INDIAN SOCIETY OF HIP AND KNEE SURGEONS ,MUMBAI vs. INCOME TAX OFFICER EXEM WARD 1(3), MUMBAI

IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH MUMBAI BEFORE MS. KAVITHA RAJAGOPAL, JUDICIAL MEMBER & SHRI MAKARAND VASANT MAHADEOKAR, ACCOUNTANT MEMBER 1. ITA No. 8334/Mum/2025 (Assessment Year: 2011-12) 2. ITA No. 8335/Mum/2025 (Assessment Year: 2015-16) 3. ITA No. 8336/Mum/2025 (Assessment Year: 2016-17) Indian Society of Hip ITO, Exem. Ward – and Knee Surgeons 1(3), Mumbai 4-A, Ploughshare, 415, Vs. Room no. 619, 6th Sitladevi Temple Road, Floor, Cumballa Hill, Mahim, Mumbai- MTNL TE Building, 400016 Mumbai-400 026 PAN/GIR No. AAATI5493B (Applicant) (Respondent)

Assessee by Shri K. Gopal & Ms. Neha Paranjpe, Ld. ARs Revenue by Shri R. A. Dhyani & Shri V. S. Mahajan, Ld. DRs

Date of Hearing 30.04.2026 Date of Pronouncement 29.06.2026

2 ITA No. 8334 to 8336/Mum/2026 Indian Society of Hip and Knee Surgeons आदेश / ORDER PER MAKARAND VASANT MAHADEOKAR, AM: These appeals filed by the assessee arise out of separate orders passed by the National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as "CIT(A)"], under section 250 of the Income-tax Act, 1961 [hereinafter referred to as “the Act"], for the captioned assessment years. Since common facts and substantially identical issues are involved in all the appeals, the same were heard together and are being disposed of by this consolidated order for the sake of convenience and brevity. For the purpose of narration of facts, Assessment Year 2015-16 is taken as the lead year and the decision rendered therein shall apply mutatis mutandis to the remaining years, subject to variations in figures and grounds, wherever applicable. 2. The assessee trust is registered under section 12A of the Act and is also registered under the Bombay Public Trust Act with the office of the Charity Commissioner, Mumbai. As noted in the assessment orders, the principal objects of the assessee-trust are: (i) to increase knowledge of hip and knee joints in health and disease; (ii) to promote the highest level of professional standards in patient care in disorders of hip and knee joints; and

3 ITA No. 8334 to 8336/Mum/2026 Indian Society of Hip and Knee Surgeons (iii) to create an optimum environment to facilitate and carry out education and research relating to treatment and surgery of arthritic hip and knee joints. 3. During the relevant previous years, the assessee carried on its activities through organisation of seminars, conferences, workshops and educational programmes relating to hip and knee surgery and allied medical sciences. The assessee claimed exemption under sections 11 and 12 of the Act in respect of its income. 4. The Assessing Officer, however, was of the view that the activities of the assessee were essentially confined to members of the society and that the assessee functioned on principles of mutuality. According to the Assessing Officer, the surplus generated from conferences and seminars and certain other receipts were not eligible for exemption under section 11 of the Act. The Assessing Officer further held that the assessee could not be regarded as a charitable institution entitled to exemption under section 11 and proceeded to assess the surplus generated from such activities to tax. 5. The assessee carried the matter in appeal before the learned CIT(A). The assessee contended that it was a charitable trust duly registered under section 12A of the Act; that its activities fell within the scope of "education" and "medical relief" as defined under section 2(15) of the Act; that conferences and seminars were conducted for dissemination of knowledge and advancement

4 ITA No. 8334 to 8336/Mum/2026 Indian Society of Hip and Knee Surgeons of medical education; that the activities were not restricted to members alone; that the surplus generated was applied only towards the objects of the trust; and that the Assessing Officer had erred in invoking the doctrine of mutuality and in denying exemption under section 11.

Particulars A.Y. 2011-12 A.Y. 2015-16 A.Y. 2016-17 Return Filed on and 14.12.2011 31.03.2017 31.03.2018 returned income Nil income after Nil income after Returned income of claiming exemption claiming exemption Rs.71,75,380/- u/s 11 u/s 11 Assessment Order u/s 143(3) r.w.s. u/s 143(3) u/s 143(3) 147 Date of AO Order 23.11.2018 23.12.2017 23.11.2018 Interest Income Taxed Rs.1,01,500/- Rs.41,301/- Rs.68,721/- Dividend Income Taxed Rs.2,30,406/- Nil Nil Bangalore Conference Rs.80,10,060/- Nil Nil Surplus Ahmedabad Conference Rs.5,68,831/- Nil Nil Surplus Pune Conference Nil Rs.34,47,824/- Nil Surplus Mumbai Nil Nil Rs.1,53,45,123/-

5 ITA No. 8334 to 8336/Mum/2026 Indian Society of Hip and Knee Surgeons Seminar/Conference Surplus Corpus Donation Nil Rs.75,50,000/- Nil Treated as Sponsorship Receipt Total Additions Rs.89,10,797/- Rs.1,10,39,125/- Rs.1,54,13,844/- Sustained by AO Assessed Income Rs.89,10,800/- Rs.1,10,39,130/- Rs.1,54,13,840/- CIT(A) / NFAC Order Order u/s 250 Order u/s 250 Order u/s 250 dated 08.10.2025 dated 08.10.2025 dated 08.10.2025

Assessment Year 2011-12 Legal: Reopening initiated under section 147 of the Act is bad in law 1.The notice dated 24.03.2018 under section 148 of the Act is bad in law and without jurisdiction as the same has been issued without having any reason to believe that any income chargeable to tax has escaped assessment. Thus, the reassessment proceedings initiated by the Ld. A.O. under section 147 of the Act are bad in law and consequently, the notice issued under section 148 of the Act may be quashed and set aside. 2.The reassessment proceedings initiated by the Ld. A.O. are in violation of the procedure laid down by the Hon'ble Supreme Court in the case of GKN Driveshaft (I) Limited vs. ITO [2003] 259 ITR 19 (SC) as the Ld. A.O. failed to pass the order disposing off the objections raised by the Appellant on 22.08.2018 to the reasons recorded to issue a notice under section 148 of the Act. Thus, the entire reassessment proceedings are bad in law and the same may be quashed. 3.The Ld. A.O. claimed that the objections of the Appellant were disposed off vide letter dated 28.08.2018. However, the Appellant has never been served with the said letter. Thus, the Ld. A.O. has acted against the procedure laid down by the Hon'ble Supreme Court in the case of GKN Driveshaft (I) Limited vs. ITO (Supra). Hence, the notice issued under section 148 of the Act is without jurisdiction and bad in law.

6 ITA No. 8334 to 8336/Mum/2026 Indian Society of Hip and Knee Surgeons Denial of the claim of an exemption of Rs.89,10,800/- under section 11 of the Act is unjustified 4.The NFAC erred in confirming the disallowance made by the Ld. A.O. under section 11 of the Act amounting to Rs.89,10,800/- without appreciating that the object of the Appellant Trust is to carry on charitable activities and there is no violation of the provisions of section 2(15) of the Act as alleged by the Ld. A.O. Thus, the disallowance of Rs.89,10,800/- made under section 11 of the Act is not justified and the same may be deleted. 5.The NFAC failed to appreciate that the Appellant had received fees from the members and non-members alike, for attending the conferences at Bangalore and Ahmedabad and generated a surplus of Rs.85,78,891/-. The said sum is received from the activity of disseminating education in the field of hip and knee which is not in the nature of trade, commerce or business or any activity relating thereto. The principle of mutuality has no application to this as alleged by the Ld. A.O. Thus, the disallowance of Rs.85,78,891/- made under section 11 of the Act is not justified and the same may be deleted. 6.The NFAC erred in confirming the disallowance of the exemption under section 11 of the Act of Rs.1,01,500/- on account of interest income without appreciating that the said interest has been received on the fixed deposits kept out of the funds accumulated to carry on the charitable activities to be utilized for the trust's activities. Thus, the disallowance of the exemption of Rs.1,01,500/- under section 11 made on the interest income is unjustified and the same may be deleted. 7.The NFAC erred in confirming the disallowance made by the Ld. A.O. under section 11 of the Act on account of dividend income of Rs.2,30,406/- without appreciating the facts and circumstances of the case. Thus, the disallowance of the exemption under section 11 made on the dividend income is unjustified and the same may be deleted. 8.The Appellant denies the liability to pay interest under section 234A, 234B and 234C of the Act. 9.The Appellant seeks leave to add, alter and amend the above grounds whenever required.

7 ITA No. 8334 to 8336/Mum/2026 Indian Society of Hip and Knee Surgeons Assessment Year 2015-16 Denial of the claim of an exemption of Rs.34,47,824/- under section 11 of the Act is unjustified 1.The NFAC erred in confirming the disallowance made by the Ld. A.O. under section 11 of the Act amounting to Rs.34,47,824/- without appreciating that the object of the Appellant trust is to carry on the charitable activities and there is no violation of the provisions of section 2(15) of the Act as alleged by the Ld. A.O. Thus, the disallowance of Rs.34,47,824/- made under section 11 of the Act is not justified and the same may be deleted. 2.The NFAC failed to appreciate that the Appellant had received fees from the members and non-members alike, for attending the conference at Pune and generated a surplus of Rs.34,47,824/-. The said sum is received from the activity of disseminating education in the field of hip and knee which is not in the nature of trade, commerce or business or any activity relating thereto. The principle of mutuality has no application to this as alleged by the Ld. A.O. Thus, the disallowance of Rs.34,47,824/- made under section 11 of the Act is not justified and the same may be deleted. Denial of the claim of exemption under section 11 of the Act on interest income of Rs.41,301/- is not justified 3.The NFAC erred in confirming the disallowance of the exemption under section 11 of the Act of Rs.41,301/- on account of interest income without appreciating that the said interest has been received on the fixed deposits kept out of the funds accumulated to carry on the charitable activities to be utilized for the trust's activities. Thus, the disallowance of the exemption of Rs.41,301/- under section 11 made on the interest income is unjustified and the same may be deleted. Denial of the claim of an exemption of Rs.75,50,000/- by treating corpus fund as sponsorship fees is not justified 4.The NFAC erred in confirming the disallowance of Rs.75,50,000/- made by the Ld. A.O. under section 11 of the Act by treating the corpus donation as sponsorship fees without appreciating the facts and circumstances of the case. Thus, the disallowance of the exemption of Rs.75,50,000/- under section 11 is unjustified and the same may be deleted.

8 ITA No. 8334 to 8336/Mum/2026 Indian Society of Hip and Knee Surgeons 5.The NFAC failed to appreciate that the Appellant has received corpus fund of Rs.75,50,000/- from various parties along with direction letters. Thus, the disallowance of Rs.75,50,000/- made under section 11 of the Act by treating the corpus donation as sponsorship fees is unjustified and the same may be deleted. 6.The Appellant denies the liability to pay interest under section 234B and 234C of the Act. 7.The Appellant seeks leave to add, alter and amend the above grounds whenever required. Assessment Year 2016-17 Denial of the claim of an exemption of Rs.1,53,45,123/- under section 11 of the Act is unjustified 1.The NFAC erred in confirming the disallowance made by the Ld. A.O. under section 11 of the Act amounting to Rs.1,53,45,123/- without appreciating that the object of the Appellant trust is to carry on the charitable activities and there is no violation of the provisions of section 2(15) of the Act as alleged by the Ld. A.O. Thus, the disallowance of Rs.1,53,45,123/- made under section 11 of the Act is not justified and the same may be deleted. 2.The NFAC failed to appreciate that the Appellant had received fees from the members and non-members alike, for attending the conferences at Mumbai and generated a surplus of Rs.1,53,45,123/-. The said sum is received from the activity of disseminating the education in the field of hip and knee which is not in the nature of trade, commerce or business or any activity relating thereto. The principle of mutuality has no application to this as alleged by the Ld. A.O. Thus, the disallowance of Rs.1,53,45,123/- made under section 11 of the Act is not justified and the same may be deleted. Denial of the claim of exemption under section 11 of the Act on interest income of Rs.68,721/- is not justified 3.The NFAC erred in confirming the disallowance of the exemption under section 11 of the Act of Rs.68,721/- on account of interest income without appreciating that the said interest has been received on the fixed deposits kept out of the funds accumulated to carry on the charitable activities to be utilized for the trust's activities. Thus, the disallowance of

9 ITA No. 8334 to 8336/Mum/2026 Indian Society of Hip and Knee Surgeons the exemption of Rs.68,721/- under section 11 made on the interest income is unjustified and the same may be deleted. 4.The Appellant denies the liability to pay the interest under section 234B and 234C of the Act. 5.The Appellant seeks leave to add, alter and amend the above grounds whenever required. 9. During the course of hearing before us, the learned Authorised Representative (AR) fairly stated that the grounds challenging the validity of the reassessment proceedings under sections 147/148 of the Act for A.Y. 2011-12 are not pressed. Accordingly, the said grounds are dismissed as not pressed.

(i) whether the assessee is entitled to exemption under section 11 in respect of the surplus generated from conferences/seminars conducted during the relevant assessment years;

(ii) whether the authorities below were justified in invoking the proviso to section 2(15) of the Act and treating the assessee as a mutual association rather than a charitable institution;

(iii) whether interest income earned on deposits and investments is eligible for exemption under section 11;

(iv) whether dividend income of Rs.2,30,406/- is exempt under section 11 in A.Y. 2011-12;

10 ITA No. 8334 to 8336/Mum/2026 Indian Society of Hip and Knee Surgeons (v) whether corpus donations of Rs.75,50,000/- were rightly treated as sponsorship receipts in A.Y. 2015-16; (vi) consequential levy of interest under sections 234A, 234B and 234C of the Act." 12. The learned AR invited our attention to the objects of the trust, it was submitted that the assessee was established for increasing knowledge relating to hip and knee disorders, promoting professional standards in patient care, and facilitating education and research in the field of treatment and surgery of hip and knee joints. It was contended that the dominant and primary objects of the assessee squarely fall within the expression "education" and "medical relief" as defined in section 2(15) of the Act and, therefore, the proviso to section 2(15), which applies only to the residuary limb of "advancement of any other object of general public utility", had no application to the assessee's activities. 13. The learned AR submitted that during the relevant assessment years the assessee organized conferences, seminars, workshops and educational programmes with the object of disseminating knowledge, spreading awareness and enhancing professional competence in the field of hip and knee surgery. The fees collected from members as well as non-members for participation in such conferences represented incidental receipts arising in the course of carrying out the charitable objects of the trust. According to the learned AR, the generation of surplus from

11 ITA No. 8334 to 8336/Mum/2026 Indian Society of Hip and Knee Surgeons such educational activities would not alter the charitable character of the institution. It was argued that the Assessing Officer erred in treating the conference surplus as business income and in invoking the proviso to section 2(15) merely because a surplus arose from the conferences conducted by the assessee. 14. The learned AR further submitted that both the Assessing Officer and CIT(A) fundamentally erred in treating the assessee as a mutual association. It was contended that the principle of mutuality and the concept of a public charitable trust operate in different fields and that the assessee could not be characterised as a mutual concern merely because certain members of the medical fraternity participated in its activities. Attention was invited to the fact that the conferences organised by the assessee were open not only to members but also to non-members, postgraduate students and other participants. It was thus submitted that the benefits of the assessee's activities were available to a wider section of the public and were not confined to the members alone. The surplus generated by the assessee was not distributed amongst members, contributors or trustees but was wholly utilised for carrying out the charitable objects of the trust. Therefore, the essential conditions necessary for invoking the doctrine of mutuality were absent. 15. The learned AR further submitted that both the Assessing Officer and CIT(A) had incorrectly proceeded on the assumption that the objects and activities of the trust were intended only for

12 ITA No. 8334 to 8336/Mum/2026 Indian Society of Hip and Knee Surgeons the benefit of its members. Referring to the trust objects and the conference brochures, it was argued that the activities of the assessee were directed towards dissemination of medical knowledge and advancement of healthcare standards for the benefit of the medical profession and the public at large. It was submitted that there was no clause in the trust deed permitting distribution of income or surplus amongst members and the entire surplus was required to be applied towards the charitable purposes for which the trust was established. 16. Insofar as the interest income was concerned, the learned AR submitted that the fixed deposits were made out of the funds accumulated by the trust for carrying out its charitable activities and the interest earned thereon was merely incidental to and inseparably connected with the charitable activities of the assessee. It was contended that such interest income retained the same character as the funds from which it arose and was therefore eligible for exemption under section 11 of the Act. Similar submissions were advanced in respect of dividend income wherever applicable. 17. In the assessment year involving corpus donations, the learned AR submitted that the amounts received from various contributors were accompanied by specific written directions requiring the same to form part of the corpus of the trust (paper book page No. 69-73). The Assessing Officer was therefore not justified in re-characterising such corpus donations as sponsorship receipts. It was submitted that the corpus donations

13 ITA No. 8334 to 8336/Mum/2026 Indian Society of Hip and Knee Surgeons satisfied the statutory requirements and could not be brought to tax by denying exemption under section 11 of the Act. 18. The learned AR submitted that both the Assessing Officer and the CIT(A) have fundamentally misread and misapplied CBDT Circular No. 11/2008 dated 19.12.2008. According to him, far from supporting the Revenue's case, the Circular itself clearly establishes that the assessee is entitled to exemption under section 11 of the Act. It was submitted that paragraph 2.1 of the Circular specifically clarifies that the proviso to section 2(15) does not apply to institutions engaged in the charitable purposes of "education" or "medical relief". The Circular further recognises that institutions pursuing such objects would continue to remain charitable institutions even if their activities incidentally generate commercial receipts, subject to the conditions prescribed under the Act. Referring to the objects of the assessee trust, the learned Authorised Representative submitted that the assessee was established to increase knowledge relating to hip and knee disorders, promote professional standards in patient care, and facilitate education and research in the field of treatment and surgery of hip and knee joints. These activities, according to him, fall squarely within the specific limbs of "education" and "medical relief" contained in section 2(15), and not under the residuary category of "advancement of any other object of general public utility". 19. The learned AR further submitted that paragraph 3.1 of the Circular, which was heavily relied upon by the Revenue, deals

14 ITA No. 8334 to 8336/Mum/2026 Indian Society of Hip and Knee Surgeons exclusively with industry and trade associations whose objects fall under the fourth limb of section 2(15), namely, "advancement of any other object of general public utility". The Circular discusses the interplay between mutuality and charitable status only in the context of such trade and industry associations. It was contended that the assessee is neither an industry association nor a trade association, and its objects are not covered by the fourth limb of section 2(15). Therefore, the Assessing Officer committed a serious error in importing the discussion relating to trade associations and applying it to a charitable trust engaged in educational and medical activities. 20. The learned AR submitted that even paragraph 3.1 of the Circular does not support the Revenue's stand because the Circular itself recognises that mutuality exists only where there is complete identity between contributors and participants and where the activities are confined exclusively to members without any dealings with outsiders. In the present case, the conferences, seminars and educational programmes conducted by the assessee were admittedly open not only to members but also to non-members, postgraduate students and other medical professionals. The assessee was therefore never claiming exemption on the basis of mutuality. On the contrary, the assessee consistently claimed exemption as a charitable trust registered under section 12A. Consequently, the discussion relating to mutual associations contained in paragraph 3.1 of the Circular was wholly inapplicable.

15 ITA No. 8334 to 8336/Mum/2026 Indian Society of Hip and Knee Surgeons 21. The learned AR further placed reliance upon the decision of the Chennai Bench in Neuro Update Chennai v. ITO (Exemption Ward-1), Chennai (ITA No.1480/Chny/2025, order dated 30.10.2025) and submitted that the facts of the said case were substantially identical to those of the assessee. He submitted that in the said case also the Assessing Officer had denied exemption under section 11 by holding that the activities of conducting medical conferences, seminars and workshops did not constitute "education" within the meaning of section 2(15) and that the assessee was receiving sponsorship fees and delegate fees in the nature of commercial receipts. The Assessing Officer therein had further invoked the proviso to section 2(15) and treated the activities as falling under the residuary limb of "advancement of any other object of general public utility". 22. Referring to the findings of the Co-ordinate Bench, the learned Authorised Representative submitted that the Bench rejected the approach of the Revenue authorities and held that systematic dissemination of specialised medical knowledge through conferences, workshops, seminars and continuing education programmes constituted "education" within the meaning of section 2(15) of the Act. He submitted that the Co- ordinate Bench specifically held that educational activity is not confined to conventional classroom teaching or formal schooling and that professional education through scientific conferences and continuing medical education programmes is equally covered by the expression "education".

16 ITA No. 8334 to 8336/Mum/2026 Indian Society of Hip and Knee Surgeons 23. The learned AR submitted that the objects and activities of the present assessee are materially identical. The assessee is engaged in conducting conferences, seminars, workshops and educational programmes in the field of hip and knee surgery with the object of dissemination of medical knowledge, promotion of professional standards and advancement of medical science. The conferences are attended not only by members but also by non- members, postgraduate students and other medical professionals. The receipts from registration fees, sponsorships and advertisements are utilised exclusively for carrying out the charitable objects of the assessee and no part thereof is distributed to any member or trustee. Therefore, applying the ratio laid down by the Chennai Bench in Neuro Update Chennai (supra), the assessee's activities are liable to be regarded as falling within the charitable purpose of "education" and consequently the proviso to section 2(15) has no application. The denial of exemption under section 11 by treating the assessee as a mutual association or by invoking the proviso to section 2(15) was therefore wholly unsustainable. 24. Per contra, the learned Departmental Representative (DR) strongly relied upon the assessment orders and the appellate orders passed by the learned CIT(A). The learned DR invited our attention to the relevant paragraphs of the order of the learned CIT(A) for A.Y. 2016-17. He submitted that the objects of the assessee, namely increasing knowledge relating to hip and knee disorders, promoting professional standards amongst surgeons

17 ITA No. 8334 to 8336/Mum/2026 Indian Society of Hip and Knee Surgeons and facilitating research and education in the field of hip and knee surgery, clearly demonstrate that the primary focus of the assessee is the professional advancement of a specific class of medical professionals and not the public at large. According to him, the learned CIT(A) correctly observed that the activities of the assessee predominantly benefit its members and, therefore, the assessee cannot be regarded as a charitable institution entitled to exemption under section 11 of the Act. 25. Referring to paragraph 5.1.6 of the appellate order, the learned DR submitted that the membership of the assessee is restricted to medical professionals specialising in hip and knee surgery who contribute to the common fund through membership subscriptions and conference fees. The conferences, seminars and workshops organized by the assessee are primarily intended for such members and allied participants. The learned CIT(A), therefore, rightly concluded that the assessee possesses all the essential attributes of a mutual concern where contributors and beneficiaries substantially belong to the same class of persons. 26. The learned DR further submitted that the learned CIT(A) had correctly relied upon CBDT Circular No.11 of 2008 dated 19.12.2008 and held that the circular recognises the concept of mutuality in the case of associations formed for the benefit of their members. According to him, the Assessing Officer rightly applied the principle of mutuality and correctly concluded that the assessee was essentially a mutual association and not a charitable trust.

18 ITA No. 8334 to 8336/Mum/2026 Indian Society of Hip and Knee Surgeons 27. Inviting our attention to paragraphs 5.2.1 to 5.2.3 of the appellate order, the learned DR submitted that the learned CIT(A) correctly rejected the assessee's contention that its activities fall under the heads "education" and "medical relief". According to him, the mere conduct of conferences and professional programmes for a specialized class of medical practitioners does not automatically constitute charitable education. He submitted that public benefit is an indispensable element of charity and that the predominant beneficiaries of the assessee's activities are its members rather than the public at large. 28. The learned DR further relied upon the findings recorded in paragraphs 5.3.7 to 5.3.9 of the appellate order wherein the learned CIT(A) concurred with the Assessing Officer's conclusion that the dominant object of the assessee was to provide benefits and facilities to its members. He submitted that the learned CIT(A) also referred to the decision relating to Cricket Club of India and the doctrine of mutuality as explained in Bankipur Club Ltd. and held that the assessee's activities were comparable in principle since the primary beneficiaries continued to be the members themselves notwithstanding incidental participation by non-members. 29. Referring to paragraphs 5.4.1 to 5.4.6 of the appellate order, the learned DR submitted that once the assessee was held to be a mutual association and not a charitable institution, the interest income earned from fixed deposits with banks and the surplus generated from conferences could not qualify for exemption under

19 ITA No. 8334 to 8336/Mum/2026 Indian Society of Hip and Knee Surgeons section 11 of the Act. He submitted that interest received from banks was admittedly income derived from third parties and, therefore, fell outside the scope of mutuality. Reliance was placed upon the decisions in Bangalore Club v. CIT (350 ITR 509)(SC) and CIT v. Common Effluent Treatment Plant (Thane- Belapur) Association (328 ITR 362)(Bom.) to contend that such interest income was taxable. 30. The learned DR finally relied upon the conclusions recorded in paragraphs 5.6.1 and 5.6.2 of the appellate order and submitted that the learned CIT(A), after an elaborate examination of the facts, correctly held that the assessee was an association of medical professionals functioning for their mutual benefit and professional advancement. Since the concepts of mutuality and charity are mutually exclusive, the assessee could not simultaneously claim the status of a charitable institution and a mutual association. He therefore submitted that the denial of exemption under section 11 by the Assessing Officer, as affirmed by the learned CIT(A), deserves to be upheld. 31. We shall now proceed to examine and adjudicate each of the substantive issues arising out of the grounds for consideration. Whether the activities of the assessee fall within the ambit of "education" under section 2(15) 32. We have carefully considered the rival submissions and perused the material available on record. The primary reason which weighed with the Assessing Officer and the learned CIT(A)

20 ITA No. 8334 to 8336/Mum/2026 Indian Society of Hip and Knee Surgeons for denying exemption is the conclusion that the assessee was merely a facilitator for conducting conferences and seminars and, therefore, its activities could not be regarded as "education" within the meaning of section 2(15) of the Act. The Assessing Officer relied upon various decisions to hold that the assessee was not imparting education through normal schooling and, therefore, could not be regarded as carrying on educational activities. The learned CIT(A) substantially affirmed the aforesaid reasoning. 33. However, in our considered view, the authorities below have approached the issue from an unduly narrow perspective. The objects of the assessee-trust reveal that it was established for advancement of medical knowledge, dissemination of scientific information, conduct of seminars, conferences, workshops and continuing medical education programmes relating to hip and knee surgery. The material on record shows that during the relevant year the assessee organised scientific conferences and educational programmes attended by medical practitioners, surgeons, post-graduate students, researchers and other stakeholders in the field of orthopaedics. The conferences involved presentation of research papers, live surgical demonstrations, academic deliberations, exchange of scientific knowledge and dissemination of advancements in medical science. 34. The concept of education cannot be confined only to classroom teaching in schools and colleges when the very object

21 ITA No. 8334 to 8336/Mum/2026 Indian Society of Hip and Knee Surgeons of the institution is advancement and dissemination of specialised medical knowledge. Medical science is a constantly evolving discipline and continuing professional education is an indispensable component of modern medical practice. Dissemination of updated scientific knowledge amongst medical professionals directly contributes to improvement in healthcare delivery and ultimately benefits the public at large. 35. We find considerable force in the contention of the learned AR before lower authorities that the assessee's activities are akin to Continuing Medical Education (CME) programmes recognised throughout the medical profession as an essential educational activity. The conferences conducted by the assessee were not recreational or commercial events but were academic forums for dissemination of medical knowledge and research findings. 36. Support for the aforesaid conclusion is available from the decision of the Co-ordinate Bench in Neuro Update Chennai v. ITO, Exemption Ward-1, Chennai (ITA No.1480/Chny/2025, order dated 30.10.2025). In that case, the assessee-trust was engaged in conducting medical conferences, seminars and workshops in the field of neurology. The Assessing Officer had denied exemption under section 11 on the ground that the assessee was merely a facilitator conducting conferences on a commercial basis and that sponsorship receipts and delegate fees rendered its activities commercial in nature. The Bench, after examining the objects and activities of the trust, rejected the Revenue's stand and held as under:

22 ITA No. 8334 to 8336/Mum/2026 Indian Society of Hip and Knee Surgeons "15. The core question before us is whether such activities constitute 'education' within the meaning of section 2(15) of the Act, or whether they are commercial activities falling within the mischief of the proviso." 37. Thereafter, the Bench observed:

"16. The expression 'education' in section 2(15) has been interpreted liberally by various judicial authorities to include not merely formal schooling but also systematic dissemination of knowledge through seminars, workshops, and continuing education programmes." 38. After referring to the decisions in DIT (Exemption) v. Ahmedabad Management Association and CIT (Exemption) v. Anesthesia Society, the Bench concluded:

"18. Applying the same principle, we hold that the assessee's activities in organising neurology conferences and workshops squarely fall within the ambit of 'education' under section 2(15)." 39. The Bench further dealt with the Revenue's objection regarding sponsorship receipts and delegate fees and held:

"20. In the present case, there is no material on record to suggest that any part of the income or property of the trust was diverted for private benefit. All receipts, including sponsorships and delegate fees, were utilised for conference-related expenses or donations to other registered charitable institutions having similar objects. Therefore, the existence of surplus cannot be a ground to deny exemption." 40. The Bench ultimately held:

"24. In view of the foregoing discussion and the judicial precedents cited, we hold that the assessee's activities constitute 'education' within the meaning of section 2(15) of the Act and the proviso to section 2(15) is inapplicable." 41. The facts before us are materially similar. The assessee is engaged in organising scientific conferences, workshops and

23 ITA No. 8334 to 8336/Mum/2026 Indian Society of Hip and Knee Surgeons educational programmes in the specialised field of hip and knee surgery. The conferences involve dissemination of medical knowledge, discussion of advancements in surgical techniques, presentation of research findings and continuing professional education for medical practitioners. Merely because sponsorship amounts and delegate fees are received in connection with such conferences, the activities do not cease to be educational in character. As held by the Chennai Bench, systematic dissemination of specialised medical knowledge through conferences and continuing medical education programmes constitutes "education" within the meaning of section 2(15) of the Act. 42. Respectfully following the aforesaid decision, we are unable to subscribe to the finding of the lower authorities that the assessee is merely a facilitator conducting conferences on a commercial basis. On the facts available before us, the activities carried out by the assessee are essentially educational in character and are directed towards dissemination, advancement and upgradation of medical knowledge in the field of hip and knee surgery. Consequently, the assessee's objects and activities fall within the specific limb of "education" under section 2(15) of the Act. Whether the assessee is a mutual concern and whether CBDT Circular No.11/2008 applies

24 ITA No. 8334 to 8336/Mum/2026 Indian Society of Hip and Knee Surgeons 43. The next plank of the reasoning adopted by the Assessing Officer and the learned CIT(A) is that the assessee is essentially a mutual association of medical professionals and not a charitable institution. The learned CIT(A) heavily relied upon paragraph 3.1 of CBDT Circular No.11/2008 dated 19.12.2008 and concluded that the assessee possessed characteristics of a mutual concern because medical professionals became members by paying membership fees and participated in seminars and conferences organised by the assessee. 44. In our considered opinion, the reliance placed on the aforesaid Circular is misplaced. A plain reading of paragraph 3.1 of Circular No.11/2008 shows that it deals with industry and trade associations which claim both mutuality and charitable status simultaneously. The Circular merely explains that where activities are restricted to members and there exists complete identity between contributors and participants, the principle of mutuality may apply. The Circular nowhere provides that every professional association automatically becomes a mutual concern. On the contrary, the Circular itself emphasises that each case has to be examined on its own facts. 45. The essential test of mutuality is complete identity between contributors and participators. The surplus must ultimately belong to the contributors themselves and no outside element should participate in the activities. In the present case, the conferences organised by the assessee were attended not merely by members but also by non-members, delegates, post-graduate

25 ITA No. 8334 to 8336/Mum/2026 Indian Society of Hip and Knee Surgeons students, researchers, faculty members, sponsors and other participants. The educational activities undertaken by the assessee were not confined exclusively to its members. More importantly, the objects of the trust do not contemplate distribution of profits or surplus amongst members. The surplus remains impressed with charitable obligations and is required to be applied towards the objects of the trust. Therefore, one of the fundamental ingredients of mutuality itself is absent. 46. The learned CIT(A) has repeatedly observed that the primary beneficiaries are the members. However, such conclusion overlooks the broader impact of the assessee's activities. Enhancement of medical knowledge amongst surgeons and healthcare professionals directly translates into improved diagnosis, treatment and healthcare services available to patients. The ultimate beneficiaries are not merely the participating doctors but the public at large. We are equally unable to accept the analogy drawn by the learned CIT(A) from the decisions relating to clubs such as Bankipur Club Ltd. and Bangalore Club. Those decisions concerned organisations established primarily for mutual benefit of members. The assessee before us is a registered charitable trust constituted for advancement of medical education and healthcare knowledge. The underlying objectives, organisational structure and manner of application of funds are fundamentally different. 47. We therefore hold that the authorities below were not justified in treating the assessee as a mutual association merely

26 ITA No. 8334 to 8336/Mum/2026 Indian Society of Hip and Knee Surgeons because medical professionals participated in its activities or paid membership subscriptions. Applicability of proviso to section 2(15) 48. Even assuming for a moment that the assessee falls under the residual limb of "advancement of any other object of general public utility", the question still remains whether the proviso to section 2(15) can be invoked. The Assessing Officer proceeded on the footing that sponsorship receipts and delegate fees constituted commercial receipts and consequently denied exemption. 49. The legal position regarding interpretation of the proviso to section 2(15) now stands authoritatively settled by the Constitution Bench judgment of the Hon'ble Supreme Court in ACIT (Exemptions) v. Ahmedabad Urban Development Authority reported in 449 ITR 1 (SC). The Hon'ble Supreme Court has held that a GPU institution is not disentitled from exemption merely because some receipts arise from activities generating surplus. What is required to be examined is whether such activities are undertaken in the course of carrying out the charitable objects and whether the statutory quantitative limit is breached. The Court further clarified that activities undertaken in the actual course of achieving charitable objectives do not lose their charitable character merely because incidental receipts are generated.

27 ITA No. 8334 to 8336/Mum/2026 Indian Society of Hip and Knee Surgeons 50. In the present case, sponsorship receipts and delegate fees were intrinsically connected with the conduct of educational conferences, scientific programmes and other activities undertaken in furtherance of the objects of the trust. These receipts were not shown to have arisen from any independent commercial venture divorced from the charitable activities carried on by the assessee. The assessee has further contended that the delegate fees constituted only a small fraction of the overall receipts and, therefore, the statutory limits prescribed under the proviso to section 2(15) were not breached. 51. However, we do not consider it necessary at this stage to examine the correctness of the quantitative figures or the applicability of the monetary thresholds prescribed under the proviso to section 2(15). Those aspects pertain to the computation and quantification of exemption and shall be dealt with separately while examining the extent of exemption admissible under section 11. For the present purpose, it is sufficient to hold that the mere receipt of sponsorship amounts and delegate fees, being receipts intrinsically connected with the carrying out of the objects of the trust, cannot by itself constitute a ground for denying the charitable character of the assessee or for rejecting its claim for exemption under section 11 at the threshold. The issues relating to the treatment of such receipts, their character, and their impact on the computation of exemption shall be considered independently in the subsequent part of this order. Entitlement to exemption under section 11

28 ITA No. 8334 to 8336/Mum/2026 Indian Society of Hip and Knee Surgeons 52. Once it is held that the assessee is a charitable institution and not a mutual concern, the very foundation of the orders passed by the Assessing Officer and the learned CIT(A) collapses. The assessee is admittedly registered under section 12AA. The registration continued to remain in force during the relevant assessment year. There is no allegation that the income of the trust was applied for non-charitable purposes or that any of the prohibitions contained in section 13 were attracted. The denial of exemption has been founded solely on the conclusions that: (i) the assessee is not engaged in educational activities; (ii) it is a mutual association; and (iii) the proviso to section 2(15) is attracted. 53. For the reasons recorded hereinabove, we have held that none of the aforesaid conclusions can be sustained. Consequently, the assessee continues to remain eligible for exemption under section 11 of the Act. 54. Accordingly, the findings of the Assessing Officer and the learned CIT(A) denying exemption under section 11 at the threshold by invoking mutuality and the proviso to section 2(15) are set aside. The assessee shall be treated as eligible to claim exemption under section 11 in principle. However, the actual quantification of exemption and computation of taxable income shall be determined by the Assessing Officer in accordance with sections 11 to 13 of the Act.

29 ITA No. 8334 to 8336/Mum/2026 Indian Society of Hip and Knee Surgeons Taxability of Interest Income and Dividend Income 55. The next issue relates to the treatment of interest income and dividend income earned by the assessee during the relevant assessment years. 56. The Assessing Officer held that interest earned from fixed deposits maintained with banks and dividend income earned from investments were receipts derived from third parties and, therefore, fell outside the scope of the principle of mutuality. Proceeding on the premise that the assessee was not entitled to exemption under section 11, the Assessing Officer brought the said receipts to tax. The learned CIT(A) affirmed the aforesaid view. 57. In our considered opinion, the approach adopted by the authorities below proceeds on an incorrect premise. The entire discussion regarding interest income and dividend income in the assessment orders is founded upon the assumption that the assessee is either a mutual concern or that it has ceased to be a charitable institution by virtue of section 2(15). We have already held while deciding the earlier issues that the assessee is carrying on charitable activities falling within the scope of section 2(15) and that the denial of exemption under section 11 on the grounds adopted by the Revenue cannot be sustained. 58. Once the assessee is held entitled to be considered for exemption under section 11, the mere fact that interest income has been earned on fixed deposits or that dividend income has

30 ITA No. 8334 to 8336/Mum/2026 Indian Society of Hip and Knee Surgeons arisen from investments does not, by itself, render such receipts taxable. The investments and deposits from which such income arose were admittedly made out of the funds of the trust. Such receipts form part of the income of the trust and are required to be considered in accordance with the scheme of sections 11 and 12 of the Act. 59. The decisions relied upon by the Revenue dealing with the principle of mutuality, including the decision of the Hon'ble Supreme Court in Bangalore Club v. CIT (350 ITR 509), merely lay down that interest earned from third parties is outside the ambit of mutuality. Those decisions do not lay down that such receipts become automatically taxable even where the recipient is otherwise entitled to exemption under section 11. The controversy before us is not whether the receipts satisfy the test of mutuality but whether the assessee is entitled to exemption as a charitable institution. Once the latter issue is answered in favour of the assessee, the character of interest income and dividend income has to be examined within the framework of section 11 and not through the prism of mutuality. 60. At the same time, the precise treatment of such receipts while computing the exemption admissible under section 11 would depend upon examination of the statutory requirements relating to application of income, accumulation, mode of investment and other relevant provisions. Since the lower authorities have not undertaken such exercise, it would not be

31 ITA No. 8334 to 8336/Mum/2026 Indian Society of Hip and Knee Surgeons appropriate for us to determine the quantum of exemption in relation to these receipts in the present proceedings. 61. Accordingly, we hold that the authorities below were not justified in treating the interest income and dividend income as taxable merely on the ground that they were receipts from third parties and fell outside the doctrine of mutuality. The taxability and treatment of such receipts shall be examined by the Assessing Officer while undertaking the exercise of quantification of exemption under section 11 in accordance with law. Quantification of Exemption u/s 11 62. Having held that the activities carried on by the assessee fall within the ambit of charitable purposes and that the authorities below were not justified in denying exemption under section 11 merely by invoking the principle of mutuality and the proviso to section 2(15) of the Act, the next issue that arises for consideration is the quantification of exemption admissible under section 11. 63. At the outset, it is pertinent to note that both the Assessing Officer and the learned CIT(A) proceeded on the premise that the assessee was not entitled to exemption under section 11 at all. Consequently, the authorities below did not undertake the exercise contemplated under sections 11 and 12 of the Act for determining the extent of exemption admissible to the assessee. 64. At this stage, it would be relevant to note that section 11(1)(a) provides exemption in respect of income derived from

32 ITA No. 8334 to 8336/Mum/2026 Indian Society of Hip and Knee Surgeons property held under trust to the extent such income is applied to charitable or religious purposes in India and permits accumulation to the extent specified therein. Thus, grant of exemption under section 11 is not dependent merely upon the charitable character of the institution but also requires examination of the extent of application of income, permissible accumulation and other statutory conditions governing computation of exempt income.

Particulars A.Y. 2011-12 A.Y. 2015-16 A.Y. 2016-17 Conference/Event Bangalore and Pune Mumbai Ahmedabad Conference & Rs.1,88,47,307/- Rs.1,54,25,768/- Rs.3,00,58,156/- Sponsorship Receipts Excluding Rs. 75,50,000/- directly credited to Corpus in the Balance Sheet Membership Fees Rs.1,09,750/- Rs.2,51,000/- Rs.2,00,000/- Other Receipts Rs.3,31,905/- Rs.2,44,385/- Rs.19,39,596/- Total Receipts (A) Rs.1,92,88,962/- Rs.1,59,21,153/- Rs.3,21,97,752/- Conference Expenses Rs.1,02,68,417/- Rs.1,19,77,944/- Rs.2,01,91,543/- Other Expenses Rs.3,66,657/- Rs.16,98,705/- Rs.1,166/- Total Expenses (B) Rs.1,06,35,074/- Rs.1,36,76,649/- Rs.2,01,92,709/- Excess/(Deficit) (A-B) Rs.86,53,888/- Rs.22,44,504/- Rs.1,20,05,043/- Excess/(Deficit) as % 44.86% 14.10% 37.29% of Total Receipts Exemption Claimed Rs.1,92,88,962/- Rs.1,59,21,153/- Rs.2,50,22,372/- u/s 11 Including 15% of Receipts Returned Income Nil Nil Rs.71,75,380/-

33 ITA No. 8334 to 8336/Mum/2026 Indian Society of Hip and Knee Surgeons sponsorships, membership subscriptions and other allied activities. The assessee had simultaneously incurred substantial expenditure towards organising conferences, scientific programmes, workshops and other activities undertaken in furtherance of its stated objects. The year-wise figures placed on record indicate that the excess of receipts over expenditure ranged from approximately 14.10% to 44.86% of the total receipts during the years under consideration. 67. At this stage, however, it cannot be conclusively determined from the material presently available on record whether the assessee has satisfied the statutory requirements governing exemption under section 11. The figures relied upon by the parties represent only conference-wise receipts and expenditure and do not constitute the computation contemplated under sections 11 to 13 of the Act. Determination of exemption under section 11 would require examination of several aspects including the extent of application of income towards charitable purposes, admissibility of accumulation, treatment of interest income and dividend income, characterisation of sponsorship receipts claimed as corpus donations and other relevant computational adjustments. Since the Assessing Officer denied exemption at the threshold by holding that the assessee was not entitled to the benefit of section 11, neither the Assessing Officer nor the learned CIT(A) undertook the aforesaid exercise or recorded any findings thereon.

34 ITA No. 8334 to 8336/Mum/2026 Indian Society of Hip and Knee Surgeons 68. We further notice that in Assessment Year 2015-16 an amount of Rs. 75,50,000/- received from various contributors was directly credited to the Balance Sheet as corpus donation and was not routed through the Income and Expenditure Account. The assessee has contended that the contributors had issued specific directions requiring the said amounts to be treated as corpus donations. The Revenue authorities, on the other hand, treated the same as sponsorship receipts relatable to the Pune Conference and included the amount while computing taxable income. 69. While dealing with the legal issue, we have already observed that the sponsorship receipts were intrinsically connected with the conference conducted by the assessee and, therefore, we are unable to accept the assessee's contention that the said receipts automatically assume the character of corpus merely because the contributors described them as corpus donations in their communications. At the same time, the record indicates that the amount was directly credited to the balance sheet and excluded from the Income and Expenditure Account. The precise nature of the receipts, the authority under the trust deed to receive corpus contributions, the effect of the directions issued by the contributors, the accounting treatment adopted by the assessee and the impact thereof on computation under section 11 have not been properly examined by the authorities below. 70. We therefore find that the issue relating to computation of exempt income under section 11 requires fresh examination.

35 ITA No. 8334 to 8336/Mum/2026 Indian Society of Hip and Knee Surgeons Since the lower authorities denied exemption at the threshold, the entire exercise regarding application of income, verification of expenditure incurred towards charitable purposes, treatment of sponsorship receipts credited as corpus donations, admissibility of accumulation, treatment of interest income and other consequential computational issues has remained unaddressed. 71. In these circumstances, while holding that the assessee is entitled to claim exemption under section 11 in principle, we deem it appropriate to restore the limited issue relating to quantification of exemption to the file of the Assessing Officer. The Assessing Officer shall examine the claim of exemption afresh in accordance with sections 11 to 13 of the Act, verify the application of income towards charitable purposes, determine the treatment of sponsorship receipts including the amount of Rs.75,50,000/- credited as corpus donation in A.Y. 2015-16, consider the assessee's claim regarding accumulation, if any, and thereafter compute the income eligible for exemption in accordance with law. 72. The Assessing Officer shall afford adequate opportunity of being heard to the assessee and shall decide the issue by a speaking order after considering all evidences and explanations that may be furnished. Accordingly, this issue is restored to the file of the Assessing Officer for the limited purpose of quantification of exemption admissible under section 11.

36 ITA No. 8334 to 8336/Mum/2026 Indian Society of Hip and Knee Surgeons 73. In the result, the appeals for A.Ys. 2011-12, 2015-16 and 2016-17 are partly allowed for statistical purposes. The grounds challenging the validity of reassessment proceedings in A.Y. 2011-12 are dismissed as not pressed. We hold that the activities carried on by the assessee fall within the ambit of charitable purposes as contemplated under section 2(15) of the Act and that the authorities below were not justified in denying exemption under section 11 by treating the assessee as a mutual association or by invoking the proviso to section 2(15) of the Act. Consequently, the findings of the Assessing Officer and the learned CIT(A) on these issues are set aside. However, since neither the Assessing Officer nor the learned CIT(A) examined the assessee's claim from the perspective of sections 11 to 13 of the Act, including the issues relating to application of income, satisfaction of the requirement prescribed under section 11(1)(a), treatment of interest income and dividend income, admissibility of accumulation, and the treatment of sponsorship receipts of Rs.75,50,000/- credited as corpus donations in A.Y. 2015-16, the issue relating to quantification of exemption admissible under section 11 is restored to the file of the Assessing Officer for fresh adjudication in accordance with law after affording adequate opportunity of being heard to the assessee. The Assessing Officer shall decide the issue uninfluenced by the findings recorded in the assessment orders and the appellate orders on the applicability of mutuality and section 2(15), but in conformity with the findings recorded in this order.

37 ITA No. 8334 to 8336/Mum/2026 Indian Society of Hip and Knee Surgeons 74. The grounds relating to levy of interest under sections 234A, 234B and 234C, as applicable, being consequential and mandatory in nature are restored to the file of the Assessing Officer for re-computation, if any, while giving effect to this order. The ground relating to initiation of penalty proceedings is premature and does not call for separate adjudication at this stage. All other grounds being either consequential or ancillary are disposed of accordingly.

Order pronounced on 29/06/2026 as per Rule 34(4) of the Income Tax (Appellate Tribunal) Rules, 1963.

Sd/- Sd/- (KAVITHA RAJAGOPAL) (MAKARAND VASANT MAHADEOKAR) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai, Dated 29/06/2026 Dhananjay, Sr.PS आदेश की प्रतितिति अग्रेतिि/Copy of the Order forwarded to : अपीलाथी / The Appellant 1. प्रत्यथी / The Respondent. 2. 3. संबंधधत आयकर आयुक्त / The CIT(A) आयकर आयुक्त(अपील) / Concerned CIT 4. धिभागीय प्रधतधनधध, आयकर अपीलीय अधधकरण, मुम्बई / DR, ITAT, Mumbai 5. गार्ड फाईल / Guard file. 6. आदेशानुसार/ BY ORDER, सत्याधपत प्रधत //True Copy// 1. उि/सहायक िंजीकार ( Asst. Registrar) आयकर अिीिीय अतिकरण, मुम्बई / ITAT, Mumbai