AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2020 (3) TMI 436
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....rly in view of the decision of Allahabad High Court in the case of CIT vs Muzafar Nagar Development Authority which has distinguished the decision of the Hon'ble Supreme Court in the case of Society for Promotion of Education (2016) in which the Supreme Court had not decided this question ?" 2. The short question that falls for our consideration is, whether the Tribunal could have allowed the Appeal filed by the respondent - assessee on the ground of not deciding the application for deemed registration filed under Section 12AA of the Income Tax Act, 1961 (for short 'the Act, 1961') within the stipulated period of time as specified in sub-section (2) of Section 12AA of the Act, 1961. 3. The brief facts of the present case are as under : 3.1 The respondent - assessee made an online application for registration under Section 12AA of the Act, 1961, on 23.01.2017 in Form No.10A under Rule 11AA of the Income Tax Rules, 1961, along with the Registration Certificate issued by the Charity Commissioner. 3.2 The Commissioner of Income Tax (Exemption), Ahmedabad (for short, 'CIT(E)'), by letter dated 05.02.2018, called for the details of the various activities actually ....
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.... decision of the Kerala High Court in the case of Commissioner of Income Tax, Cochin vs. TBI Education Trust, reported in (2018) 96 taxmann.com 356 (Kerala), as well as the decision of the Rajasthan High Court in the case of Commissioner of Income Tax vs. Sahitya Sadawart Samiti jaipur, reported in (2017) 88 taxmann.com 703 (Rajasthan), to submit that an identical issue was raised before the Kerala High Court as well as the Rajasthan High Court, wherein both the Courts took the similar view that the registration is deemed to have been granted automatically on expiry of the period of six months as specified in sub-section (2) of Section 12AA of the Act, 1961. 6. With regard to grant of deemed registration, reliance is placed on the following decisions : (i) In the case of Commissioner of Income Tax, Cochin vs. TBI Education Trust, (2018) 96 taxmann.com 356 (Kerala); (ii) In the case of Commissioner of Income Tax vs. Sahitya Sadawart Samiti Jaipur, (2017) 88 taxmann.com 703 (Rajasthan); (iii) In the case of Commissioner of Income Tax, Kanpur vs. Society for Promotion of Education, Allahabad, (2016) 67 taxmann.com 264 (SC). 7. Having heard the learned counsel appearing fo....
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....or are not being carried out in accordance with the objects of the trust or institution, as the case may be, he shall pass an order in writing cancelling the registration of such trust or institution: Provided that no order under this sub-section shall be passed unless such trust or institution has been given a reasonable opportunity of being heard. (4) Without prejudice to the provisions of sub-section (3), where a trust or an institution has been granted registration under clause (b) of sub-section (1) or has obtained registration at any time under Section 12A [as it stood before its amendment by the Finance (No. 2) Act, 1996 (33 of 1996)] and subsequently it is noticed that the activities of the trust or the institution are being carried out in a manner that the provisions of Sections 11 and 12 do not apply to exclude either whole or any part of the income of such trust or institution due to operation of sub-section (1) of Section 13, then, the Principal Commissioner or the Commissioner may by an order in writing cancel the registration of such trust or institution: Provided that the registration shall not be cancelled under this sub-section, if the trust or institution....
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....ctory or mandatory remains unimpaired even where both the words are used in the same provision. In Govindlal Chagganlal Patel v. Agricultural Produce Market Committee Godhra (1976) 1 SCR 451: (AIR 1976 SC 263) Chandrachud, C.J., speaking for the Court approved the following passage in Crawford on 'Statutory Construction' (Ed. 1940 Art. 261, p. 516): "The question as to whether a statute is mandatory or directory depends upon the intent of the legislature and not upon the language in which the intent is clothed. The meaning and intention of the legislature must govern, and these are to be ascertained, not only from the phraseology of the provision, but also while considering its nature, its design and the consequences which would follow from construing it the one way or the other." Applying this well-recognised canon of construction the conclusion is inescapable that the word 'shall' used in the provision is directory and not mandatory and must be read as 'may'." In that case, the Supreme Court was construing the provisions of Section 11A of the Bihar Buildings (Lease, Rent and Eviction) Control Act 1947 relating to the deposit of rent by a tenant in....
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....estion as they stand and the intention of the legislature has to be construed with reference to the language of the words used. While interpreting the provision, the Court cannot legislate a new provision or introduce a deeming fiction where none has been provided. Similarly, even as a matter of first principle, a casus omissus cannot be supplied by the Court unless there is a case of clear necessity and when reason is found within the statute itself (Padmasundara Rao (Dead) and others vs. State of T.N. and others, Union of India vs. Rajiv Kumar and Unique Butyle Tube Industries (P) Ltd. vs. U.P. Financial Corporation and others) A similar view to that of the Division Bench was adopted in a judgement of the Delhi Bench of the Income Tax Appellate Tribunal in Bhgwad Swarup Shri Shri Devraha Baba Memorial Shri Hari Parmarth Dham Trust vs. Commissioner of Income-tax, Dehradun. The Tribunal, as indeed the Division Bench of this Court, in the earlier decision, observed that on the balance and though the questions presented some difficulty, it was inclined to take the view supporting the plea of deemed registration, otherwise the assessee would be left without a remedy. The assessee, in ....
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.... by a Division Bench of the Madras High Court in Commissioner of Income-tax vs. Karimangalam Onriya Pengal Semipu Amaipu Ltd.. There can be no dispute about the basic principle of law that where a legal fiction has been created, it must be given full force and effect. As Lord Asquith,J observed in East End Dwellings Co. Ltd. vs. Finsbury Borough Council, "where the statute says that you must imagine a certain state of affairs; it does not say that having done so, you must cause or permit your imagination to boggle when it comes to the inevitable corollaries of that state of affairs". The point, however, in this matter is that Section 12AA(2) does not provide for a legal fiction at all. Parliament has carefully and advisedly not provided for a deeming fiction to the effect that an application for registration would be deemed to have been granted, if it is not disposed of within six months. Legislative fictions are what they purport to be : acts of the legislating body. The Court cannot create one, where the legislature has not provided a deeming fiction. In Bhavnagar University vs. Palitana Sugar Mill (P) Ltd. and others, the Apex Court held as follows: "We are not obliviou....
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....osed of within six months. (5) The non-disposal of an application for registration by granting or refusing registration before the expiry of six months as provided under Section 12AA(2) of the Act would not result in a deemed grant of registration. 11. Mr.Mehta, the learned counsel appearing for the respondent, would submit that although the legislature has thought fit not to incorporate the word 'deemed' in Section 12AA(2) of the Act, yet having regard to the language and the intention, it can be said that legal fiction has been created. As such, it is not necessary for us to deal with such submission canvassed by Mr.Mehta on behalf of the respondent. However, as this is the principal argument of Mr.Mehta, we propose to answer the same. We, for the purpose of answering the submission of Mr.Mehta, proceed on the footing that the legislature has used the word 'deemed' in Section 12AA(2) of the Act. Whether that by itself would make any difference or whether that by itself would create a legal fiction having regard to the provision of law we are dealing with. 12. The word 'deemed' is used in various senses. Sometimes, it means 'generally regarded....
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....e purposes of a statute an artificial construction of a word or phrase that would not otherwise prevail. Sometimes it is used to put beyond doubt a particular construction that might otherwise be uncertain. Sometimes it is used to give a comprehensive description that includes what is obvious, what is uncertain and what is, in the ordinary sense, impossible."" 16. In State of Tamil Nadu v. M/s. Arooran Sugars Ltd., reported in AIR 1997 SC 1815, a Constitution Bench, while dealing with the deeming provision in a statute, opined that the role of a provision in a statute creating legal fiction is well settled. Their Lordships referred to the decisions in East End Dwellings Co. Ltd. v. Finsbury Borough Council, 1952 AC 109, Chief Inspector of Mines v. Karam Chand Thapar, AIR 1961 SC 838, J.K. Cotton Spinning and Weaving Mills Ltd. v. Union of India, AIR 1988 SC 191, M.Venugopal v. Divisional Manager, Life Insurance Corporation of India, AIR 1994 SC 1343 and Harish Tandon v. Addl. District Magistrate, Allahabad, AIR 1995 SC 676, and came to hold that when a statute creates a legal fiction saying that something shall be deemed to have been done which in fact and truth has not been done....
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....s enacted and the object which it is required to subserve and the authority by which the rule is framed. This necessitates examination of the broad features of the Act." 19. In Reserve Bank of India v. Peerless General Finance and Investment Co. Ltd. and others, reported in AIR 1987 SC 1023, Their Lordships have ruled thus: "Interpretation must depend on the text and the context. They are the bases of interpretation. One may well say if the text is the texture, context is what gives the colour. Neither can be ignored. Both are important. That interpretation is best which makes the textual interpretation match the contextual. A statute is best interpreted when we know why it was enacted. With this knowledge, the statute must be read, first as a whole and then section by section, clause by clause, phrase by phrase and word by word. If a statute is looked at, in the context of its enactment, with the glasses of the statute- maker, provided by such context, its scheme, the sections, clauses, phrases and words may take colour and appear different than when the statute is looked at without the glasses provided by the context. With these glasses we must look at the Act as a whole and....
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....ed that the application for permission to construct was submitted on 7th August 1999 and since there was no communication in that regard within a period of one month, the application can be said to have been granted by a deeming fiction. In the said background, the Bench made the following observations : "Thus even after a period of one month as stated by the petitioner is over, it is necessary that unless and until notice is given to the City Engineer, the proposed date of commencement to erect a new building, the petitioners could not have commenced construction work. Section 263 and Rule 3 of Chapter XII refers to deeming provision. Reading the aforesaid provision assuming that the deeming provision is applicable for construction which is otherwise legal even then one has to give notice of commencement of work and only thereafter the work of erection of a building can be commenced. After completion of building within one month thereafter notice is required to be given in writing of completion accompanied by a certificate. Law also prohibits occupying the building in absence of any permit or occupation certificate issued to use the building. In the instant case, there is a fla....