AUROVEDA INTEGRAL FOUNDATION,JAIPUR vs. CIT(EXEMPTIONS), JAIPUR

PER SHRI KUL BHARAT, JM.

The appeal filed by the assessee is directed against the order of ld. CIT

(Exemptions), Jaipur dated 09 September, 2016. The assessee has raised the

following grounds of appeal :-

i. on the pretext of the appellant company not having carried out any charitable activities.

ii. in holding that Registration u/s. 12AA cannot be granted unless the trust has really carried out charitable activities.

iii. in not considering the actions of the appellant company of applying to the State Govt. and State Govt. departments for allotment of a suitable land for its proposed charitable hospital and in turn signing an MOU with the state govt. for the purposes on the insistence of the state govt. and further consequent to which JDA had shortlisted and made an allotment of Land to the Company, which under certain conditions was not accepted by the company on technical.

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iv. in not considering all the above preparatory activities as activities towards the objects of the trust and alleging such activities to be not falling within the ambit of “real charitable” activities without really defining what in his mind the charitable activities would constitute to be. Same could constitute to be.

v. in holding that the genuineness of the activities is reflected by the actual conduct of the activity and whether it is as per objects or not and accordingly holding that the proposal for allotment of land cannot be held as charitable activity within the meaning of Sec. 2(15) of the Act. On such basis concluding that applicant company cannot be held as charitable organization.(para 8 at page 5)

vi. in holding that in absence of actual activities, the genuineness of the activities of the society is neither verifiable nor, it is established.

vii. in wrongly placing reliance on the decision of the ITAT, Agra Bench reported at (2012) 25 Taxman.com 288/ (2012) 138 ITD 179 which is based on distinguishable facts not applicable to the company and at the same time not considering decision of various High Courts which have held that commencement of actual activities is not a condition precedent for grant of registration and what is actually required to be seen is whether the objects incorporated in trust deed are genuine for carrying out the charitable activities.

2.i. The learned Commissioner of Income Tax has erred I fact and in law in not following the judgment of the Jurisdiction High Court in the case of CIT v. Vijay Vargiya Vani Charitable Trust (2015) 58 taxmann.com 335/232Taxman 340/(2014)369 ITR 360 (Raj.) which is binding on the subordinate court and authorities or Tribunals under its superintendence throughout the territories in relation to which it exercises under the Rule of Judicial Precedence.

ii. In view of the aforesaid judgment of the jurisdictional High Court, when the objects incorporated in the Objects of the Company for which it has been incorporated are found to be genuine for carrying on charitable activities, it fulfills requirement of grant of registration under Section 12A and commencement of actual activities by the trust or registration u/s 12AA of the Act and actual commencement of charitable activities is not a condition precedent or grant of Registration and hence application for Registration cannot be rejected.”

the registration under Section 12AA of the Income Tax Act, 1961(herein after

referred to as the Act) was made to the Ld. CIT and the same was rejected on the

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ground that the applicant has not carried out any charitable activity as well as it has

not started the activities as per the object of the Company. It is observed by the Ld.

CIT(E) that genuineness of the activities is reflected by the actual conduct of the

activity and whether it is as per objects or not. Therefore, on this ground, he

rejected the application. Aggrieved by this, the assessee has preferred the present

appeal.

as made by the assessee.

3.1. The ld. Counsel submitted that the assessee company is incorporated as a

Company under section 8 of the Companies Act 2013 and is engaged in the

charitable activities and it is not for earning any profit. He submitted that the

decision of the Ld. CIT is contrary to the binding precedents wherein the Hon’ble

jurisdictional High Court rendered in the case of CIT vs. Vijay Vargiya Vani Charitable

Trust, 369 ITR 360 has held as under :

“In our view, the Trust can move the application immediately at the time of formation then there is no prohibition under the Act seeking registration. In our view as observed earlier the only thing to be looked into at the time of granting of registration is that the object of the Trust or which it was formed have to be seen and examined, the CIT’s satisfaction about genuineness of the activities of the Trust is not a criteria as the trust is yet to commence activities. Asking about charitable activities at the nascent stage would amount to putting a cart before the horse.

In view of what we have observed hereinabove, in our view the Tribunal rightly directed the commissioner for granting registration u/sec. 12AA of the Act and in our view reading of plain language of Section 12AA, no substantial question of law arise out of the order of the Tribunal for consideration of this court.”

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3.2. The ld. Counsel for the assessee submitted that at the time of registration it is

not required to be seen whether the assessee has carried out any activity. In

support of this contention, Ld. Counsel for the assessee further relied on the

judgment of the Hon’ble Madras High Court rendered in the case of Director of

Income Tax (E) Vs. Seervi Samaj Tambaram Trust, 362 ITR 199 (Madras). Further,

realiance is placed on the judgment of Hon’ble High Court of Punjab and Haryana

rendered in the case of Shishu Niketan Panchkula Educational Society vs. CIT,

(2015) 53 Taxmann.com 311 (P&H).

3.3. On the Contrary, Ld. CIT D/R opposed the submission and she submitted that

similar issue is pending for adjudication before Hon’ble Supreme Court in the case of

CIT vs. Sree Anjaneya Medical (2016) 74 taxmann.com 243 (SC). The ld. D/R

submitted that Special Leave Petition has been allowed and leave has been granted

to the Revenue. The Ld. Counsel for the assessee submitted that merely leave has

been granted would not disturb the binding nature of the judgment of the

jurisdictional High Court.

3.4. We have heard the rival contention, perused the material available record and

gone through the orders of the lower authorities. There is no dispute with regard to

the fact that the Ld. CIT has rejected the application on the basis that no activity has

been carried out, therefore, genuineness of the same cannot be commented upon.

We therefore, following the judgement of Hon’ble Jurisdictional High Court rendered

in the case of CIT vs Vijay Vargiya Vani Charitable Trust(Supra) set aside of the

order the Ld. CIT and restore this application for registration under Section 12AA for

decision afresh, to the file of Ld. CIT(E). Grounds raised in the appeal is allowed for

statistical purposes.

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Order pronounced in the open court on 23/02/2017.

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vkns'kkuqlkj@ By order,

सहायक पंजीकार@ Aेेपेजंदज. त्महपेजतंत