AUROVEDA INTEGRAL FOUNDATION, Jaipur V. CIT(EXEMPTIONS), Jaipur

ITA 988/JPR/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 5558 (ITAT-JAIPUR)
• Duration Of Justice: 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-02-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: misc
• Appeal Filed On: 10-11-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRATIMA KAUSHIK CIT DHK
• Keywords: Charitable institution; Question of law
• Section: 12A; 12AA

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH DQY HKKJR] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS [KK LNL; DS LE{K BEFORE: SHRI KUL BHARAT, JM & SHRI VIKRAM SINGH YAD AV, AM VK;DJ VIHY LA-@ ITA NO. 988/JP/2016 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : AUROV E DA INTEGRAL FOUNDATION, JAIPUR CUKE VS. CIT (EXEMPTION), JAIPUR . LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AANCA9058Q VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI PRAMOD PATNI (CA) JKTLO DH VKSJ LS@ REVENUE BY : SMT. PRATIMA KAUSHIK (CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 09.2.2017. ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 23.02.2017. VKNS'K@ ORDER PER SHRI KUL BHARAT, JM. THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF LD. CIT (EXEMPTIONS), JAIPUR DATED 09 SEPTEMBER, 2016. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL :- 1. THE LD. COMMISSIONER OF INCOME TAX HAS GROSSLY ER RED IN FACT AS WELL AS IN LAW IN REJECTION THE APPLICATION FOR REGISTRATION U /S. 12AA OF INCOME TAX ACT, 1961 OF THE APPELLANT COMPANY: 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 GR ANTED UNLESS THE TRUST HAS REALLY CARRIED OUT CHARITABLE ACTIVITIES. III. IN NOT CONSIDERING THE ACTIONS OF THE APPELLANT COM PANY OF APPLYING TO THE STATE GOVT. AND STATE GOVT. DEPARTMENTS FOR ALLOTME NT OF A SUITABLE LAND FOR ITS PROPOSED CHARITABLE HOSPITAL AND IN TURN SI GNING AN MOU WITH THE STATE GOVT. FOR THE PURPOSES ON THE INSISTENCE OF T HE 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. 2 ITA NO. 988/JP/2016 AUROVEDA INTEGRAL FOUNDATION. IV. IN NOT CONSIDERING ALL THE ABOVE PREPARATORY ACTIVI TIES AS ACTIVITIES TOWARDS THE OBJECTS OF THE TRUST AND ALLEGING SUCH ACTIVITI ES TO BE NOT FALLING WITHIN THE AMBIT OF REAL CHARITABLE ACTIVITIES WITHOUT R EALLY 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 I S REFLECTED BY THE ACTUAL CONDUCT OF THE ACTIVITY AND WHETHER IT IS AS PER OB JECTS 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 H ELD AS CHARITABLE ORGANIZATION.(PARA 8 AT PAGE 5) VI. IN HOLDING THAT IN ABSENCE OF ACTUAL ACTIVITIES, TH E 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 IT D 179 WHICH IS BASED ON DISTINGUISHABLE FACTS NOT APPLICABLE TO TH E COMPANY AND AT THE SAME TIME NOT CONSIDERING DECISION OF VARIOUS HIGH COURTS WHICH HAVE HELD THAT COMMENCEMENT OF ACTUAL ACTIVITIES IS NOT A CON DITION 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 ER RED 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 TAXMA NN.COM 335/232TAXMAN 340/(2014)369 ITR 360 (RAJ.) WHICH IS BINDING ON TH E SUBORDINATE COURT AND AUTHORITIES OR TRIBUNALS UNDER ITS SUPERINTENDENCE THROUGHOUT THE TERRITORIES IN RELATION TO WHICH IT EXERCISES UNDER THE RULE OF JU DICIAL PRECEDENCE. II. IN VIEW OF THE AFORESAID JUDGMENT OF THE JURISD ICTIONAL 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 R EGISTRATION U/S 12AA OF THE ACT AND ACTUAL COMMENCEMENT OF CHARITABLE ACTIVITIE S IS NOT A CONDITION PRECEDENT OR GRANT OF REGISTRATION AND HENCE APPLIC ATION FOR REGISTRATION CANNOT BE REJECTED. 2. BRIEFLY, STATED THE FACTS ARE THAT AN APPLICATIO N IN THE FORM NO. 10A SEEKING THE REGISTRATION UNDER SECTION 12AA OF THE INCOME T AX ACT, 1961(HEREIN AFTER REFERRED TO AS THE ACT) WAS MADE TO THE LD. CIT AND THE SAME WAS REJECTED ON THE 3 ITA NO. 988/JP/2016 AUROVEDA INTEGRAL FOUNDATION. GROUND THAT THE APPLICANT HAS NOT CARRIED OUT ANY C HARITABLE 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 REFLEC TED 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 A SSESSEE HAS PREFERRED THE PRESENT APPEAL. 3. THE EFFECTIVE GROUND IS AGAINST REJECTION OF THE APPLICATION UNDER SECTION 12AA AS MADE BY THE ASSESSEE. 3.1. THE LD. COUNSEL SUBMITTED THAT THE ASSESSEE CO MPANY IS INCORPORATED AS A COMPANY UNDER SECTION 8 OF THE COMPANIES ACT 2013 A ND 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 HONBLE JURISDICTIONAL HIGH COURT RENDERED IN THE CASE OF C IT VS. VIJAY VARGIYA VANI CHARITABLE TRUST, 369 ITR 360 HAS HELD AS UNDER : IN OUR VIEW, THE TRUST CAN MOVE THE APPLICATION IM MEDIATELY AT THE TIME OF FORMATION THEN THERE IS NO PROHIBITION UNDE R 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 AN D EXAMINED, THE CITS SATISFACTION ABOUT GENUINENESS OF THE ACTIVIT IES OF THE TRUST IS NOT A CRITERIA AS THE TRUST IS YET TO COMMENCE ACTIVITI ES. ASKING ABOUT CHARITABLE ACTIVITIES AT THE NASCENT STAGE WOULD AM OUNT TO PUTTING A CART BEFORE THE HORSE. IN VIEW OF WHAT WE HAVE OBSERVED HEREINABOVE, IN OU R VIEW THE TRIBUNAL RIGHTLY DIRECTED THE COMMISSIONER FOR GRAN TING REGISTRATION U/SEC. 12AA OF THE ACT AND IN OUR VIEW READING OF P LAIN LANGUAGE OF SECTION 12AA, NO SUBSTANTIAL QUESTION OF LAW ARISE OUT OF THE ORDER OF THE TRIBUNAL FOR CONSIDERATION OF THIS COURT. 4 ITA NO. 988/JP/2016 AUROVEDA INTEGRAL FOUNDATION. 3.2. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THA T AT THE TIME OF REGISTRATION IT IS NOT REQUIRED TO BE SEEN WHETHER THE ASSESSEE HAS CA RRIED OUT ANY ACTIVITY. IN SUPPORT OF THIS CONTENTION, LD. COUNSEL FOR THE AS SESSEE FURTHER RELIED ON THE JUDGMENT OF THE HONBLE 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 HONBLE HIGH COURT OF PUNJAB AND HARYANA RENDERED IN THE CASE OF SHISHU NIKETAN PANCHKULA ED UCATIONAL SOCIETY VS. CIT, (2015) 53 TAXMANN.COM 311 (P&H). 3.3. ON THE CONTRARY, LD. CIT D/R OPPOSED THE SUBMI SSION AND SHE SUBMITTED THAT SIMILAR ISSUE IS PENDING FOR ADJUDICATION BEFORE HO NBLE 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 ALLO WED AND LEAVE HAS BEEN GRANTED TO THE REVENUE. THE LD. COUNSEL FOR THE ASSESSEE SU BMITTED THAT MERELY LEAVE HAS BEEN GRANTED WOULD NOT DISTURB THE BINDING NATURE O F THE JUDGMENT OF THE JURISDICTIONAL HIGH COURT. 3.4. WE HAVE HEARD THE RIVAL CONTENTION, PERUSED TH E MATERIAL AVAILABLE RECORD AND GONE THROUGH THE ORDERS OF THE LOWER AUTHORITIES. T HERE IS NO DISPUTE WITH REGARD TO THE FACT THAT THE LD. CIT HAS REJECTED THE APPLICAT ION ON THE BASIS THAT NO ACTIVITY HAS BEEN CARRIED OUT, THEREFORE, GENUINENESS OF THE SAM E CANNOT BE COMMENTED UPON. WE THEREFORE, FOLLOWING THE JUDGEMENT OF HONBLE JU RISDICTIONAL 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). GROUND S RAISED IN THE APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 5 ITA NO. 988/JP/2016 AUROVEDA INTEGRAL FOUNDATION. 4. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 23/02/2017. SD/- SD/- FOE FLAG ;KNO ( DQY HKKJR ) (VIKRAM SINGH YADAV) ( KUL BHARAT ) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER JAIPUR DATED:- 23/02/2017. POOJA/ VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- AUROVEDA INTEGRAL FOUNDATION, JAI PUR. 2. THE RESPONDENT- . THE COMMISSIONER OF INCOME TAX (E), JAIPUR. 3. THE CIT(A). 4. THE CIT, 5. THE DR, ITAT, JAIPUR 6. GUARD FILE (ITA NO. 988/JP/2016) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR