C I T ALWAR vs. PUBLIC ROSE SHIKSHA SAMITI ALWAR

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Income Tax Appeal No. 650 / 2011 The Commissioner of Income Tax, Alwar ----Appellant Versus Public Rose Shiksha Samiti, Tijara Road, Alwar. ----Respondent _____________________________________________________ For Appellant(s) : Mr. Daksh Pareek for Mr. Sameer Jain For Respondent(s) : Mr. Aditya Bohra for Mr. Gunjan Pathak _____________________________________________________ HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE MR. JUSTICE VIJAY KUMAR VYAS Judgment 07/02/2018

By way of this appeal, the appellant has challenged the judgment and order of the Tribunal whereby the Tribunal has allowed the appeal of the assessee. This Court while admitting the matter framed the following substantial question of law:- “Whether the Tribunal was legally justified in granting the registration u/s 12A with retrospective effect w.e.f. 1.4.2000., on the basis of the photo copy of application dt. 19.3.2001 being without justification as it was submitted at the office of Commissioner of Income Tax, Bikaner?” Counsel for the appellant contended that while considering the matter, the CIT(A) has considered the basic principles which are required to be considered for the granting the benefit u/s

(2 of 6) 12A and he has taken us to the order of CIT(A) which reads as under:- “The assessee was given an opportunity of being heard before the undersigned or 06.04.2010 vide this office letter no. CIT/Alw/DCIT(Hqrs.)/2009- 10/3126 dt., 23.03.2010. The President of the trust requested for adjournment of the dte of hearing due to his personal reasons. The case was re-fixed for tearing before the undersigned on 15.04.2010 vide this office letter no. CIT/Alw/DCIT

(Hqrs.)/2010/11/39

dated 07.04.2010. The Accountant of the trust requested to further adjourns the case. Finally, last opportunity was given to the trust on 21.04.2010 on which Sh. Praveen Jain, Accountant the Samiti/trust appeared but he was unable to explain the coverance of samiti under the charitable purpose and the hearing was adjourned to letter No. CIT/Alw/DCIT

(Hqrs.)/2010-11/109

dated 21.04.2010 addressed to Sh. Rajesh Kumar Singh, President of the Trust/Samiti to the fixed date of hearing. Sh. Rajesh Kumar Singh appeared before the undersigned along with Sh. Praveen Jain, Accountant of the Samiti but they were unable to explain that the activities of the trust were to be considered as charitable under the provision 2(15) of the IT Act, 1961 and they were unable to explain how the activities carried out by the trust/samiti are of charitable nature and not profit. Also they unable to the misappropriation of funds of the trust by President, Members and other trustees. Having regard to the facts of the case it is apparent that the trust has not been able to bring any evidence on record to establish that its activities till now were genuinely taken for any charitable purpose. The trust/samiti is engaged in activities which cannot be said to be of charitable nature and are profit motive. Also, the trust did not comply with the mandatory requirements as requested by this office through various opportunities. The trust on the basis of present format of application is not eligible for registration u/s 12A(a) and hence its application for registration is hereby rejected.”

(3 of 6) However, we have gone through the judgment of the Tribunal. The Tribunal while considering the matter has observed as under:- “2.7. We have heard both the parties. The copy of application for registration in form no. 10A was filed on 19.03.2001 and copy of such application is available at page 1 of the paper book. The ld. AR contended before us that the assessee filed the original copy of trust deed. However, the copies of the trust deed have been filed subsequently. The society is registered under the Societies of the Registration Act. Hence, there is no dispute that the society has not been constituted and it is not being run as per the constitution of the society. The Hon’ble Karnataka High Court in the case of Sanjeevamma Hanumanthe Gowda Charitable Trust. vs. Director of Income Tax (Exemptions), supra had an occasion to consider the powers of the Commissioner of Income Tax in respect of granting of registration to the trust. After receipt of application, the Commissioner of Income tax is authorized to call for such documents or informations from the trust in order to satisfy himself about the genuineness of the activities of the trust or institution. The Commissioner of Income tax is not to look into the source of income but has to consider as to whether the income has been applied for charitable or religious purposes. For arriving at such satisfaction, the ld. CIT has to look at the object of the trust of the trust when the same is reduced into writing in the form of trust deed. The authorities require to grant registration is to satisfy itself about the genuineness of the activities of the trust or institution and such authority is not required to look into the nature of the activity by which income is derived by the trust. 2.8. Moreover, the application was filed on 19.03.2001 and as per requirement of the Act, the application for registration is to be decided within six months. The Hon’ble Allahabad High Court in the case of Society for the Promotion of Education Adventure Sport & Conservation of Environment vs. CIT, 216 CTR 167 has held that registration should be treated as deemed if the application for registration is not disposed off within six months of the end of the month in

(4 of 6) which application is filed. It will be useful to reproduce the held portion from this judgment. “Held: Taking the view that non-consideration of the registration application within the time fixed by Section 12AA(2) would result in deemed registration, may not at the worst cause loss of some revenue or income tax payable by the individual assessee. On the other hand, taking the contrary view and holding that not taking a decision within the time fixed by Section 12AA(2) is of no consequence would leave the assessee totally at the mercy of the IT authorities, inasmuch as the assessee has not been provided any remedy under the Act against non-decision because u/s 12AA(3), the registration can always be cancelled by the CIT, if he is satisfied that the object of such trust or institution are not genuine or the activities are not being carried out in accordance with the object of the trust or institution. The only drawback is that such cancellation would operate only prospectively. Therefore, if a view is taken that non-consideration of the registration application within the time limit fixed by Section 12AA(2) would amount to deemed grant of registration, the only adverse consequence like to flow from such a view in respect of any case of that assessee arising in future would be at best be some loss of revenue from that individual assessee from the date of expiry of the limitation u/s 12AA(2) till the date of cancellation of that registration, if such cancellation is called for. Moreover, this view furthers the object and purpose of the aforesaid statutory provision. For the interpretation of a statute ‘purpose construction’ of the enactment which gives effect to the legislative purpose/intendment, if necessary must be followed and appealed. Consideration the pros and cons of the two views by far the better interpretation would be to hold that the effect of non-consideration of the application for registration within the time fixed by Section 12AA(2) would be a deemed grant of registration. There is no good reason to make the assessee suffer merely check and control, so as to take timely decisions in such simple matters such as consideration of the applications for registration even within the large six months period provided by Section 12AA(2). Accordingly the respondents are directed, subject to any order which may be passed u/s 12AA(3) to treat

(5 of 6) the petitioner society as an institution duly approved and registered u/s 12AA and to recompute its income by applying the provisions of Section 11. Accordingly a formal certificate of approval will be issued forthwith to the petitioner by the respondent no. 2 – Chet Ram Vashist vs. Municipal Corporation AIR 1981 SC 653 distinguished; R. (Haw) vs. Secretary of State for the Home Department (2006) 3 All Er 428 applied.” 2.9. The special bench in the case of Bhagwad Swarup Shri Shri Devraha Baba Memorial Shri Hari Parmarth Dham Trust vs. CIT, 111 ITD 175 has held that if the commissioner does not passed the order, granting or refusing registration of the trust within the period laid down in Section 12AA(2) i.e. within period of six months from the end of the month in which application for registration u/s 12A was filed then registration would be deemed to have been granted to trust or institution automatically on expiry of period specified in Section 12AA(2) of the Act. In such a case, registration will be deemed to have been granted as applied for by the assessee. 2.10. ITAT Agra bench in the case of Shri Haridevji Gaushala Trust vs. CIT, 119 TTJ 981 had held that once there is no dispute about the genuineness of the activities of the trust then ld. CIT cannot refuse registration u/s 12A of the Act. 2.11. Keeping in view the above discussions and considering the orders of the Special Benchy and Jaipur Bench, we hold that the assessee is entitled for registration u/s 12A of the Act from the date as mentioned in the application i.e. 19.03.2001 as registration was neither granted or rejected within the period of six months from the end of the month in which application was filed. Thus the assessee will be entitled to registration from 01.04.2000 as application has been filed within the financial year 2000-01.” We are in complete agreement with the view taken by the Tribunal. Therefore, the issue is answered in favour of the assessee and against the department.

(6 of 6) The appeal stands dismissed. (VIJAY KUMAR VYAS) J. (K.S. JHAVERI)J. A.Sharma/101