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2020 (9) TMI 290 - ITAT JAIPURExemption u/s 11 - application of Rajasthan Nursing Council seeking registration U/s 12AA denied - observation of CIT is that, applicant society cannot be held as charitable within the meaning of Sec.2(15) of the Income -tax Act, 1961 - a per CIT- A Council is not engaged in the “charitable purpose” of education, and that its activities fall under “General Public Utility” thereby attracting proviso to Sec. 2(15) - dominant purpose test - determine the dominant objectives and purpose of the assessee Council - HELD THAT:- The assessee Council has been established by the Rajasthan Government under the Rajasthan Nursing Council Act, 1964 for the purpose of carrying out the provisions as so stated in the said Act. The preamble to the Act provides that the Act has been enacted by the Rajasthan State Legislature in the 50th year of Republic of India to provide for the registration of nurses, midwives, health visitors and auxiliary nurse-midwives in the state of Rajasthan. Rajasthan Nursing Council is a statutory authority established under the Rajasthan Nursing Council Act, 1964 consisting of ex-officio members who are officials of the health department Activities carried out by the applicant council have been reflected in its Income & Expenditure accounts of various years - applicant council has shown receipt of direct income comprising of registration fees, counselling fees, examination fees, Inspection fees, revaluation fees etc and there are corresponding expenditure of councelling charges, examination charges, inspection charges, etc - such income receipts and expenditure describes its activities which are in the nature of General public Utility (GPU) - same income receipts (100%) are of nature of Business/commercial receipts and thus, in contravention of 20% limit as provided in the proviso to section 2(15) and also are not incidental but pre-dominant activities of the institution. How can the same activity qualify and falls in both the categories i.e, an activity in the nature of general public utility and at the same time, qualify as business activity. Merely because the assessee council has charged certain fees as part of rendering its statutory function and to meet its administrative/operative expenses, the same cannot be said to be done for the purpose of profit. It is not even the case of the Revenue that such activities are carried out for the purposes of profit and the fees so charged are exorbitant and not commensurate with the activities so undertaken by the assessee council. The test of carrying out the activities in the nature of trade, commerce or business is not satisfied in the instant case. As we have held above, the primary or dominant purpose of the assessee council is to regulate the medical profession of registered nurses, midwives, health visitors and auxiliary nurse midwives in the state of Rajasthan and to ensure that these persons have undergone requisite training and have passed the qualifying examination and hold the necessary degrees/certificates and thus eligible to practice as nurses, midwives, health visitors and auxiliary nurse midwives in their respective domains and services of such persons are thus available to the hospitals, nursing homes and public at large. Where as part of rendering of such activities, it recovers certain nominal fees to meet its operational and administrative expenses, the same will not disqualify it from being involved in activities of general public utility as the Courts have held that the proviso to section 2(15) does not seek to disqualify charitable organization covered by the last limb, when certain reasonable/nominal fee is collected from the beneficiaries in the course of activity which is not a business but clearly charity for which they are established and they undertake. Once it is held that the whole of the activities are in nature of general public utility and there are no separate business activities and no separate revenue streams from such business activities, the proviso to section 2(15) doesn’t apply in the instant case and has been wrongly invoked by the ld CIT(E) - order passed by the ld CIT(E) is hereby set-aside and he is directed to grant registration to the assessee Council u/s 12AA as so applied. - Decided in favour of assessee.
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