2019 (4) TMI 1433

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....Since, similar issues are involved in these two appeals filed by assessee, our decision in AY 2012-13 shall apply mutatis mutandis to the issues arising in assessee‟s appeal for AY 2013-14. 2. The assessee has raised following grounds of appeal in memo of appeal filed with the Income-Tax Appellate Tribunal, Mumbai (hereinafter called " the tribunal") in ITA No. 1037/Mum/2018 for AY 2012-13: "Ground I The CIT (A) erred rejecting contention of the Bank that the following amounts received by the Bank are Capital Receipts: (1) Entrance Fee Rs. 50/- per ordinary member. (2) Membership Fees Rs. 1000/- (For 40 shares of Rs. 25 each) The CIT (A) failed to appreciate that (1) The Bank confers certain valuable rights on the person when he is admitted to the membership of the Bank. (2) Section 2 (47)e.b(VI) recognizes that a transaction by way of becoming member of Co-operative society or acquiring shares in co-operative society is a transfer of „Capital Asset‟. (3) Entrances fees collected by the Bank relates to "becoming the member of the Bank and, therefore, is a capital receipt." The appella....

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.... 1497*50/ Rs. 20 for each nominal member 1198*20 74850 23960 Bank considered such receipts as capital receipts because it confers on the members a valuable right in the form of participation in AGM's and also voting there at. Entrance Fees are collected at the time of admission of a person to the membership of the Bank in terms of the Bye-laws of the Bank. This is a onetime receipt and is credited to the Statutory Reserve account of the Bank that is to say it becomes a part of the profit making apparatus as distinguished from the revenue generated from it." The assessee was treating aforesaid receipts as capital receipts as in the opinion of assessee it confers on members valuable rights in the form of participation in AGMs and also voting rights thereof in terms of bye laws of bank. It was explained by the assessee before the AO that it is one time receipts and is credited to the Statutory Reserve account of the bank and it became a part of the profit making apparatus as distinguished from the revenue generated from it. The A.O rejected the contention of the assessee and held to the same to be revenue in nature and brought both the receipts namely Entran....

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....ital in nature, the issue cannot be decided only on submissions. Since the details were not furnished before the A.O about nature of membership granted and whether the shares were allotted or not, the issue cannot be decided only on the nomenclature of the amounts in books. Therefore, in the interest of justice, we restore the issue to the file of the AO to examine the nature of receipt of these amounts and how the amounts are calculated and the ratio thereon, to decide the issue whether the amount do pertain to revenue in nature. Issue is accordingly remitted to the file of the AO and orders of the AO and CIT(A) on this issue are set aside for redoing according to facts and law. It was explained by the AR that the AO after examining the issue held that the receipts on account of membership and entrance fee are revenue receipts. As the issue involved and the facts of the case for the year under consideration are the same as they were in A.Y. 2009-10 and 2010-11, my predecessor's decision as above, is equally applicable in the appellant's case for the year under consideration also. Therefore, following my predecessor's decision as above, it is held that....

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....erused the material available on record including cited case laws. We have observed that the assessee is co-operative society, engaged in the business of banking. The assessee is registered under The Maharashtra Cooperative Societies Act, 1960. The functions and operations of the assessee are regulated by the Reserve Bank of India vide its banking license u/s 22 of the Banking Regulation Act. We have observed that the assessee has received entrance fees of Rs. 23,960/ and nominal membership fee of Rs. 74,850/- towards making of new members . There are different classes of members viz. ordinary and nominal members which are admitted by the assessee. The assessee has explained that on becoming members , certain valuable rights are vested in members such as right to participate in AGM and to vote at AGM and on that basis contentions are raised that these are capital receipts. We have observed that for the earlier years i.e. AY 2007-08 and 2008-09 the same issue came up before the ITAT, Mumbai in assessee‟s own case in ITA No. 7114/Mum/2010 and 7006/Mum/2011 for AY 2007-08 and 2008-09 respectively, wherein tribunal vide common order dated 11.07.2012 was pleased to restore the mat....