Character of membership and entrance fees must be tested on bye-laws and records before deciding capital or revenue nature.

Amounts received as entrance fee and membership fee on admission of members of a co-operative bank could not be characterised as capital or revenue receipts merely by nomenclature or by the claim that they were one-time receipts. Their true nature depended on verification of the bye-laws, the rights attached to different classes of members, the method of computation, whether shares were allotted, and whether the sums were refundable on cessation of membership. As the relevant material required examination and similar issues had earlier been sent back for de novo review, the matter was restored for fresh adjudication on the facts and records.

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Issues: Whether the amounts received as entrance fee and membership fee on admission of members of a co-operative bank are capital receipts or revenue receipts, and whether the matter required fresh examination on the facts and bye-laws governing the memberships.

Analysis: The determination of the character of these receipts could not be made merely on the basis of nomenclature or the assessee's assertion that they were one-time receipts. The nature of the membership granted, the bye-laws, the rights attached to different classes of members, the manner of computation of the receipts, whether shares were allotted, and whether the amounts were refundable on cessation of membership all required verification. The record showed that similar issues in earlier years had been restored for de novo adjudication after examination of the relevant material, and the same course was considered appropriate here.

Conclusion: The issue was restored to the Assessing Officer for fresh adjudication after examining the relevant bye-laws, membership terms, supporting records, and related material. The appeal was allowed for statistical purposes.

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