The Jaipur bench of Income Tax Appellate Tribunal (ITAT) has recently held that activities carried out by Rajasthan Para-Medical Council are not commercial hence they should be liable for registration under section 12AA of the Income Tax Act, 1961.
Section 12AA of the Income Tax Act deals with procedure for registration of charitable trust
Assessee Rajasthan Para-Medical Council is established by an Act of State Legislature with the aim to develop, promote and regulate education in para-medical courses and mainly carrying out the functions as prescribed under Section 13 of the RPMC Act, 2008 which includes, (i) to promote innovations, research and development in establishment of new Paramedical subjects in the Schedule
(ii) to formulate schemes for promoting Paramedical education
(iii) to lay down norms and standards for courses, curricula,
physical and instructional facilities, staff pattern, staff qualifications, quality instructions, assessment;
(iv) examination in Para-medical education;
(v) to recognize the institutions conducting courses in Para-medical subjects and provide guidelines for admission of student for imparting Para-medical education;
(vi) to inspect or cause to be inspected any Para-medical institution;
(vii) to constitute a board for conducting the examination in Para-medical subjects so as to maintain uniformity of standards.
The applicant filed an application online on 04.06.2020 in Form No. 10A for seeking registration under Section 12AA of the Income Tax Act, 1961 The applicant was issued a letter/notice requesting therein to submit certain documents/explanations and to produce original RC/MOA for verification.only part details were submitted the applicant.
Accordingly, a show cause notice was issued to the applicant society details were called for and date of hearing was fixed In compliance, the applicant council furnished a reply along with the details called for, which has been examined in detail.
Therefore, the CIT(E) rejected the application for registration under Section 12A of the Income Tax Act stating that it is not covered as Education because it is a regulatory body for Para-medical education and does not provide direct schooling.
Aggrieved by the order of the CIT (E), the assessee has filed the appeal before the Tribunal.
Shyam Lal Agarwal counsel for the assesee submitted that the assessee Council is constituted by the State Government primarily for paramedical education and to promote, develop & regulate the same for the welfare of the society, and the public health with no intent of any business and profit at all.
Tarun Agarwal counsel for the revenue submitted that Council is though a Govt. Body enacted under the Act for para-medical education but they are running the Institution resulting in surplus and on commercial basis.The Council is not providing free education and also is not directly educating.
After hearing the rival submissions, the tribunal observed that appellant has applied for the registration under Section 12A Income Tax Act, which was rejected on the ground that the revenue earned by the Council is from commercial activities.
Further the surplus is not distributed and only utilized for the activities and the fees/charges are decided in consultation with the State Government at normal level looking to the welfare of the public.
Therefore, the two member bench of Sandeep Gosain, (Judicial Member) Shri Rathod Kamlesh Jayantbhai, (Accountant Member) held that object of the appellant Council qualified as charitable purpose and covered under Section 2(15) of the Income Tax Act as applied by the appellant and given that there is no dispute on the genuineness of the activities carried on by the assessee Council in furtherance of its object.
Thereafter, the bench directed to grant the registration to the appellant-Council under Section 12AA of the Income Tax Act.
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