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2022 (9) TMI 40 - HC - Income TaxExemption u/s 11 - deemed grant of registration - Tribunal justification in applying the time limit of 6 months provided in section 12AA(2) in a case where the order u/s 12AA is to be passed in second round to ITAT'S direction - HELD THAT:- It is not the intention that if, on an appeal filed against such an order, any directions are issued and thereafter any decision is taken which is taken beyond the period of six months then such a decision would be a nullity in view of sub-Section (2) of Section 12A of the Act, 1961. Any such understanding of the provision would be against the express language of the provision. Once a decision is taken on the application within the period of six months envisaged in Section 12AA(2) then subsequent events are irrelevant so far as application of Section 12AA(2) of the Act is concerned. The period of six months referred in Section 12AA(2) has to be calculated from the end of the months in which the application under Section 12A was received and not from any other date. Therefore, we are of the opinion that substantial questions of law framed at point no.(1) has to be answered in favour of the Revenue and against the Assessee. Tribunal was not justified in applying Section 12AA(2) of the Act, 1961 in the facts of the present case and the order of Commissioner of Income Tax, Faizabad could not have been set aside on this ground. The decision of the Tribunal is based on a misreading and misunderstanding of Section 12AA(2) of the Act, 1961, its purport and scope. Deemed registration - Recent decision of Hon'ble the Supreme Court in 'Harshit Foundation Sehmalpur Jalalpur Jaunpur [2022 (5) TMI 179 - SC ORDER] wherein this very question of 'deemed registration' arose and their Lordships of Hon'ble the Supreme Court after considering the Full Bench decision in the case of CIT vs. Muzafar Nagar Development Authority [2022 (5) TMI 179 - SC ORDER] approved the same and dismissed the Special Leave Petition against the judgment of a Division Bench of this Court [2015 (3) TMI 99 - ALLAHABAD HIGH COURT (LB)] rendered in Income Tax Appeal Defective No.24 of 2013 'Commissioner of Income Tax Faizabad vs. Harshit Foundation Sehmalpur Jalalpur Jaunpur'. Law on the question of 'deemed registration' which had already been clarified and declared by the Full Bench of this Court referred hereinabove stands further crystallized and approved by Hon'ble the Supreme Court by the aforesaid decision. In view of the aforesaid declaration of law, decision of the Division Bench of this Court in the case of Society for the Promotion of Education, Adventure Sport & Conservation of Environment [2008 (4) TMI 700 - ALLAHABAD HIGH COURT] is not good law as held by the Full Bench though it may be binding between the parties in view of the order passed in the civil appeal arising therefrom as already discussed. Substantial question no.(2) is answered in terms of the Full Bench decision in the case of CIT vs. Muzafar Nagar Development Authority [2015 (3) TMI 99 - ALLAHABAD HIGH COURT (LB)] and decision of Hon'ble the Supreme Court in the case of Harshit Foundation Sehmalpur Jalalpur Jaunpur [2022 (5) TMI 179 - SC ORDER] in favour of the Revenue as there is no question of deemed registration merely because the application is not decided within the period of six months referred in Section 12AA(2) of the Act, 1961. Power to grant or refuse registration - In view of the discussion already made in the context of substantial question nos.1 and 2 and for the reasons mentioned hereinabove, we hold that the Tribunal erred in granting deemed registration to the Assessee under Section 12AA of the Act, 1961. We, accordingly, answer question no.(3) in favour of the Revenue and against the Assessee.
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