Excess fee receipts and section 11 exemption cannot be denied in income-tax proceedings for alleged breach of education-law norms.

Excess fee receipts treated as capitation fee could not be sustained as taxable income where the educational society applied its receipts towards its educational objects. The Tribunal noted that any alleged breach of fee-fixation norms under the relevant education law fell within the competence of the authority under that statute, not the income-tax authorities, and that exemption under sections 11 and 12A could not be denied merely because another statutory requirement was said to have been violated. As no action had been initiated by the concerned education authorities, the addition was held to rest on a not properly determinable in income-tax proceedings and was directed to be deleted.

---

---

Issues: Whether the addition of excess fee receipts treated as capitation fees could be sustained in the assessee's income, and whether exemption under sections 11 and 12A could be denied on the basis of alleged violation of fee-fixation norms under another statute.

Analysis: The assessee, an educational society, was found to be running an institution and applying its receipts towards its educational objects. The Tribunal noted that the question of excess fee collection under the relevant educational law fell within the domain of the competent authority under that enactment, and not the income-tax authorities. It further noted judicial support for the view that exemption under section 11 cannot be denied merely because some other statutory requirement may have been violated. On the facts, no proceedings had been initiated by the concerned estate authorities regarding excess fees, and the impugned addition rested on an issue not properly determinable for income-tax purposes in the manner adopted by the lower authorities.

Conclusion: The addition of Rs. 21,01,050 was unsustainable and was directed to be deleted; the issue was decided in favour of the assessee.

---