2019 (2) TMI 622 - AT - Income Tax

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 ... Grant of registration u/s 12AA denied - non-disposal of the application for registration u/s.12AA within a period of six months from the end of month in which application should be considered - deemed grant of registration - Held that:- This issue had come up before the Hon’ble Supreme Court in the case of CIT Vs. Society for the Promotion of Education Adventure Sports & Conservation of Environment [2016 (2) TMI 672 - SUPREME COURT] wherein, the Hon’ble Supreme Court held that non-disposal of application for registration u/s.12AA amounts to be deemed grant of the registration. Also see SOCIETY FOR THE PROMOTION OF EDUCATION, ADVENTURE SPORT & CONSERVATION OF ENVIRONMENT VERSUS COMMISSIONER OF INCOME-TAX, CENTRAL, KANPUR [2008 (4) TMI 700 - ALLAHABAD HIGH COURT] non-disposal of application within a period of six months amounts to deemed grant of registration on the expiry period of six months from the end of the month, in which, application for grant seeking registration was received by the Ld.CIT (Exemptions), Chennai. Therefore, 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 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 12AAThe 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 12AAThe 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 RegistrationThe 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.