Tribunal deems trust eligible for registration under Income Tax Act

The Tribunal held that the non-disposal of the application within the prescribed time limit resulted in deemed registration under Section 12AA of the Income Tax Act. The appellant trust's objectives were found to cater to the welfare of a specific community but were deemed to benefit a section of the public, making it eligible for registration. Consequently, the Tribunal directed the Commissioner to grant registration from the expiry of the six-month period, and the appeal was allowed. The order was pronounced on 24th January 2019 in Chennai.

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Issues Involved:
1. Whether the order under Section 12AA of the Income Tax Act, 1961, was passed within the prescribed time limit.
2. Whether non-disposal of the application within the prescribed period results in deemed registration under Section 12AA.
3. Whether the appellant trust’s objectives cater only to a particular community and if it qualifies for registration under Section 12AA.

Detailed Analysis:

Issue 1: Prescribed Time Limit for Passing Order under Section 12AA
The appellant argued that the order under Section 12AA was incorrect, illegal, and contrary to law. The appellant highlighted that according to Section 12AA(2) of the Income Tax Act, 1961, an order granting or refusing registration must be passed within six months from the end of the month in which the application was received. The application was filed on 10.07.2014, and the due date for passing the order was 31.01.2015. However, the order was passed on 17.06.2015, which was beyond the prescribed time limit.

Issue 2: Deemed Registration under Section 12AA
The appellant contended that non-disposal of the application within six months should be considered as deemed grant of registration, citing the decision of the Hon'ble Supreme Court in CIT Vs. Society for the Promotion of Education Adventure Sports & Conservation of Environment. The Tribunal agreed with this argument, referencing the Supreme Court's ruling that non-disposal of the application within the prescribed period results in deemed registration. The Tribunal also cited the Kerala High Court's decision in CIT, Cochin, Vs. TBI Education Trust, which reinforced this interpretation.

Issue 3: Objectives of the Trust and Eligibility for Registration
The department denied registration on the grounds that the trust's objectives catered only to the Kanchipuram traders' community. The appellant argued that the Kanchipuram traders' community is not a specific caste or community but a section of the public. The appellant cited the Supreme Court case of CIT Vs. Dawoodi Bohra Jamat, which clarified that a section of the public is also considered public. The Tribunal found that the trust's objectives were for the welfare of the Chennai-based traders' community, regardless of caste, creed, religion, or sex, and thus qualified for registration under Section 12AA.

Conclusion:
The Tribunal held that the non-disposal of the application within six months amounted to deemed grant of registration and directed the Commissioner to grant registration from the date of expiry of the six-month period. The appeal filed by the assessee was allowed.

Order Pronounced:
The order was pronounced on 24th January 2019 in Chennai.

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