TaxTMI 
TaxTMI 
2010 (1) TMI 398
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....ner No. 1 is a society registered under the Societies Registration Act, 1860. It was registered on February 12, 1976. The basic aim and object of the petitioner-society is to undertake, promote and assist in the upliftment of the poor, needy, backward, underprivileged and handicapped people irrespective of caste, creed or colour by itself or in collaboration with others and undertake to assist emergency relief work for the victims of flood, famine, earthquake and other disasters, to assist in resettlement and rehabilitation of displaced persons and repatriates. It was also granted registration under section 12A of the Income-tax Act (hereinafter referred to as "the Act") on September 22, 1976. It has also received approval under section 80G of the Act in relation to donations received by it which approval has existed all through. It is a charitable society having high repute in India and abroad. 3. As is well-known, a disastrous earthquake occurred in Gujarat on January 26, 2001 which literally shook the earth up and down resulting in vast spread calamities, affecting millions of people. Not only the Government of India but other sovereign countries came forward to help the vict....
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....ub-section (2) only if the trust or institution or fund is established in India for a charitable purpose and it fulfils the following conditions, namely :- (i) it is approved in terms of clause (vi) of sub-section (5) ; (ii) it maintains separate accounts of income and expenditure for providing relief to the victims of earthquake in Gujarat ; (iii) the donations made to the trust or institution or fund are applied only for providing relief to the earthquake victims of Gujarat on or before the 31^st day of March, 2004 ; (iv) the amount of donation remaining unutilised on the 31^st day of March, 2004 is transferred to the Prime Minister's National Relief Fund on or before the 31^st day of March, 2004 ; (v) it renders accounts of income and expenditure to such authority and in such manner as may be prescribed, on or before the 30^th day of June, 2004." 5. This amendment signalled hundred per cent. of the donation given for the purpose of Gujarat earthquake relief as deductible in contradistinction to fifty per cent. deductions allowed in normal cases. The condition that was imposed in clause (d) of sub-section (2) of section 80G was that such donation is to be given ....
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....ive this form." On the very next day, i.e., March 31, 2006 this form was filed before the Director of Income-tax (Exemptions) along with a letter seeking condonation of delay in filing the same. However, vide communication dated August 8, 2006, respondent No. 2 purportedly acting on behalf of respondent No. 1 rejected the said application seeking condonation of delay. The operative portion of this communication reads as under : "Sub. : Condonation of delay in filing of Form 10AA-Regarding. Please refer to your letter reference No. Fin/660 dated March 27, 2006 though addressed to Director General of Income-tax (Exemptions), Aayakar Bhawan, Distt. Centre, Laxmi Nagar, Delhi but filed in the office of Director of Income-tax (Exemptions) on March 31, 2006 (vide receipt No. 10626) on the above mentioned subject which has been received in this office on August 7, 2006, whereby you have filed statement in Form No. 10AA in your case and requested for condonation of delay thereof. In this connection, I am directed to mention that keeping in view provision of section 80G(5C)(v) of the Income-tax Act, 1961, there is no provision as to condonation of delay for any reason and as your applica....
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....done delay for any reason, in section 80G(5C)(v) of the Act. Naturally, this order has far reaching ramifications and adversely affects the interests of the petitioners. Before passing such an order, therefore, it was necessary to provide an opportunity of being heard to the petitioners herein. The impugned orders could be set aside on this ground alone. However, since the view is taken by the respondents that there is no provision for condonation of delay and the respondents have taken the same position by arguing the matter at length before us and since this view is questioned by the learned counsel for the petitioners, it is deemed appropriate to decide this pure question of law in the present writ petitions. This was so urged by the counsel for both the parties as well, so that position in law in this behalf is clarified. It is for this reason we proceed to determine as to whether the said provision is only directory and not mandatory and whether it is within the powers of the competent authority to entertain the application given after the stipulated date, on showing sufficient cause for delay. 11. Keeping in view the purpose for which this provision was specifically insert....
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....nation received for providing relief to the victims of earthquake in Gujarat, speciation provision in the form of sub-section (3) of section 12 has been inserted, inter alia, stipulating that the amount of donations in respect of which accounts of income and expenditure have not been rendered to the authority prescribed under clause (v) of sub-section (5C) of section 80G, such amount of donation received by the trusts or institutions is deemed to be income of the previous year and is to be charged to tax. 14. In the beginning itself, we may observe that in case separate accounts of income and expenditure are not prepared or the donations received are not exclusively applied for providing relief to the earthquake victims of Gujarat by March 31, 2004, or unspent amount is not transferred to the Prime Minister's National Relief Fund, such donation received would be exigible to tax. These are clearly the mandatory provisions inasmuch as scheme of the donation is the amount of donation has to be received within specific period, i.e., from January 26, 2001 to September 30, 2001 and by the institutions or funds, which is approved by the Commissioner in accordance with rules made in thi....
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....or "mandatory", and if mandatory, they prescribe, in addition to requiring the doing of the things specified, the result that will follow if they are not done, whereas, if directory, their terms are limited to what is required to be done. A "mandatory" provision in a statute is one the omission to follow which renders the proceedings to which it relates void, while "directory" provision is one the observances of which is not necessary to the validity of the proceeding. It is also said that when the provision of a statute is the essence of the thing required to be done, it is mandatory ; otherwise when it relates to form and manner, and where an incident, or after jurisdiction acquired, it is directory merely. Mandatory provision is one which must be observed, as distinguished from "directory" provision, which leaves it optional with department or officer to which addressed to obey it or not. 17. A number of principles of interpreting provisions with regard to their mandatory or directory effect have been evolved by the courts over a period of time. Though there are no universal tests, one test is the language used by a statute, which can provide significant indications as to whe....
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....proceeding, or when some antecedent and prerequisite conditions must exist prior to the exercise of power or must be performed before certain other powers can be exercised, the statute must be regarded as mandatory. (82 C. J. S., Statutes, $ 376)." Wilcox, 200 Kan. at 657-58." 19. Recent judgment of the Supreme Court in the case of Smt. Bachchan Devi v. Nagar Nigam, AIR 2008 SC 1282 provides sufficient guidelines to ascertain as to whether a particular provision is obligatory or directory. The following discussions in the said judgment are worth of reproduction : "28. The use of the word 'shall' in a statute, though generally taken in a mandatory sense, does not necessarily mean that in every case it shall have that effect, that is to say, that unless the words of the statute are punctiliously followed, the proceeding or the outcome of the proceeding would be invalid. On the other hand, it is not always correct to say that when the word 'may' has been used, the statute is only permissible or directory in the sense that non-compliance with those provisions will not render the proceeding invalid. 29. Words are the skin of the language. The language is the medium of expressin....
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....convenience or injustice which may result in treat-ing the provision one way or the other, the relation of the provision to other consideration which may arise on the facts of any particular case, have all to be taken into account in arriving at the conclusion whether the provision is mandatory or directory. Two main considerations for regarding a rule as directory are : (i) absence of any provision for the contingency of any particular rule not being com-plied with or followed, and (ii) serious general inconvenience and prejudice to the general public would result if the act in question is declared invalid for non-compliance with the particular rule." 20. To use the language of Lord Cairns in the case of Julius v. Bishop of Oxford [1880] 5 AC 214, 222 : ". . . there may be something in the nature of the thing empowered to be done, something in the object for which it is to be done, some-thing in the conditions under which it is to be done, something in the title of the person or persons for whose benefit the power is to be exercised, which may couple the power with a duty, and make it the duty of the person in whom the power is reposed to exercise that power when called upon....
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....nt and, if so, has there been substantial compliance in the case in issue even though there has not been strict compliance ? (The substantial compliance question.) Is the non-compliance capable of being waived, and if so, has it or can it and should it be waived in this particular case ? (The discretionary question.) I treat the grant of an extension of time for compliance as a waiver. If it is not capable of being waived or is not waived then what is the consequence of the non-compliance ? (The consequences questions.) Which questions arise will depend upon the facts of the case and the nature of the particular requirement. The advantage of focusing on these questions is that they should avoid the unjust and unintended consequences which can flow from an approach solely dependent on dividing requirements into mandatory ones, which oust jurisdiction, or directory, which do not. If the result of non-compliance goes to jurisdiction it will be said jurisdiction cannot be conferred where it does not otherwise exist by consent or waiver." 22. On the application of these tests also, in the context of the present pro-vision relating to rendition of the accounts, the date mentioned t....