Section 12A does not provide for deemed registration if application is not disposed of within six months : HC

Citation- Commissioner of Income-tax-IV, Pune v. Dr. Kasliwal Medical Care & Research Foundation

High Court- Bombay

ITA No: 4320 of 2009

Assessment Year: 2005-06

Date of Order- October 21, 2024

Brief Facts:

• The assessee, a public trust, applied for registration under Section 12A of the Income-tax Act, 1961 on February 6, 2006.

• The Commissioner of Income-tax (CIT) refused registration on September 15, 2006, beyond the six-month statutory period under Section 12AA(2).

• The assessee contended that the delay in disposing of the application for registration under Section 12AA(2) automatically resulted in deemed registration, as the Commissioner failed to pass an order within the stipulated six-month period.

• The Income-tax Appellate Tribunal (ITAT) ruled in favour of the assessee, stating that the delay resulted in deemed registration.

• The CIT challenged this order before the High Court.

Observations of the Court:

The High Court observed as follows-

1. It emphasized that Section 12AA(2) does not include a provision for deemed registration if the application is not disposed of within six months.

   
   

2. It clarified that deeming fictions must be explicitly provided by the legislature, and courts cannot assume or create such provisions.

   
   

3. The court analyzed two conflicting precedents:

a. Society for Promotion of Education (Allahabad High Court): Held that delay results in deemed registration.

b. Muzafar Nagar Development Authority (Allahabad High Court, Full Bench): Held that no such deeming fiction exists, which was later upheld by the Supreme Court in Harshit Foundation Sehmalpur.

4. It referred to the decision of the Allahabad High Court Full Bench in Muzafar Nagar Development Authority, which held that Section 12AA(2) lacks a deeming provision for automatic registration.
   

5. It observed that the Supreme Court in Harshit Foundation Sehmalpur upheld this interpretation, agreeing that Parliament had intentionally excluded a deeming provision for delayed decisions under Section 12AA(2).
   

6. The ITAT misinterpreted the statutory provisions by inferring a deemed registration, which is unsupported by the legislative framework.

   
   

7. Therefore, the court ruled that there is no deeming provision for automatic grant of registration under Section 12A.

Hence, the High Court reversed the Tribunal’s order and upheld the Revenue's contention that no deemed registration is granted under Section 12AA(2) due to a delay in disposing of an application.