MADRAS ORTHOPAEDIC SOCIETY,CHENNAI vs. ITO, EXEMPTIONS WARD-4,, CHENNAI

ITA 3114/CHNY/2026Status: DisposedITAT Chennai07 October 202611 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the issues raised by the CIT(E), particularly regarding mutuality, the nature and extent of beneficiaries, the character of academic and CME activities, and the financial particulars, require reconsideration. The Tribunal noted that the assessee's earlier registration under Section 12AA was granted after considering its amended Memorandum of Association, and no material change in its objects or activities had been brought to its notice. The Tribunal found that the assessee's academic activities, conferences, and CME programmes are attended by post-graduate students and professionals beyond its subscribing membership, and some programmes were open to non-members. The Tribunal also observed that the principle of mutuality requires identity between contributors and participators, and in this case, the assessee's activities benefit doctors, students, patients, and the public, with no member having a right to share in the surplus or corpus. The Tribunal further noted that the principal activities include propagation of medical knowledge, academic training, and CME programmes, and the financial statements showed excess application over income in some years. Therefore, the Tribunal set aside the impugned order and restored the matter to the CIT(E) for fresh consideration, directing the CIT(E) to consider the application in light of the objects, activities, financial statements, and the earlier Tribunal order in the assessee's own case (ITA No.1641/Mds/2013 dated 17.07.2015) and the consequential order granting registration under Section 12AA. The CIT(E) was directed to afford a reasonable opportunity of hearing and pass a speaking order.

What were the facts?

The assessee, M/s. Madras Orthopaedic Society, filed an appeal against the order of the Commissioner of Income Tax (Exemption), Chennai, dated 21.03.2026. This order rejected the assessee's application for registration under Section 12AB of the Income Tax Act, 1961, filed on Form No. 10AB. The assessee was previously registered under Section 12AA since 14.09.2012 and had obtained registration in Form 10AC for assessment years 2022-23 to 2026-27. The CIT(E) rejected the application citing reasons such as limited beneficiaries, activities confined to conferences, functioning on the principle of mutuality, and generating a surplus, indicating commercial operations.

What were the issues?

1. Whether the Commissioner of Income Tax (Exemptions) erred in rejecting the assessee's application for registration under Section 12AB of the Income Tax Act, 1961, by invoking the principle of mutuality, when the assessee's activities were previously held to be charitable and registration under Section 12AA was granted? (Question of law and mixed fact and law, turning on Section 12AB). Assessee's Contentions: - The CIT(E) erred in invoking the principle of mutuality. - The issue of mutuality was already decided in the assessee's own case by the Tribunal in its order dated 17.07.2015, which led to the grant of Section 12AA registration. - The assessee's activities, such as advancing medical education in Orthopaedics through conferences and seminars, fall under 'education' as per Section 2(15). - Beneficiaries are not limited to members; advancement of medical knowledge ultimately serves public interest. - Participation in conferences and receipt of fees/sponsorships do not establish mutuality or profit motive, as these are incidental and applied to charitable objects. - Mere surplus does not establish commercial activity, especially when used for charitable objects. - The assessee has been registered under Section 12A since FY 2012-13 and has received exemption under Section 11, and there has been no material change in its objects or activities, thus the principle of consistency should be followed. Revenue's Contentions: - The Ld. DR supported the order of the CIT(E).

Which sections of the Income-tax Act were involved?

Section 12AB,Section 12A,Section 12AA,Section 2(15),Section 11

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘D’ BENCH, CHENNAI

Before: SHRI GEORGE GEORGE K & MS PADMAVATHY S

Hearing: 29.09.2026Pronounced: 07.10.2026

PER GEORGE GEORGE K, VICE PRESIDENT:

This appeal filed by the assessee is directed against the order of the Commissioner of Income Tax (Exemption), Chennai dated 21.03.2026, rejecting Form No.10AB filed for seeking registration u/s.12AB of the Income Tax Act, 1961 (hereinafter the ‘Act’). Madras Orthopaedic Society

2.

Brief facts of the case are as follows: The assessee is a society registered under the Tamil Nadu Societies Registration Act, 1975. The assessee society was granted registratio

The order continues below.

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