Successful appeal emphasizes trust objects and genuineness over activity commencement. Precedents upheld for application reevaluation.

Auroveda Integral Foundation Versus CIT (Exemption), Jaipur

Auroveda Integral Foundation Versus CIT (Exemption), Jaipur - TMI Issues Involved:
Rejection of application for registration under section 12AA of the Income Tax Act, 1961 based on lack of charitable activities and non-alignment with the company's objects.

Analysis:

Issue 1: Rejection of Application for Registration under Section 12AA
The appeal challenged the rejection of the application for registration under Section 12AA by the Ld. CIT (Exemptions) based on the grounds of the company not having carried out any charitable activities and not aligning its activities with the objects of the company. The appellant argued that preparatory activities towards the objects of the trust, such as applying for land for a proposed charitable hospital and signing an MOU with the state government, should be considered charitable activities. The Ld. CIT's decision was criticized for emphasizing the need for actual activities to verify genuineness, contrary to the argument that the trust deed's objects should be the focus. The appellant also contested the reliance on a previous ITAT decision, urging consideration of various High Court decisions that commencement of actual activities is not a prerequisite for registration. The judgment highlighted the importance of the trust's objects and the genuineness of its activities, setting aside the Ld. CIT's decision and remanding the application for reevaluation.

Issue 2: Compliance with Jurisdictional High Court Judgment
The appellant contended that the Ld. CIT failed to follow the judgment of the Jurisdictional High Court in a specific case, which held that seeking registration at the formation stage without actual activities is permissible. The appellant argued that the focus should be on the trust's objects at the time of registration, not on the commencement of activities. The appellant cited additional High Court judgments supporting this view. The Ld. CIT's opposition, citing a pending Supreme Court case, was countered by the appellant, emphasizing the binding nature of the High Court judgment. The Tribunal, aligning with the Jurisdictional High Court's precedent, set aside the Ld. CIT's decision and directed a fresh evaluation of the registration application.

In conclusion, the appeal succeeded in challenging the rejection of the registration application under Section 12AA, emphasizing the importance of trust objects and the genuineness of activities over the commencement of actual activities. The judgment highlighted the significance of following binding High Court precedents and set aside the Ld. CIT's decision for a reevaluation of the application.