Deemed registration under Section 12AA(2) and timing of registration: No deemed grant if application not decided within six months

Whether an application for registration is 'deemed granted' if not decided within six months under Section 12AA(2) was addressed by reference to Supreme Court and Allahabad High Court rulings; the reasoning is that Parliament did not create a deeming fiction and therefore non-decision within six months does not operate as deemed registration. The legal basis rests on statutory interpretation and binding precedent, distinguishing earlier authorities where necessary. The operative effect is that the claim of automatic registration on expiry of six months is rejected and the Revenue s position is upheld.

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Issues Involved:
1. Whether the Income Tax Appellate Tribunal (ITAT) was justified in granting a deemed registration under Section 12AA of the Income Tax Act, 1961, despite the absence of a specific deeming provision in the Act.

Issue-wise Analysis:

1. Deemed Registration under Section 12AA:
The primary issue in this case revolves around whether the ITAT was justified in granting the assessee a deemed registration under Section 12AA of the Income Tax Act, 1961, due to the Commissioner of Income-tax's (CIT) failure to decide the application within the prescribed six-month period.

Background and Tribunal's Decision:
The assessee, a public trust running a pediatric hospital, applied for registration under Section 12A on 6 February 2006. The CIT refused registration on 15 September 2006, beyond the six-month period prescribed under Section 12AA(2). The ITAT, relying on a previous decision in Bhagwad Swarup Shri Shri Devraha Baba Memorial Shri Hari Parmarth Dham Trust, held that the failure to decide within six months resulted in a deemed registration. The Tribunal quashed the CIT's order and directed registration from 1 April 2005.

Revenue's Argument:
The revenue, represented by Mr. Saxena, argued that the Tribunal's decision contradicted Section 12AA(2), which does not provide for deemed registration. He cited the Full Bench decision of the Allahabad High Court in Commissioner, Income Tax vs. Muzafar Nagar Development Authority, which held that the absence of a decision within six months does not imply deemed registration. This view was supported by subsequent decisions, including Commissioner of Income-tax vs. Harshit Foundation Sehmalpur, where the Supreme Court left the question of law open.

Assessee's Argument:
Mr. Mundhra, representing the assessee, countered by citing the Supreme Court's decision in Commissioner of Income Tax, Kanpur vs. Society for the Promotion of Education, which suggested that non-response within six months results in deemed registration. He argued that this earlier decision should be binding, supported by principles from cases like Sundeep Kumar Bafna vs. State of Maharashtra.

Court's Analysis:
The court examined the conflicting decisions from different benches of the Supreme Court and the interpretation of Section 12AA(2). It noted the Full Bench of the Allahabad High Court's reasoning that the statute does not create a deeming fiction for registration. The court also acknowledged the Supreme Court's decision in Harshit Foundation Sehmalpur, which supported the view that no deemed registration occurs if the CIT fails to decide within six months.

Conclusion:
The court concluded that the ITAT's decision was incorrect. It held that Section 12AA(2) does not provide for deemed registration, aligning with the Full Bench's interpretation and the Supreme Court's subsequent affirmation in Harshit Foundation Sehmalpur. The appeal was allowed in favor of the revenue, and the question of law was answered against the assessee.

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