If it intended that the failure of the Standing Committee to deal with the matter within the prescribed period should imply a deemed sanction it would have said so. They are two distinct things, the failure of the Standing Committee to deal with the application within sixty days and that the failure should give rise to a right in the applicant to claim that sanction has been accorded. The second does not necessarily follow from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s design and the consequences which would follow from construing it the one way or the other." Applying this well-recognised canon of construction the conclusion is inescapable that the word 'shall' used in the provision is directory and not mandatory and must be read as 'may'." In that case, the Supreme Court was construing the provisions of Section 11A of the Bihar Buildings (Lease, Rent and Eviction) Control Act 1947 relating to the deposit of rent by a tenant in a suit for ejectment. The Supreme Court observed that the expression 'shall' must be construed as being directory and not mandatory having due regard to the legislative intent. We are unable to accept the line of reasoning which weighed with the Division Bench of this Court in Society for the Promotion of Education Adventure Sport & Conservation of Environment (supra). The Division Bench, in holding that the consequence of the non-consideration of an application for registration within the time fixed by Section 12AA(2), would be a deemed grant of registration, placed reliance on the following considerations: (i) Unlike the decision of the Supreme Court in Chet Ram Vashist (supra) which dealt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paragraph 14) A similar view to that of the Division Bench was adopted in a judgement of the Delhi Bench of the Income Tax Appellate Tribunal in Bhgwad Swarup Shri Shri Devraha Baba Memorial Shri Hari Parmarth Dham Trust vs. Commissioner of Income-tax, Dehradun [2007] 17 SOT 281 (Delhi) (SB). The Tribunal, as indeed the Division Bench of this Court, in the earlier decision, observed that on the balance and though the questions presented some difficulty, it was inclined to take the view supporting the plea of deemed registration, otherwise the assessee would be left without a remedy. The assessee, in our view, is not without a remedy since a delay on the part of the Commissioner to consider an application can be remedied by recourse to the jurisdiction under Article 226 of the Constitution. If the Commissioner has delayed in passing an order on an application for registration under Section 12AA, recourse to the remedy under Article 226 is always available to order an expeditious decision thereon. A considerable amount of reliance was placed on behalf of the assessee in the present case on a judgement of the Supreme Court in Commissioner of Income-Tax vs. Ajanta Electricals 215 IT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g done so, you must cause or permit your imagination to boggle when it comes to the inevitable corollaries of that state of affairs". The point, however, in this matter is that Section 12AA(2) does not provide for a legal fiction at all. Parliament has carefully and advisedly not provided for a deeming fiction to the effect that an application for registration would be deemed to have been granted, if it is not disposed of within six months. Legislative fictions are what they purport to be : acts of the legislating body. The Court cannot create one, where the legislature has not provided a deeming fiction. In Bhavnagar University vs. Palitana Sugar Mill (P) Ltd. and others (2003) 2 SCC 111, the Apex Court held as follows: "We are not oblivious of the law that when a public functionary is required to do a certain thing within a specified time, the same is ordinarily directory but it is equally when settled that when consequence for inaction on the part of the statutory authorities within such specified time is expressly provided, it must be held to be imperative." Significantly, in the present case, Parliament has not legislated a consequence of a failure to decide an application ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
