2018 (5) TMI 257

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....ts income for the year under consideration. 3. During the course of assessment, the assessee submitted a revised computation of income wherein surplus income was reduced from Rs. 1. 73 crores to Rs. 1. 58 crores. It submitted that by mistake capital expenditure for fixed assets, amounting to Rs. 45. 61 lakhs was taken as applica - tion of money, that in the original return the depreciation claim of Rs. 30. 53 lakhs was taken instead of capital expenditure actually incurred. The AO held that the revised computation of income could not be accepted, that the assessee had not filed audited report along with balance sheet, income/expenditure account with the return before the due date of filing, that the audit report was submitted only during the course of assessment proceedings. 4. Aggrieved by the order of the AO, the assessee preferred an appeal before the First Appellate Authority (FAA) and filed detailed submissions along with the case laws. After considering the available material, the FAA held that the assessee had been an application, dated18/06/ 2009, before the CIT- I, Thane, that it had requested for grant registration under section 12AA(2) of the Act, that it had also ....

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.... be penalised for inaction of an officer representing the Sovereign. The Act provides that if the CIT does not reject the application or does not grant registration, it would be deemed that the assessee was entitled to registration. In the case of Society for the Promotion of Education Adventure Sport and Conservation of Environment (supra), the Hon'ble Allahabad High Court found that the CIT had not disposed off the application made for registration within a period of six months. Deciding the writ petition filed by the assessee, the Hon'ble Court held as under: "4. Section 12AA(2) reads as follows : "12AA. (2) Every order granting or refusing registration under clause (b) of sub-section (1) shall be passed before the expiry of six months from the end of the month in which the application was received under clause (a) or clause (aa) of sub-section (1) of section 12A. " 5. Admittedly, no decision was taken on the petitioner's application within the time of six months fixed by the aforesaid provision and in fact, even after a lapse of almost five years, no decision had been taken as per the counter-affidavit. And for want of a decision by the Commission....

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....2 ). Based on that hypothesis, it has been argued that absence of any such order of the Commissioner should be taken to mean that he has not found any reason for refusing registration, notice of which could have been given to the assessee by way of opportunity of hearing. For showing the legislative intent, reliance has also been placed by the petitioner on the fact that against an order of the Commissioner granting registration the Income-tax Department has not been given any right of appeal. It has been argued that laches and lapse on the part of the Department cannot be to its own advantage by treating the application for registration as rejected. 9. On the other hand, the standing counsel for the Income-tax Department relies upon a decision of the Supreme Court in the case of Chet Ram Vashist v. Municipal Corporation of Delhi, AIR 1981 SC 653. In the said decision, the Supreme Court was examining the effect of the failure on the part of the Delhi Municipal Corporation to decide an application u/s. 313(3) of the Delhi Municipal Corporation Act, 1957, for sanction to a lay- out plan within the period specified in that subsection. The Supreme Court held in that decision t....

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....istration, if such cancellation is called for. 13. Moreover, the view we are inclined to take as above furthers the object and purpose of the aforesaid statutory provision. In our view for the interpretation of a statute "purposive construction" of the enactment which gives effect to the legislative purpose/intendment, if necessary must be followed and applied. The doctrine of purposive interpretation is well accepted and has been applied in India by the apex court following the English law on the subject. Explaining as to what "purposive construction" is, Lord Smith in R. (Haw) v. Secretary of State for the Home Department [2006] 3 All ER 428 at page 438, in paragraph 42, observed "A purposive construction of an enactment is one which gives effect to the legislative purpose by (a) following the literal meaning of the enactment where that meaning is in accordance with the legislative purpose (in this code called a purposive-and-literal construction), or (b) applying a strained meaning where the literal meaning is not in accordance with the legislative purpose (in the code called a purposiveand- strained construction). " 14. Again, in paragraph 44 quoting the passa....

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....t and Sachs also appear to treat 'purpose' as a subjective concept. I say 'appear' because, although Hart and Sachs claim that the interpreter should imagine himself or herself in the legislator's shoes, they introduce two elements of objectivity : First, the interpreter should assume that the Legislature is composed of reasonable people seeking to achieve reasonable goals in a reasonable manner ; and sec ond, the interpreter should accept the non-rebuttable presumption that members of the legislative body sought to fulfil their constitu tional duties in good faith. This formulation allows the interpreter to inquire not into the subjective intent of the author, but rather the intent the author would have had, had he or she acted reasonably. " 17. The apex court also referred to and followed its earlier decisions in Bharat Petroleum Corporation Ltd. v. Maddula Ratnawalli JT 2007 (6) SC 564 and Oriental Insurance Co. Ltd. v. Brij Mohan JT 2007 (7) SC 472, for taking recourse to the doctrine of "purposive interpretation". 18. The apex court has also applied the doctrine of purposive interpretation in fiscal statutes that would be evident from its ....