SARASWATI SAHAKARI BANK LTD.,NASHIK vs. DEPUTY COMMISSIONER OF INCOME-TAX,

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ITA 2403/PUN/2016Status: DisposedITAT Pune23 March 2018AY 2012-135 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that contributions to a corpus fund, like a building fund, are capital receipts and not taxable. It noted that the same CIT(A) had accepted this position in a subsequent assessment year.

What were the facts?

The assessee, a cooperative bank, received a contribution to its building fund which it treated as a capital receipt. The Assessing Officer treated it as revenue receipt and made an addition, partly based on an admission by the assessee's representative. The CIT(A) confirmed the addition.

What were the issues?

Whether contribution to a building fund is a capital receipt or a revenue receipt, and if an admission by a representative can override the correct legal position.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 147

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, PUNE BENCH “SMC”, PUNE

For Appellant: Shri Pramod Shingte
For Respondent: Dr. Vivek Aggrawal
Hearing: 21.03.2018Pronounced: 23.03.2018

PER SUSHMA CHOWLA, JM:

The appeal filed by assessee is against order of CIT(A)-1, Nashik, dated 11.08.2016 relating to assessment year 2012-13 against order passed under section 143(3) r.w.s. 147 of the Income-tax Act, 1961 (in short ‘the Act’).

2.

The assessee has raised the following ground of appeal:- 2

1.

On the facts and in circumstances of the case and in law, the Lower Authorities have erred in making the addition of Rs.1,81,957/- being a sum received on account of contribution to building fund, this being capital receipt, entire addition needs to be deleted. Further it is submitted that the addition is made merely on the basis of admission made by authorized representative of the appellant, such admission should not be treated decisive if it is not as per the provisions of law, appellant prays for the relief accordingly.

3.

The only issue raised in the present appeal is against addition of ₹ 1,81,957/- being a sum received on account of contribution to building fund.

4.

Briefly, in the facts of the case, the assessee was Co-operative society registered under the Maharashtra State Co-operative Societies Act and was carrying on banking business. The assessee had declared income from business of banking in the return of income. The Assessing Officer noted various issues in the hands of assessee and also made addition on account of various issues but the only the issue which is raised before us is with regard to addition of ₹ 1,81,957/- and hence, we deal with the facts of the said issue only. The assessee had received contribution to the building fund of ₹ 1,81,957/-, which was directly transferred to the Balance Sheet by crediting the same to building fund account. The said amount was not offered as income in the Profit and Loss Account. The claim of assessee in this regard was that the building fund received from members was capital receipt. The Assessing Officer was of the view that the building fund received was revenue receipt. During the course of hearing, the learned Authorized Representative for the assessee also accepted the said addition vide order sheet entry dated 22.01.2015, hence the addition of ₹ 1,81,926/-.

5.

The CIT(A) confirmed the said addition in view of the acceptance of learned Authorized Representative for the assessee during the course of assessment proceedings. 3

6.

The assessee is in appeal against the order of CIT(A).

7.

The learned Authorized Representative for the assessee pointed out that principally the contribution received to the corpus fund was capital receipt. During the year, the contribution was to the tune of ₹ 1,81,957/-, which the assessee pointed out was capital receipt before the Assessing Officer and even before CIT(A). However, the Assessing Officer taxed the same in the hands of assessee without disposing of the plea of assessee on the ground that the learned Authorized Representative for the assessee has accepted the same. He further stated that the assessee has filed an appeal against the order of Assessing Officer and pointed out that there was no question of acceptance as the receipt was capital receipt. The learned Authorized Representative for the assessee also stated that the same CIT(A) in assessment year 2013-14 vide order dated 01.12.2016 has accepted the plea of assessee that the contribution to the building fund is capital receipt and as such, the same principle be applied for the year under appeal.

8.

The learned Departmental Representative for the Revenue however, pointed out that where the learned Authorized Representative for the assessee had agreed to the said addition, there was no merit in the plea of assessee now being raised.

9.

We have heard the rival contentions and perused the record. The limited issue which arises in the case of assessee is the taxability of contribution to building fund, which is capital receipt. The said plea of assessee has been accepted by the CIT(A) in the appeal relating to assessment year 4

2013-14 vide order dated 01.12.2016, against which the Revenue is not in appeal. Principally, the contribution which has been received by the assessee to the corpus fund is capital receipt and in such circumstances, the same cannot be brought to tax. The learned Authorized Representative for the assessee during the course of assessment proceedings did admit to the said addition but before the CIT(A), at the first instance, objections were raised and ground of appeal was filed in this regard. Where it is incumbent upon the Assessing Officer to assess the correct income in the hands of assessee i.e. what is assessable under the provisions of the Act and then even if the learned Authorized Representative for the assessee has admitted to the same or where the assessee has not correctly claimed any deduction, then the Courts have time and again held that the Assessing Officer has to adjudicate the issue in line with the provisions of the Act. In the present case, the provisions of the Act very clearly lay down that the contribution to the building fund being contribution to the corpus fund, was capital receipt. Accordingly, we find no merit in the orders of authorities below and the same are reversed. The Assessing Officer is directed to delete the addition of ₹ 1,81,957/-. The ground of appeal raised by the assessee is thus, allowed.

10.

In the result, the appeal of assessee is allowed.

Order pronounced on this 23rd day of March, 2018. (D.KARUNAKARA RAO) (SUSHMA CHOWLA) ऱेखा सदस्य / ACCOUNTANT MEMBER न्याययक सदस्य / JUDICIAL MEMBER ऩुणे / Pune; ददनाांक Dated : 23rd March, 2018. GCVSR 5

आदेश की प्रयिलऱपप अग्रेपषि/Copy of the Order is forwarded to : 1. अऩीऱाथी / The Appellant; 2. प्रत्यथी / The Respondent; 3. आयकर आयुक्त(अऩीऱ) / The CIT(A)-1, Nashik;

4.

The Pr.CIT-1, Nashik; ववभागीय प्रतततनधध, आयकर अऩीऱीय अधधकरण, ऩुणे, एक-सदस्य 5. मामऱा / DR ‘SMC’, ITAT, Pune; गार्ड पाईऱ / Guard file. 6. आदेशािुसार/ BY ORDER, सत्यावऩत प्रतत //// वररष्ठ तनजी सधिव / Sr. Private Secretary आयकर अऩीऱीय अधधकरण ,ऩुणे / ITAT, Pune

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