TMI Blog2015 (3) TMI 99X X X X Extracts X X X X X X X X Extracts X X X X ..... osal in terms of the questions so answered - Decided against assessee. - Income Tax Appeal No. - 348 of 2008 - - - Dated:- 5-2-2015 - Hon'ble Dr. Dhananjaya Yeshwant Chandrachud,CJ, Hon'ble Dilip Gupta And Hon'ble Suneet Kumar,JJ. For the Appellant : A. N. Mahajan For the Respondent : Shubham Agarwal JUDGMENT (Per: Dr D Y Chandrachud,C.J.) This reference to the Full Bench has been occasioned by a referring order of a Division Bench of this Court dated 5 August 2013 and turns upon the interpretation of the provisions of Section 12AA(2) of the Income Tax Act 19611. The questions which have been formulated for decision are as follows: (i) Whether the non disposal of an 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; and (ii) Whether the Division Bench judgment of this Court in the case of Society for the Promotion of Education, Adventure Sport Conservation of Environment vs. Commissioner of Income Tax (2008) 216 CTR (All) 167 holding that the effect of non consideration of the appli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issioner may proceed with such applications under that sub-section from the stage at which they were on that day.] (2) Every order granting or refusing registration under clause (b) of sub-section (1) shall be passed before the expiry of six months from the end of the month in which the application was received under clause (a) [or clause (aa) of sub-section (1)] of section 12A.] [(3) Where a trust or an institution has been granted registration under clause (b) of sub-section (1) [or has obtained registration at any time under section 12A [as it stood before its amendment by the Finance (No. 2) Act, 1996 (33 of 1996)]] and subsequently the Commissioner is satisfied that the activities of such trust or institution are not genuine or are not being carried out in accordance with the objects of the trust or institution, as the case may be, he shall pass an order in writing canceling the registration of such trust or institution: Provided that no order under this sub-section shall be passed unless such trust or institution has been given a reasonable opportunity of being heard.] Clause (a) of sub-section (1) of Section 12AA provides that the Commissioner, upon receipt of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that an application would be deemed to be granted after the expiry of the period; and (iii) The legislature has not contemplated that the authority would not be entitled to pass an order beyond a period six months. On behalf of the assessee, learned counsel has submitted that (i) whereas Sections 11 and 12 of the Act provide for certain incomes of religious and charitable trusts not being included in the total income of the assessee, the pre condition is registration under Section 12AA. Section 12AA provides for the procedure for recognition; (ii) the procedure for recognition was introduced by Finance Act (No.2) 1996 and the memorandum explaining its provisions indicates that an order granting or refusing permission has to be passed within six months from the end of the month in which the application for registration is received; (iii) the intention of the legislature was that the period of six months is mandatory and must be strictly observed; (vi) the legislature has used the expression 'may' as well as 'shall' in Section 12AA(1) which is an indicative of the fact that the expression 'shall' was regarded as mandatory wherever it has been used; (v) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claim exemption under ss. 11 and 12 by the assessee and the grant or rejection of such application by the CIT. A conjoint reading of ss.11, 12, 12A and 12AA makes it clear that registration under ss. 12A and 12AA is a condition precedent for availing benefit under ss. 11 and 12. Unless an institution is registered under the aforesaid provisions, it cannot claim the benefit of ss. 11 and 12. Sec. 13 enlists the circumstances wherein the exemption would not be available to a religious or charitable trust otherwise falling under s. 11 or 12 and therefore, requires to be read in conjunction with the provisions of ss. 11 and 12 towards determination of eligibility of a trust to claim exemption under the aforesaid provisions. Section 12AA(1) requires the Commissioner to whom an application is made for the registration of a trust or institution to satisfy himself about the genuineness of the activities of the trust or institution as well as about the objects of the trust or institution. For that purpose, the Commissioner has been vested with a power to call for documents or information and is empowered to make such inquiries as he may deem necessary in that behalf. The Commissioner is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . A legislative provision cannot be rewritten by referring to the notes on clauses which, at the highest, would constitute background material to amplify the meaning and purport of a legislative provision. In the present case, what the Court has been called upon to do is to introduce a legislative fiction which would not be permissible. In Chet Ram Vashist vs. Municipal Corporation of Delhi and another AIR 1981 SC 653, the Supreme Court construed the provisions of Section 313(3) of the Delhi Municipal Corporation Act 1957 under which it was stipulated that within sixty days after the receipt of an application under sub-section (1), the Standing Committee shall either accord sanction to a lay-out plan on such conditions as it may think fit or disallow it or ask for further information. The proviso to sub-section (5) similarly stipulated that the passing of such orders shall not, in any case, be delayed for more than sixty days after the Standing Committee had received information which it considers necessary to deal with the application. The Supreme Court held that neither sub-section (3) nor sub-section (5) provided that an application which is not dealt with within the prescrib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... where the legislature uses two words 'may' and 'shall' in two different parts of the same provision prima facie it would appear that the legislature manifested its intention to make one part directory and another mandatory. But that by itself is not decisive. The power of the court still to ascertain the real intention of the Legislature by carefully examining the scope of the statute to find out whether the provision is directory or mandatory remains unimpaired even where both the words are used in the same provision. In Govindlal Chagganlal Patel v. Agricultural Produce Market Committee Godhra (1976) 1 SCR 451: (AIR 1976 SC 263) Chandrachud, C.J., speaking for the Court approved the following passage in Crawford on 'Statutory Construction' (Ed. 1940 Art. 261, p. 516): The question as to whether a statute is mandatory or directory depends upon the intent of the legislature and not upon the language in which the intent is clothed. The meaning and intention of the legislature must govern, and these are to be ascertained, not only from the phraseology of the provision, but also while considering its nature, its design and the consequences which would f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of revenue as legislated upon by Parliament or by the State Legislature. Proper collection of the revenues of the State is a matter of public interest since public revenues are utilized for public purposes. But such general considerations cannot override the duty of the Court to give plain meaning and effect to the language used in a taxing statute. The duty of the Court first and foremost is to construe the words of the taxing statute in question as they stand and the intention of the legislature has to be construed with reference to the language of the words used. While interpreting the provision, the Court cannot legislate a new provision or introduce a deeming fiction where none has been provided. Similarly, even as a matter of first principle, a casus omissus cannot be supplied by the Court unless there is a case of clear necessity and when reason is found within the statute itself (Padmasundara Rao (Dead) and others vs. State of T.N. and others AIR 2002 SC 1334, paragraphs 8A and 14, Union of India vs. Rajiv Kumar AIR 2003 SC 2917, paragraph 23 and Unique Butyle Tube Industries (P) Ltd. vs. U.P. Financial Corporation and others (2003) 2 SCC 455, paragraph 14) A similar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision would be of no assistance to the assessee. We may also note at this stage, that the provisions of sub-section (2) of Section 12AA of the Act have been construed in a judgment of a Division Bench of the Madras High Court in Commissioner of Income-tax-I Salem vs. Sheela Christian Charitable Trust [2013] 32 taxman.com 242 (MADRAS). The Division Bench in that case has held that the Tribunal was not right in holding that the failure to pass an order in an application under Section 12AA within the stipulated period of six months would automatically result in granting registration to the trust. The same view has been reiterated by a Division Bench of the Madras High Court in Commissioner of Income-tax vs. Karimangalam Onriya Pengal Semipu Amaipu Ltd. [2013] 32 taxman.com 292 (MADRAS). There can be no dispute about the basic principle of law that where a legal fiction has been created, it must be given full force and effect. As Lord Asquith,J observed in East End Dwellings Co. Ltd. vs. Finsbury Borough Council (1951) 2 All ER 587 p. 599 B-D : 1952 AC 109 (HL), where the statute says that you must imagine a certain state of affairs; it does not say that having done so, you must ..... X X X X Extracts X X X X X X X X Extracts X X X X
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