Charitable status and Section 11 exemption are not lost merely because incidental receipts arise from carrying out charitable objects.

Receipt of fees or other amounts while carrying out charitable objects does not by itself destroy charitable character where the statutory test for commercial activity is not met. The Tribunal correctly held that educational, youth-centre, and general public utility activities remained charitable despite incidental receipts, so the proviso to Section 2(15) did not apply and exemption under Section 11 was available.

---

---

Issues: Whether the assessees were entitled to exemption under Section 11 of the Income-tax Act, 1961, despite receipt of amounts for conducting activities, and whether the proviso to Section 2(15) was attracted so as to deny charitable status.

Analysis: The assessees claimed charitable objects falling within general public utility and allied non-profit educational and youth-centre activities. The Assessing Officer treated the receipts as indicative of commercial activity and invoked the proviso to Section 2(15). The Income Tax Appellate Tribunal held that mere collection of amounts for carrying on the stated activities did not, by itself, destroy the charitable character of the assessees, relying on binding precedent on the scope of charitable purpose and incidental receipts. The Court found that the Tribunal's view accorded with law and facts and did not give rise to any substantial question of law.

Conclusion: The assessees were held entitled to exemption under Section 11, and the proviso to Section 2(15) was not applied to deny charitable status.

Ratio Decidendi: Receipt of fees or amounts in the course of carrying out charitable objects does not, by itself, convert a charitable into a commercial concern unless the statutory test for loss of charitable character is satisfied.

---