TaxTMI 
TaxTMI 
2021 (7) TMI 627
X X X X Extracts X X X X
X X X X Extracts X X X X
....ow was wrong to reject the application u/s 80G filed by the appellant trust. 2. That the Ld. Commissioner of Income Tax (Exemptions) Lucknow was wrong to coming to the conclusion that the activities of the appellant trust were not charitable in nature. 3. That the Ld. Commissioner of Income Tax (Exemptions) Lucknow was wrong to reject the 80G application ignoring the fact that the appellant trust fulfilled all the conditions laid down u/s 80G (5) of the Act. 4. That the Ld. Commissioner of Income Tax (Exemptions) Lucknow was wrong in rejecting the application under Section 80G on the finding that the Appellant Society had not renewed its registration under the Societies Registration Act. 5. That the Ld. CIT(E) was wrong in contending that the material filed by the appellant was not sufficient to prove genuineness of activities and its objects. 6. That the Ld. Commissioner of Income Tax (Exemptions) Lucknow was wrong in coming to the conclusion that the appellant trust did not carry out any charitable activities ignoring the fact that the appellant trust was already registered u/s 12AA of the Act and carrying out its activities as per its....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f registration granted under section 12A or copy of notification issued under section 10(23) or 10(23C) ; (ii) Notes on activities of institution or fund since its inception or during the last three years, whichever is less; (iii) Copies of accounts of the institution or fund since its inception or during the last three years, whichever is less. (3) The Commissioner may call for such further documents or information from the institution or fund or cause such inquiries to be made as he may deem necessary in order to satisfy himself about the genuineness of the activities of such institution or fund. (4) Where the Commissioner is satisfied that all the conditions laid down in clauses (i) to (v) of sub-section (5) of section 80G are fulfilled by the institution or fund, he shall record such satisfaction in writing and grant approval to the institution or fund specifying the assessment year or years for which the approval is valid (5) Where the Commissioner is satisfied that one or more of the conditions laid down in clauses (i) to (v) of sub-section (5) of section 80G are not fulfilled, he shall reject the application for approval after rec....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tion 12AA of the 1961 Act . Our attention was drawn by ld. Counsel for the assessee to order dated 16.05.2019 issued by ld. CIT(E) granting registration to assessee u/s 12AA of the 1961 Act, which order is placed in Paper Book-I, at page No. 1 and 2. It was submitted by ld. Counsel for the assessee that the assessee filed an application for grant of approval u/s 80G with Department, on 10.03.2020. It was submitted that the assessee's registration under Societies Registration Act, 1860 expired on 24th April, 2020 , which could not be renewed within time owing to spread of pandemic Covid-19 disease , and as well owing to restrictions /lockdowns imposed by Government to control the spread of pandemic Covid19 disease. It was submitted by ld. Counsel for the assessee that later on the said registration of the assessee Society under Societies Registration Act, 1860 was renewed by Registrar of Societies , Varanasi , vide Renewal of Registration No. R/MIR/02568/2021-2022 Certificate No. V-48970, dated 11th June, 2021 , effective from 24th April, 2020 for a period of five year, which is placed in Paper Book-II, at page No. 5 & 6 . It was submitted that in the interim period before it could ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... appellant by tribunal itself instead of remitting the matter back to the file of ld. CIT(E) for consideration afresh of assessee's application for grant of approval u/s 80G of the 1961 Act. 4.2 The Ld. CIT-D.R on the other hand submitted that assessee's registration under the Societies Registration Act,1860 had expired on 24.04.2020 and the assessee was not able to obtain renewal of registration under the Societies Registration Act, 1860 before its expiry on 24.04.2020 , and when the application for grant of approval u/s 80G was processed by ld. CIT(E), the registration of the assessee under Societies Registration Act had already expired on 24.04.2020 and hence ld. CIT(Exemption) was right in rejecting the approval u/s 80G, vide orders dated 22.12.2020. The ld. CIT-DR submitted that it is only subsequently on 11.06.2021, the assessee got the Societies registration renewed under the Societies Registration Act,1860 retrospectively with effect from 24.04.2020, but by that time the Ld. CIT(E) had already rejected application of the assessee for approval u/s 80G of the 1961 Act.The ld. CIT-DR submitted that the certificate issued by Registrar of Societies, Varanasi granting renewal ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....iety was registered under the Societies Registration Act,1860 , vide Registration No. 71/2015-16 dated 24.04.2015 , for a period of five years from 24.04.2015 to 23.04.2020. The said registration was renewed by Registrar of Societies, Varanasi vide Renewal Certificate no. R/MIR/02568/2021-2022 dated 11.06.2021 ( Registration No. V-48970) , effective with retrospective effect from 24.04.2020 for a period of five years . The assessee was also registered with Revenue u/s 12AA of the 1961 Act, vide orders dated 16.05.2019. The said order is placed in paper book-I , at page 1-2. The assessee applied with Revenue for grant of approval u/s 80G of the 1961 Act, vide application dated 10.03.2020. The said application for grant of approval u/s 80G of the 1961 Act was rejected by ld. CIT(Exemption), vide orders dated 22.12.2020 as the assessee registration under the Societies Registration Act,1860 had already expired on 23rd April, 2020 and till the date order was passed by ld. CIT(Exemption) on 22.12.2020 ,the assessee was not holding registration under the Societies Registration Act, 1860 . It is only on 11th June, 2021 that the assessee got renewal of registration under Societies Registrat....
X X X X Extracts X X X X
X X X X Extracts X X X X
....for the assessee that once registration u/s 12AA is granted , then Revenue has no right to further look into any other aspects and Revenue is bound to give approval u/s 80G. Thirdly, the ld. Counsel for the assessee submitted before the Bench that tribunal has powers co-extensive with powers of ld. CIT(E) and hence the tribunal should direct for grant of approval u/s 80G of the 1961 Act instead of remanding the matter back to the file of ld. CIT(E) for consideration afresh of the assessee's application for grant of approval u/s 80G of the 1961 Act. The assessee has relied upon following judicial decisions to support its contentions : "i. ITAT, Lucknow Bench decision in the case of Ratan Chand Chhattibhai Seva Samiti v. Commissioner of income tax (Exemption) ,Lucknow in ITA no. 570/LKW/2019 , dated 16.12.2020. ii. ITAT, Lucknow Bench decision in the case of Samekit Mahila Evam Bal Vikas Sansthan v. Commissioner of income tax (Exemption) Lucknow in ITA No. 666/LKW/2017, dated 16.11.2018. iii. Larger Bench judgment(Three Judge Bench) in the case of Hon'ble Allahabad High Court decision in the case of Commissioner of income tax (Exemption) Lucknow U.P v. Reha....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eties Registration Act, 1860 (21 of 1860), or under any law corresponding to that Act in force in any part of India or under section 25of the Companies Act, 1956 (1 of 1956), or is a University established by law, or is any other educational institution recognised by the Government or by a University established by law, or affiliated to any University established by law, [ [***]] or is an institution financed wholly or in part by the Government or a local authority; [***] [(vi) in relation to donations made after the 31st day of March, 1992, the institution or fund is for the time being [approved by the Principal Commissioner or Commissioner;] [***]] [(vii) where any institution or fund had been approved under clause (vi) for the previous year beginning on the 1st day of April, 2007 and ending on the 31st day of March, 2008, such institution or fund shall, for the purposes of this section and notwithstanding anything contained in the proviso to clause (15) of section 2, be deemed to have been,- (a) established for charitable purposes for the previous year beginning on the 1st day of April, 2008 and ending on the 31st day of March, 2009; and ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....where the application is made under clause (ii) or clause (iii) of the said proviso,- (a) call for such documents or information from it or make such inquiries as he thinks necessary in order to satisfy himself about- (A) the genuineness of activities of such institution or fund; and (B) the fulfilment of all the conditions laid down in clauses (i) to (v); (b) after satisfying himself about the genuineness of activities under item (A), and the fulfilment of all the conditions under item (B), of sub-clause (a),- (A) pass an order in writing granting it approval for a period of five years; or (B) if he is not so satisfied, pass an order in writing rejecting such application and also cancelling its approval after affording it a reasonable opportunity of being heard; (iii) where the application is made under clause (iv) of the said proviso, pass an order in writing granting it approval provisionally for a period of three years from the assessment year from which the registration is sought, and send a copy of such order to the institution or fund: Provided also that the order under clause (i), sub-clause (b....
X X X X Extracts X X X X
X X X X Extracts X X X X
...., 2010(42 of 2010), if the applicant is registered under such Act; (e) self-certified copy of existing order granting registration under clause (vi) of subsection (5) of section 80G; (f) self-certified copy of order of rejection of application for grant of approval under clause (vi) of sub-section (5) of section 80G, if any; (g) where the applicant has been in existence during any year or years prior to the financial year in which the application for registration is made, self-certified copies of the annual accounts of the applicant relating to such prior year or years (not being more than three years immediately preceding the year in which the said application is made) for which such accounts have been made up; (h) note on the activities of the applicant. (3) Form Nos. 10A or 10AB, as the case may be, shall be furnished electronically, - (i) under digital signature, if the return of income is required to be furnished under digital signature; (ii) through electronic verification code in a case not covered under clause (i). (4) Form Nos. 10A or 10AB, as the case may be, shall be verified by the person who is aut....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ion made or order so passed as the case may be.] The provisions of Section 80G (5) and Rule 11AA of the Income-tax Rules, 1962 have recently undergone changes but fundamental and cardinal principle being that that the Principal Commissioner or the Commissioner has to make inquiries as to genuineness of the objects and activities of the such institution and also into the affairs conducted by institution are for charitable purposes , as is specified in the provisions of Section 80G(5) and Rule 11AA of the Income-tax Rules, 1962 , before granting approval under Section 80G. In the instant case , the registration u/s 12AA was granted by Revenue in May , 2019 , while an application for grant of approval u/s 80G was made by assessee on 10.03.2020. Thus, keeping in view time lag between grant of registration u/s 12AA by Revenue and application having being filed u/s 80G, it is all the more incumbent on ld. PCIT or CIT to verify whether the affairs of the assessee conducted for charitable purposes and for stated objects for which registration u/s 12AA was granted. Thus, the powers vested with ld. PCIT or CIT to make inquiries into the activities and affairs of the taxpayer institution t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....this renewal certificate of registration requires verification. Thirdly, it is contended by the assessee that tribunal should itself grant the approval u/s 80G of the 1961 Act instead of remitting the matter back to ld. CIT(E) for fresh consideration of its application for grant of approval u/s 80G, as the tribunal has powers co-extensive with powers of Ld. CIT(E). In this regard , the decision relied upon by assessee of Larger Bench(Three Judges Bench) of Hon'ble Allahabad High Court in the case of Commissioner of income tax (Exemption) Lucknow U.P v. Reham Foundation in ITA No. 37 of 2017, dated 26.09.2019 is relevant , which judgment has discussed about the powers of tribunal and the circumstances in which tribunal should itself grant registration u/s 12AA and the circumstances in which tribunal should remand the matter back to Revenue for fresh consideration of its application for registration u/s 12AA , which is reproduced as hereunder as under: 1. This Full Bench has been constituted in terms of the reference order dated 18.01.2019 passed by Division Bench in the case of Commissioner of Income Tax Exemption U.P. State Construction and Infrastructure vs. M/s. Reham Fo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t and activities of a Trust, a direction for registration would be illegal. It is for that reason alone, the Division Bench of this Court in the case of M/s. A.R. Trust Meerut (supra) caused interference in the order of the Tribunal, where direction was given for registration of the Trust within a period of sixty days. 4. In the subsequent judgment in the case of M/s. Yamuna Expressway Industrial Development Autority (supra), a divergent view was taken by the Court. If a direction for registration of a Trust is given without recording satisfaction, it would be opposed to Section 12AA of the Act of 1961. The prayer is accordingly to answer the Reference against the assessee and in favour of the Revenue. It is after holding that the Appellate Tribunal is not competent to direct for registration of a Trust under Section 12AA of the Act of 1961, rather it should remand the case to the Commissioner for the aforesaid. 5. The argument raised by learned counsel for the Revenue has been opposed by learned counsel appearing for the assessee. It is submitted that after the rejection of an application for registration of a Trust under Section 12AA of the Act of 1961, if refus....
X X X X Extracts X X X X
X X X X Extracts X X X X
....x (Exemption), Lucknow vs. M/s. Yamuna Expressway Industrial Development Authority, decided on 21.04.2017. In the said case, the Division Bench held that powers of the Tribunal are co-extensive to that of the Commissioner under Section 12AA of the Act of 1961. Thus, it can direct for registration of a Trust/Institution. A reference of Section 254 of the Act of 1961 was given to show power of the Tribunal. The Division Bench therein found the Tribunal to be competent to direct for registration of a Trust. Taking into consideration the conflicting view, now we need to decide the questions raised before us and otherwise quoted herein above. 8. We have considered the rival submission of the parties and perused the record. 9. The issue before the larger Bench is in reference to Section 12AA of the Act of 1961, thus, it would be gainful to refer the provisions aforesaid. It is quoted hereunder for ready reference:- "Procedure for registration. 12AA. (1) The Principal Commissioner or Commissioner, on receipt of an application for registration of a Trust or institution made under clause (a) or clause (aa) or clause (ab) of sub-section (1) of Section 12A,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s 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 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 proves that there was a reasonable cause for the activities to be carried out in the said manner." 10. A perusal of Section 12AA of the Income Tax Act shows that the Principal Commissioner or the Commissioner, on receipt of an application for registration of a Trust or an institution, may call for such document or information as he thinks necessary to satisfy himself about the genuineness of the activities of the Trust or the I....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ons applied at the time of institution of the suit are to be operative even in respect of the Appeals. That is because there is a vested right in the litigant to avail the remedy of an Appeal. As was observed in K. Kapen Chako v. Provident Investment Co. (P) Ltd. [(1977) 1 SCC 593 : AIR 1976 SC 2610] only in cases where vested rights are involved, a legislation has to be interpreted to mean as one affecting such right to be prospectively operative. The right of Appeal is only by statute. It is (sic not a) necessary part of the procedure in an action, but "the right of entering a superior court and invoking its aid and interposition to redress the error of the court below. It seems absurd to denominate this paramount right part of the practice of the inferior Tribunal". (Per Lord Westbury, See: Attorney General v. Sillem [33 LJ Ex 209 : 10 LT 434 : 10 HLC 704, 724 : 11 ER 1200] , ER p. 1209.) The Appeal, strictly so called, is "one in which the question is, whether the order of the court from which the Appeal is brought was right on the materials which that court had before it" (Per Lord Devuil Ponnammal v. Arumogam [1905 AC 383, 390] . The right of Appeal, where it exists, is a mat....
X X X X Extracts X X X X
X X X X Extracts X X X X
....or a reading of which clearly indicates that it is a case of 'casus omissus' that the court can interpret the provisions incorporated in statute. Hon'ble the Supreme court referring to various pronouncements in the case of Bharat Aluminium Company versus Kaiser Aluminium Technical Services Inc. reported in (2012) 9 SCC 552 has held that the court must proceed on the footing that the legislature intended what it has said. Even where there is a 'casus omissus' it is for the others than the courts to remedy the defect. The relevant paragraph in the case of Bharat Aluminium Company (supra) is as follows:- "65. Mr Sorabjee has also rightly pointed out the observations made by Lord Diplock in Duport Steels Ltd. [(1980) 1 WLR 142 : (1980) 1 All ER 529 (HL)] In the aforesaid judgment, the House of Lords disapproved the approach adopted by the Court of Appeal in discerning the intention of the legislature; it is observed that: (WLR p. 157 C-D) "... the role of the judiciary is confined to ascertaining from the words that Parliament has approved as expressing its intention what that intention was, and to giving effect to it. Where the meaning of the statutory wor....
X X X X Extracts X X X X
X X X X Extracts X X X X
....xtracting tax from the citizens without authority of law. It is axiomatic that taxation statute has to be interpreted strictly because the State cannot at their whims and fancies burden the citizens without authority of law. In other words, when the competent Legislature mandates taxing certain persons/certain objects in certain circumstances, it cannot be expanded/interpreted to include those, which were not intended by the legislature." "25. At the outset, we must clarify the position of "plain meaning rule or clear and unambiguous rule" with respect to tax law. "The plain meaning rule" suggests that when the language in the statute is plain and unambiguous, the court has to read and understand the plain language as such, and there is no scope for any interpretation. This salutary maxim flows from the phrase "cum inverbis nulla ambiguitas est, non debet admitti voluntatis quaestio". Following such maxim, the courts sometimes have made strict interpretation subordinate to the plain meaning rule [Mangalore Chemicals and Fertilisers Ltd. v. CCT, 1992 Supp (1) SCC 21] , though strict interpretation is used in the precise sense. To say that strict interpretation involves plai....
X X X X Extracts X X X X
X X X X Extracts X X X X
....in regard to reading the statute as a whole -- appear to be well settled. Under the first principle a casus omissus cannot be supplied by the court except in the case of clear necessity and when reason for it is found in the four corners of the statute itself but at the same time a casus omissus should not be readily inferred and for that purpose all the parts of a statute or section must be construed together and every clause of a section should be construed with reference to the context and other clauses thereof so that the construction to be put on a particular provision makes a consistent enactment of the whole statute. This would be more so if literal construction of a particular clause leads to manifestly absurd or anomalous results which could not have been intended by the legislature. "An intention to produce an unreasonable result", said Danckwerts, L.J. in Artemiou v. Procopiou [(1966) 1 QB 878 : (1965) 3 All ER 539 : (1965) 3 WLR 1011 (CA)] (All ER p. 544 I), "is not to be imputed to a statute if there is some other construction available". Where to apply words literally would "defeat the obvious intention of the legislation and produce a wholly unreasonable result", we ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....under Section 66 as to be on par with Section 115 of the Code of Civil Procedure. The main part of Section 61 (sic 66) clearly spells out the jurisdiction of the Industrial Court to pass any order in reference to the case brought before it as it thinks fit. The expression "as it thinks fit" confers a very wide jurisdiction enabling it to take an entirely different view on the same set of facts. The expression "as it thinks fit" has the same connotation, unless context otherwise indicates, "as he deems fit" and the latter expression was interpreted by this Court in Raja Ram Mahadev Paranjype v. Aba Maruti Mali [AIR 1962 SC 753 : 1962 Supp (1) SCR 739] to mean to make an order in terms of the statute, an order which would give effect to a right which the Act has elsewhere conferred. Is this jurisdiction so circumscribed as to bring it on par with Section 115 of the Code of Civil Procedure? Proviso does cut down the ambit of the main provision but it cannot be interpreted to denude the main provision of any efficacy and reduce it to a paper provision. Both must be so interpreted as to permit interference which if not undertaken there would be miscarriage of justice. Sub-clause (c) of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e. 23. A perusal of Section 254 of the Act of 1961 shows that the Appellate Tribunal is given power to pass such orders, as it thinks fit. The powers given under Section 254 of the Act of 1961 is to be read along with other provisions of the Act. Section 12AA of the Act of 1961 requires satisfaction about the genuineness of the activities and the objects of a Trust before its registration by the Commissioner. The arguments of learned counsel for Revenue in reference to the requirement of satisfaction on the genuineness of activities of a Trust is to be exercised by the Commissioner and that the Tribunal should not direct registration of Trust unless satisfaction, as envisaged under Section 12 (AA) of the Act, 1961 is recorded, is only partly correct. 24. Upon consideration of the judgments referred to herein above, we are of the considered opinion that in case where the Commissioner has refused to accept the application for registration of Trust after recording its finding on the basis of material on record before him holding that the activities and object of the Trust are not genuine and the Appellate Tribunal on the basis of the same material on record comes to ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on 12 (AA) of the Act, 1961 because if the Appellate Tribunal is given such wide powers to direct registration of Trust in all or any circumstances, it would render the provisions of Section 12(AA) otiose, which again can not be the intention of legislature. 31. In view of the above the answer to questions referred are answered as under:- (i) The income tax Appellate Tribunal while hearing an Appeal under Section 254(1) in a matter where registration under Section 12(AA) has been denied by Commissioner income tax can itself pass an order directing commissioner to grant registration in case the income tax Appellate Tribunal disagrees with the satisfaction of the Commissioner on the basis of material already on record before the Commissioner. However the said power is not to be exercised as a matter of course and that remand to the Commissioner income tax is to be made where the income tax Appellate Tribunal records a divergent view on the basis of material which has been filed before the Appellate Tribunal for the first time. Remand for determination of question regarding grant of registration to a Trust would also be necessitated in cases where t....