Court clarifies registration under Income Tax Act not automatic if application not decided in 6 months.

The Court clarified that non-disposal of an application within six months does not result in a deemed grant of registration under Section 12AA(2) of the Income Tax Act, 1961. The Full Bench overruled a previous judgment suggesting otherwise and held that the registration does not automatically occur if the application is not decided within the stipulated time frame. As a result, the appeal was allowed, and the Tribunal's decision was overturned. The judgment extensively analyzed the legal interpretation of Section 12AA(2) and its implications on registration.

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Issues Involved:
Interpretation of Section 12AA(2) of the Income Tax Act, 1961 regarding the deemed grant of registration within six months.

Analysis:
The judgment in question pertains to an appeal under Section 260A of the Income Tax Act, 1961, arising from a decision by the Income Tax Appellate Tribunal, Lucknow Bench 'A'. The primary issue addressed was whether the non-disposal of an application for registration within six months would result in a deemed grant of registration under Section 12AA(2) of the Act.

A Full Bench of the Court was referred two crucial questions regarding the interpretation of Section 12AA(2) based on previous judgments. The Full Bench, in its judgment, clarified that the non-disposal of an application within the stipulated time frame does not lead to a deemed grant of registration. It explicitly stated that the previous judgment, which suggested otherwise, was not legally correct and overruled it.

The Court highlighted a Division Bench judgment that contradicted the Full Bench decision by upholding the deemed grant of registration if the application is not decided within six months. However, the Court noted that this judgment was rendered without considering the Full Bench decision and, therefore, was not binding due to being per incurium.

Furthermore, a Supreme Court judgment was presented, where the Court clarified that the registration of an application under Section 12AA would take effect from a specific date. The appellant argued that this Supreme Court decision confirmed the deemed grant of registration, but the Court pointed out that other legal questions were left open, indicating that the issue was not conclusively decided.

Ultimately, the Court, relying on the Full Bench judgment, answered the question against the Assessee. Consequently, the appeal was allowed, and the Tribunal's decision was set aside. The judgment provides a detailed analysis of the legal interpretation of Section 12AA(2) and the implications of the deemed grant of registration within the specified time frame.

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