CIT v. Sheela Christian Charitable Trust [2013] 214 Taxman 551/32 taxmann.com 242 (Mad.)

(ii)

CIT v. Karimangalam Onriya Pengal Semipu Amaipu Ltd. [2013] 32 taxmann.com 292/214 Taxman 665 (Mad.)

(iii)

DIT (Exemption) v. Anjuman-e-Khyrkhah-e-Aam [2011] 200 Taxman 27 (Mag.)/11 tamann.com 354 (Mad.)

(iv)

Unique Butyle Tube Industries (P.) Ltd. v. U.P. Financial Corpn. [2003] 2 SCC 455.

(v)

Padmasundara Rao v. State of T.N. AIR 2002 SC 1334

(vi)

Union of India v. Deoki Nandan Aggarwal AIR 1992 SC 96

(vii)

Union of India v. Rajiv Kumar AIR 2003 SC 2917.

(viii)

Chet Ram Vashist v. Municipal Corpn. of Delhi AIR 1981 SC 653.

(ix)

Dhoom Singh v. Prakash Chandra Sethi AIR 1975 SC 1012.

(x)

paras 5 and 6 C.A. Abraham v. ITO AIR 1961 SC 609.

(xi)

Hotel Balaji v. State of Andhra Pradesh AIR 1993 SC 1048

(xii)

Sukanya Holdings (P) Ltd. v. Jayesh H. Pandya [2003] 5 SCC 531

(xiii)

Yashwant Rao Ghorpade v. CWT AIR 1967 SC 135.

(xiv)

State of Tamil Nadu v. M.K. Kandaswami AIR 1975 SC 1871.

(xv)

State of Gujarat v. Dilipbhai Nathjibhai Patel [1998] 3 SCC 234.

from the date of the creation of the trust or the establishment of the institution if the Commissioner is, for reasons to be recorded in writing, satisfied that the person in receipt of the income was prevented from making the application before the expiry of the period aforesaid for sufficient reasons ;

(ii)

from the 1st day of the financial year in which the application is made, if the Commissioner is not so satisfied:

(c) **

**

**

shall pass an order in writing registering the trust or institution ;

(ii)

shall, if he is not so satisfied, pass an order in writing refusing to register the trust or institution,

There is nothing in Section 12AA(2) of the Act which provides for deemed grant of registration, if the application for registration is not decided within six months.

(ii)

This sub-Section provides that every order granting or refusing registration shall be passed before expiry of six months from the end of the month in which the application was received. Thus, this provision prescribes the period of six months to pass an order either granting or refusing registration. Therefore, if an order is not passed within the period of six months, the grant cannot be deemed leaving the words 'refusing registration'.

(iii)

One of the most important condition for availing the exemption under section 11 and 12 of the Act is the grant of registration under Section 12AA of the Act and as such an order is necessarily required to be passed by the Commissioner either granting or refusing the registration. In case after considering the facts and circumstances the C.I.T. Comes to the conclusion that the person applying for registration is not entitled to registration under Section 12A of the Act then he may refuse registration and the consequence would be that such a person shall not be entitled to the benefits provided in Section 11 and 12 of the Act. Thus no presumption of grant of registration can be inferred from the plain words of Section 12AA (2) of the Act which requires the order to be passed in writing by the competent authority either granting or refusing the registration.

(iv)

Construing Section 12AA(2) of the Act to mean deemed grant of registration on the expiry of period of six months would attribute redundancy to the words "refusing registration" and therefore such a construction can not be accepted as per settled principle of law.

(v)

The principles of purposive construction or mischief rule cannot be applied so as to re-write the language in a way different from that in which it is framed. When the public officer is directed by statute to perform duty within a specified time, the provision as to time are directory as held by Hon'ble Supreme Court in the case of P.T. Rajan v. T.P.M. Sahir [2003] 8 SCC 498.

(vi)

The principles of law laid down by the Division Bench of this Court in the case of Society for the Promotion of Education, Adventure Sport & Conservation of Environment (supra) appears to be in conflict with the law laid down by the Division Bench of this Court in the case of Sanjay Kumar v. State of U.P. [2004] (54) ALR 39]. The relevant paragraph nos. 10, 11, 13, 14 and 15 of the judmgnet in the case of Sanjay Kumar (supra) are reproduced below :—

"10. It is settled legal proposition of law that unless that statute provides for a deeming clause, the Court should be very slow in accepting such a contention, as laid down by a Constitution Bench of the Allahabad High Court in Rana Pratap Singh v. State of U.P. The Court held that had the intention fiction/deeming sanction/refusal, specific in the Act or the Rules. In absence of any statutory provision/rule, it should not be construed as to provide for a fiction in such an eventuality.

11. Moreso, creating a fiction by judicial interpretation may amount to legislation, a field exclusively within the domain of the legislature. (Vide State of Jammu & Kashmir v. Triloki Nath Khosa and Ajaib Singh v. Sirhind Coop. Marketing-cum-processing Service Society Ltd.

13. Even if the statute provides for a legal fiction/deeming provision, it must be limited to the purposes indicted by the context and can not be given a larger effect. (Vide Radhakissen Chamria and others v. Durga Prasad Chamria and another, State of Travencore-Cochin v. S.V. Cashewnut factory Quilon, and Bengal Immunity Co. Ltd. v. State of Bihar and others. In Modi Cement Ltd. v. Kuchil Kumar Nandi, the Hon'ble Apex Court explained the distinction between the deeming provisions, and presumption and held that the distinction was well discernible.

14. Similar view has been taken by the Hon'ble Apex Court in State of Kerala and others v. Dr. S.G. Sarvothama Prabhu, Commissioner of Income Tax v. Mysodet (P) Ltd.and Garden Silk Mills Ltd. and another v. Union of India and others.

15. Rule 165 of the Explosive Rules, 1983, provide that if an application for renewal has been filed within time and it is not being disposed of by the licensing authority, the licence shall be deemed to be in force until such date as the licensing authority renews the licence or until an intimation that the renewal of the licence is refused and is communicated to the applicant. The rules provide for a fiction only for the transitory period, but neither the Explosive Act nor the rules framed thereunder envisage deemed renewal of a licence, thus the authorities have been passing the order without complying the requirement of the statutory provisions which cannot be held to be a sign of good governance."

(vii)

In the case of Rana Pratap Singh v. State of U.P. [1996] Supp. AWC 92 a Full Bench of this Court, while considering the provision of Section 13 and 14 of the Arms Act regarding grant of Arms Licence has held in paragraph 34 as under :—

"34. A reading of the relevant statutory provisions of the Arms Act would show that no time limit has been prescribed therein for the consideration of an application for the grant of an arms licence, nor is there any provision to the effect that if the application is not finally decided within a particular time frame, the licensing authority shall be bound to grant the licence, or that the licence shall be deemed to have been granted. We, therefore, cannot but concur with the view of Vijay Bahuguna, J that had the intention of the Legislature been such, specific provisions would undoubtedly have been made for it in the Act. On the face of it, therefore, the provisions of the Arms Act cannot be so construed as to provide for a deeming provisions for the grant of a licence merely on the expiry of a particular period of time. There can, of course, be no manner of doubt that where undue delay takes place in the licensing authority considering and deciding an application for an arms licence the Court is competent and empowered to direct that the consideration may be completed within the time to be stipulated by it. In dealing with this matter, it is not to be forgotten that there can be many reasons and circumstances to account for an application for an arms licence not having been decided within a particular period. No hard and fast rule can, therefore, be laid down. What be an appropriate order to be passed, with regard to an application for the grant of an arms licence, would clearly depend upon the facts and circumstances of each particular case."

(viii)

The provision fixing a time in which a public officer or authority has to act in performance of a duty considers it reasonable for the officer or the authority to act within the said period. The expiry of the period without more confers no right unless the statute by legal fixation or otherwise confers a right. Thus Section 12AA(2) of the Act providing for grant or refusing registration within a period of six months does not mean that the application must have been granted after expiry of the said period, unless there is a provision to the said effect made in the Act itself. The above points supported by the law laid down by Hon'ble Supreme Court in the case of Chet Ram Vashist (supra).

(ix)

The performance of duty required to be done by the competent authority under Section 12AA (2) of the Act within the period specified therein and related to a right which may accrue to a person on grant of registration, the provision of time will be directory and not passing the order within the period specified shall not automatically result in deemed grant of registration.

(x)

In the case of Nassurddin v. Sita Ram Agarwal [2003] 2 SCC 577 the Hon'ble Supreme Court has laid down the law that "it is a well settled principle that if an act is required to be performed by a private person within the specified time, the same would ordinarily be mandatory but when the public functionary is required to perform the public function within time frame, the same shall be held directory unless consequence therefor are specified." Similar view has been taken by Hon'ble Supreme Court in the case of Balwant Singh v. Anand Kumar Sharma [2003] 3 SCC 433 para 7.

(xi)

There is nothing in Section 12AA(2) of the Act which provides that the authority concerned shall have no power to pass order either granting or refusing registration after expiry of six months . Thus, when the legislature itself has not provided so and the authority concerned has not been made functus officio on expiry of the prescribed period then it is not within the powers of the Court to legislate and provide for deemed grant of registration. In the case of Bhavnagar University v. Palitana Sugar Mill (P) Ltd. [2003] 2 SCC 111 para 42, 43, 44 and 45 the Hon'ble Supreme Court has observed as under :—

"42. We are not oblivious of the law that when a public functionary is required to do a certain thing within a specified time, the same is ordinarily directory but it is equally well settled that when consequence for inaction on the part of the Statutory authorities within such specified time is expressly provided, it must be held to be imperative.

43. In Sutherland, Statutory Construction, 3rd edition, Vol.3 at p.102 the law is stated as follows :—

"…....unless the nature of the act to be performed, or the phraseology of the statute is such that the designation of time must be considered a limitation of the power of the Officer."

At p.107 it is pointed out that a statutory direction to private individuals should generally be considered as mandatory and that the rule is just the opposite to that which obtains with respect to public officers. Again, at p. 109, it is pointed out that often the question as to whether a mandatory or directory construction should be given to a statutory provision may be determined by an expression in the statute itself of the result that shall follow non-compliance with the provision. At p.111 it is stated as follows :

"As a corollary of the rule outlined above, the fact that no consequences of non-compliance are stated in the statute, has been considered as a factor tending towards a directory construction. But this is only an element to be considered, and is by no means conclusive."

44. In Dattatrays v. State of Bombay AIR 1952 SC 181, it was held as under :—

"Generally speaking the provisions of a statute creating public duties are directory and those conferring private rights are imperative. When the provisions of statute relate to the performance of a public duty and the case is such that to hold null and void acts done in neglect of this duty would work serious general inconvenience or injustice to persons who have no control over those entrusted with the duty and at the same time would not promote the main object of the Legislature, it has been the practice of the courts to hold such provisions to be directory only, the neglect of them not affecting the validity of the acts done."

45. In Craies on Statute Law VIII Edn. at page 262, it is stated thus :—

"It is the duty of courts of justice to try to get at the real intention of the Legislature by carefully attending to the whole scope of the statute to be construed That is each case you must look to the subject-matter, consider the importance of the provision and the relation of that provision to the general object intended to be secured by the Act, and upon a review of the case in that aspect decide whether the enactment is what is called imperative or only directory."

whether non disposal of application for registration by granting or refusing registration before the expiry of six months as provided under Section 12AA(2) of the Income Tax Act, 1961 would result in deemed grant of registration.

(ii)

Whether the Division Bench judgment of this Court in the case of Society for the Promotion of Education, Adventure Sport & Conservation of Environment (supra) holding that the effect of non consideration of the application for registration within the time fixed by Section 12AA(2) would be deemed grant of registration, is legally correct."