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TMI Blog2019 (2) TMI 622X X X X Extracts X X X X X X X X Extracts X X X X ..... we direct the Ld.CIT(Exemptions) to grant the registration u/s.12AA from the date of expiry of period of said six months. - Decided in favour of assessee - ITA No.1892/Chny/2015 - - - Dated:- 24-1-2019 - Shri George Mathan, Judicial Member And Shri Inturi Rama Rao, Accountant Member For the Appellant : Mr.Anand Devkumar, CA For the Respondent : Mr.B.Sagadevan, JCIT ORDER PER INTURI RAMA RAO, ACCOUNTANT MEMBER: This is an appeal filed by the assessee Society directed against the Order of the Learned Commissioner of Income Tax (Exemptions), Chennai, dated 17.06.2015, denying grant of registration under the provisions of Sec.12AA of Income Tax Act, 1961. 2. The appellant raised the following grounds of appeal: 1. The order u/s.12AA of Income Tax Act, 1961 is incorrect, illegal and contrary to law as well as our facts and circumstances of the case. 2. The impugned order suffers from limitation prescribed u/s.I2AA (2) of the Income Tax Act, 1961 and sec.12AA (2) is reproduced as follows: (2) Every order granting or refusing registration under clause (b) of subsection (1) shall be passed before the expiry of six months from the end of the m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal in the case of Devraha Baba Memorial Trust (see para 7(d) - supr ) where the view expressed stands confirmed by the High Court in the decision reported in [2008] 5 DTR (ALL) 329 and also support from the other non-Income-Tax cases. The view expressed in this decision seems to be the correct view for the reasons mentioned hereinafter. a) If the time-limit was not to be mandatory, there was no need to mention the same. The reason prompting the prescription of time-limit was to bring down the mounting pendency of registration applications (though not specially recorded anywhere) and to counter the practice of keeping such application pending for long by the authorities who were to dispose of these. b) If the Central Board of Direct Taxes wanted the time-limit only to be directory not mandatory-there was no need to mention it in section 12AA(2). Directions could have been given through departmental instructions or circular also. The fact that legislators preferred to put the time-limit in section 12AA itself indicates that the legislative intention has been to treat it as mandatory c) The use of words Shall and has to be passed within six months in the Expla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is no escape but to treat such a time-limit as mandatory . f) The Supreme Court laid down the rule of interpretation in this regard, in State of U.P.v.Babu Ram Upadhya [1961] AIR 1961 SC 751: The relevant rules of interpretation may be briefly stated thus: When a statute uses the word shall , prima facie, it is mandatory, but the court may ascertain the real intention of the legislative by carefully attending to the whole scope of the statute. For ascertaining the real intention of the legislative, the court may consider, inter alia, the nature and the design of the statute, and the consequences which would follow from construing it one way or the other, the impact of other provisions whereby the necessity of complying with the provisions in question is avoided, the circumstances, namely, that the statute provides for a contingency of the non-compliance with the provisions, the fact that the noncompliance with provision is or is not visited by some penalty, the serious or trivial consequence that flow there from, and above all, whether the object of the legislative will be defeated of furthered . g) In P.C. Pun v.CIT [1985] 151 ITR 584 (Delhi). It has been s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e word general in the expression means pertaining to a whole class. Therefore, advancement of any object of benefit to the public or a section of the public as distinguished from benefit to an individual or a group of individual would be a charitable purpose. The expression would prima facie include all objects which promote the well-being of the general public. It cannot be said that a purpose would cease to be charitable even when public welfare is intended to be served. If the primary purpose and the predominant object of a trust one to promote the welfare of the general public the purpose would be a charitable purpose. If the primary predominant object of an institution an institution is charitable, any other object which might not be charitable but which is ancillary or incidental to the dominant purpose, would not prevent the institution from being a valid charitable trust . Hence, trust for the development of Kanchipuram area traders who is also a section of the public and hence they should be treated as public. 12. Further, clauses required in para 2 (iii) and (iv) are incorporated in object clause F (i) of the bye-laws of the sangam as the objects are restrict ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation for registration u/s.12AA within a period of six months from the end of month in which application should be considered as deemed grant of registration, in the light of the decision of the Hon ble Supreme Court in the case of CIT Vs. Society for the Promotion of Education Adventure Sports Conservation of Environment. 5. Since the issue goes to root of the matter, we shall deal with the same now. Admittedly, this application seeking registration u/s.12AA of the Act, was filed on 10.07.2014. The Sub-section 2 of Sec.12AA stipulates that an order granting or refusing the registration under Clause- B of Sub-Sec.2 shall be passed before the expiry of the six months from the end of the month, in which, application was received by the Commissioner. In the instant case, admittedly, the application was received on 10.07.2014 and the limitation for passing an order under Clause-B of the Sub-Sec.1 of Sec.12AA expired on 31.01.2015, whereas the impugned order was passed on 17.06.2015. Then the issue comes up for consideration is whether non-disposal of application for registration u/s.12AA within the prescribed period would be considered as a deemed grant of registration. This issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judgment of the Allahabad High Court allowing deemed registration under Section 12AA; but applicable only from the date of expiry of the six month period as mandated in sub-section(2) of Section 12AA. The judgment of the High Court merges in the judgment of the Hon'ble Supreme Court. The opinion as expressed by the Allahabad High Court, regarding deemed registration under Section 12A for reason only of non consideration of an application under Section 12AA within a period of six months from the date of filing, having not been differed from by the Hon'ble Supreme Court in the Civil Appeal; the declaration by the High Court assumes the authority of a precedent by the Hon'ble Supreme Court on the principles of doctrine of merger. Despite the compelling persuasion of the learned Senior Counsel to interpret the provision as has been interpreted by the Full Bench of the High Court of Allahabad we find ourselves, incapacitated so to do and obliged to respectfully follow Society for the Promotion of Education case (supra). In such circumstance, respectfully following the decision of the Hon'ble Supreme Court we answer the question in favour of the assessee and against ..... X X X X Extracts X X X X X X X X Extracts X X X X
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