LIONS FOUNDATIONS KERALA V. THE COMMISSIONER OF INCOME-TAX

WP(C)/14974/2020

AI Insights

The case revolves around the petitioner's application for registration under Section 12A of the Income Tax Act, which was initially submitted on 29th March 2007 but was not acted upon by the Income Tax Department within the prescribed time frame. The petitioner, Lions Foundations Kerala, sought judicial intervention after nearly twelve years of inaction by the tax authorities, despite a directive from the Income Tax Appellate Tribunal in 2008 to reconsider the application. The High Court's decision was influenced by precedents that support deemed registration in such circumstances, emphasizing the importance of timely administrative action.

• Counselvise Citation: [2020] 140 COUNSELVISE.COM (IT) 726570 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 23-10-2020
• Assessment Year: misc
• Other Referred Cases: Commissioner of Income Tax, Kanpur and Ors. V. Society for the Promn. Of Edn., Allahabad [2016] 382 ITR 6(SC), The Commissioner of Income Tax, Cochin V. TBI Education Trust (2019) 306 CTR (Ker)295
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Applicant
• Court: HIGH COURT
• Department Lawyers: CHRISTOPHER ABRAHAM
• Assessee Lawyers: T S MAYA; D S SREEKUMARAN
• Keywords: Deemed Registration; Income Tax Act; Section 12A; Section 12AA
• Section: 12A; 12AA(2)

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE AMIT RAWAL FRIDAY, THE 23RD DAY OF OCTOBER 2020 / 1ST KARTHIKA, 1942 WP(C).No.14974 OF 2020(V) PETITIONER: LIONS FOUNDATIONS KERALA LIONS BHAVAN, N.H.BYE-PASS ROAD, THIRUVALLOM, TRIVANDRUM, REPRESENTED BY ITS DIRECTOR, G.HARIHARAN. BY ADVS. SMT.T.S.MAYA (THIYADIL) SRI.D.S.SREEKUMARAN RESPONDENTS: 1 THE COMMISSIONER OF INCOME-TAX, AYAKAR BHAVAN, KOWDIAR, TRIVANDRUM, PIN - 695 003. 2 THE PRINCIPAL COMMISSIONER OF INCOME TAX (EXEMPTION) REVENUE BUILDING, I.S.PRESS ROAD, KACHERIPADY, ERNAKULAM - 682018. OTHER PRESENT: SRI CHRISTOPHER ABRAHAM SC THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 23.10.2020, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C).No.14974 OF 2020 -2- JUDGMENT Dated this the 23rd day of October 2020 The petitioner has approached this Court with the following prayers: i) Declare that the petitioner is deemed to have been granted registration under Section 12A of the Income Tax Act with effect from 30th September 2007 being the last date of 6 months limitation period, statutorily provided for failure on the part of 1st respondent to follow the directions given by the Hon'ble Income Tax Appellate Tribunal in its order in ITA No. 884/coch/2007 dated 8/7/2008, to consider afresh the application filed by the petitioner on 29.3.2007 in Form No.10A for grant of registration under Section 12A and to pass a speaking order; ii) Issue a writ of mandamus or any other appropriate writ, order or direction commanding the 1st respondent to treat the petitioner as a duly registered society under Section 12A of the Income Tax Act, 1961, WP(C).No.14974 OF 2020 -3- effective from 30.9.2007, against the application filed before the 1st respondent in Form No.10A on 29.3.2007 by the petitioner, as he failed to follow the direction of the Hon'ble Income Tax Appellate Tribunal given by it in it's order in ITA No.884/coch/2007 dated 8.7.2008, before the statutory time prescribed under Section 12AA (2) of the Income Tax Act, 1961. iii) Issue such other writ directions or orders as this Hon'ble Court may deem fit and necessary in the facts and circumstances of the case. iv) Petitioner craves for leave to add, to amend or to delete or to withdraw the grounds as may be permitted by this Hon'ble Court.” 2. It is necessary to refer few facts in respect of the aforementioned prayers. On 2.8.2007, an application for registration of the Society, under Section 12 A of the Income Tax Act, in form 10A of the Income Tax Act, 1961, was submitted. The petitioner Society is an initiative of a group of members of the Lions Club International belonging to the WP(C).No.14974 OF 2020 -4- Southern part of Kerala stretching from Haripad to Parassala. The foundation is targeted to have an institution of Lions to pursue welfare activities for the deserving needy, without differences of distinction of religion, caste, creed or color, free from politics and fundamentalism. It is already registered under the Travancore, Cochin, Literary Scientific and Charitable Societies Registration Act, 1955, evidenced from Ext.P1. The objects of the foundation as per the Memorandum of Association is lengthy and it is in that background registration was sought. The aforementioned registration was rejected by respondent on 2.8.2007 under Section 12A of the Income Tax Act, necessitating the petitioner to assail the same before Income Tax Appellate Tribunal. Learned Income Tax Tribunal vide its order dated 8.7.2008, accepted the appeal by issuing directions to the Commissioner of Income Tax for deciding the issue on merits in accordance with law after affording sufficient opportunity of hearing to the assessee by passing a speaking order. WP(C).No.14974 OF 2020 -5- 3. Learned counsel for the petitioner submits that almost twelve years have gone, no action has been taken by the respondent, necessitating the petitioner to approach this Court. On 23.07.2020, this Court admitted the matter and on admission Mr.Christopher Abraham, learned Standing Counsel for respondent Nos.1 & 2 accepted notice and were directed to file counter affidavit. 4. Today when the case has come up for hearing, the learned counsel on instructions from the respondents submits that the necessary action would be taken on the directions of the Income Tax Appellate Tribunal. 5. I have heard the learned counsel for the parties and appraised the paper books. 6. On hearing the submission, this Court asked for an explanation of having not taken the action for almost twelve years and why the deemed exemption under Section 12A of the Income Tax Act has not been granted. During the course of the hearing, learned counsel for the petitioner WP(C).No.14974 OF 2020 -6- relied upon the judgment of the Supreme Court in Commissioner of Income Tax, Kanpur and Ors. V . Society for the Promn. Of Edn., Allahabad [2016] 382 ITR 6(SC) and the Division Bench of this Court in The Commissioner of Income Tax, Cochin V . TBI Education Trust (2019) 306 CTR (Ker)295 but no satisfactory explanation has come forward nor any counter has been filed. Such a laxity on the part of a very responsible office do not require any pardon or to be accepted in any court proceedings as almost twelve years had gone by, where no action has been taken. In the judgments cited above, the Division Bench of this Court by taking into consideration, the provisions of Section 12A of the Income Tax Act, noticed that on the submission of the application, if no decision is taken within the period of six months, the application is deemed to have been allowed. Para 9 of the judgment in Commissioner of Income Tax, Cochin (supra), reads thus: “On a reading of the order passed in (2017) 11 SCC 480, we are not convinced that there was any WP(C).No.14974 OF 2020 -7- concession made by the learned Additional Solicitor General who appeared in the matter for the Income- Tax Department. As we discern from the order, the Commissioner of Income-Tax, Kanpur had filed an appeal from the deemed registration granted under Section 12A for reason solely of an application under Section 12AA of the Act having not been acted upon for six months. The appeal arose from the judgment dated 03.04.2008 of the High Court of Judicature, Allahabad. When the matter was considered by the Hon'ble Supreme Court, the Full Bench decision of the Allahabad High Court cited, herein above, by the Revenue was passed and we do not see the said decision having been placed before the Hon'ble Supreme Court. Rather than a concession, the learned Additional Solicitor General specifically informed the Hon'ble Supreme Court that the only apprehension of the Department was regarding the date on which the said deemed registration, would be effected; whether it is on the date of application or on the expiry of six months. The Civil Appeal before the Hon'ble Supreme Court was disposed of expressing the apprehension to be unfounded, but all the same clarifying that the registration of the of the application under Section 12AA would only take effect from the date of expiry of six months from the date of application. The effect of disposal of a Civil Appeal as has been laid down in WP(C).No.14974 OF 2020 -8- Kunhayammed V . State of Kerala MANU/SC/0432/2000: [(2000) 245 ITR 360 (SC)] hence assumes significance. The Hon'ble Supreme Court in 2017 (11) SCC 480; in a Civil Appeal, approved the judgment of the Allahabad High court allowing deemed registration under Section 12AA; but applicable only from the date of expiry of the six month period as mandated in sub-section (2) of Section 12AA. The judgment of the High Court merges in the judgment of the Hon'ble Supreme Court. The opinion as expressed by the Allahabad High Court, regarding deemed registration under Section 12A for reason only of non consideration of an application under Section 12AA within a period of six months from the date of filing, having not been differed from by the Hon'ble Supreme Court in the Civil Appeal; the declaration by the High Court assumes the authority of a precedent by the Hon'ble Supreme Court on the principles of doctrine of merger. Despite the compelling persuasion of the learned Senior Counsel to interpret the provisions as has been interpreted by the Full Bench of the High Court of Allahabad we find ourselves, incapacitated so to do and obligated to respectfully follow (2017) 11 SCC 480.” 7. Similar is the view of the Supreme Court, in WP(C).No.14974 OF 2020 -9- Commissioner of Income Tax, Kanpur (supra). The relevant portion reads thus: “3. The short issue is with regard to the deemed registration of an application under Section 12AA of the Income Tax Act. The High Court has taken the view that once an application is made under the said provision and in case the same is not responded to within six months, it would be taken that the application is registered under the provision. 4. The learned Additional Solicitor General appearing for the Appellants, has raised an apprehension that in the case of the Respondent, since the date of application was of 24.02.2003, at the worst, the same would operate only after six months from the date of the application. 5. We see no basis for such an apprehension since that is the only logical sense in which the judgment could be understood. Therefore, in order to disabuse any apprehension, we make it clear that the registration of the application under Section 12AA of the Income Tax Act in the case of the Respondent shall take effect from 24.08.2003. 6. Subject to the above clarification and leaving all other questions of law open, the appeal is disposed of with no order as to costs.” 8. It is a matter of record that vide order dated WP(C).No.14974 OF 2020 -10- 08.07.2008, learned Income Tax Appellate Tribunal set aside the order of the Commissioner resulting into revival of the application for seeking exemption under Section 12A of the Income Tax Act dated 28.03.2007 submitted on 29.03.2007 and almost twelve years have passed, it is deemed to have been granted registration after the expiry of six months, in view of the ratio culled out in the judgments referred to above. Accordingly, the application of the petitioner for registration of the Society under Section 12A of the Income Tax Act is allowed. Writ petition is disposed of with the aforementioned directions. Sd/- AMIT RAWAL vv JUDGE WP(C).No.14974 OF 2020 -11- APPENDIX PETITIONER'S/S EXHIBITS: EXHIBIT P1 TRUE COPY OF MEMORANDUM OF ASSOCIATION AND RULES AND REGULATIONS OF LIONS FOUNDATION KERALA. EXHIBIT P1(A) TRUE COPY OF CERTIFICATE OF REGISTRATION UNDER TRAVANCORE COCHIN, LITERARY SCIENTIFIC AND CHARITABLE SOCIETIES REGISTRATION ACT 1995 (NO.2951/045 DATED 27/10/2004). EXHIBIT P2 TRUE COPY OF APPLICATION FOR REGISTRATION OF THE SOCIETY UNDER SECTION 12A OF IT ACT IN FORM NO.10A DATED 28/03/2007. EXHIBIT P3 TRUE COPY OF ORDER DATED 8/7/2008 IN ITA NO.884/07 OF INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH "