What did the Tribunal hold?

The Tribunal noted that the issue of whether entrance fees are capital or revenue receipts requires examination of the society's bye-laws and RBI circulars. Following a previous order in the assessee's own case, the issue was remanded.

The assessee, a cooperative bank, declared Nil income for AY 2018-19. The AO assessed total income at Rs. 10,47,173/-, treating entrance fees from nominal members as revenue receipt. The NFAC confirmed this.

What were the issues?

The primary issue is to determine if entrance/membership fees received from nominal members constitute a capital or revenue receipt.

The Jalgaon District Central Co… vs DCIT | ITAT Pune 2024

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

Before: SHRI SATBEER SINGH GODARA & SHRI INTURI RAMA RAO

For Appellant: Shri Nemin Shah

For Respondent: Shri B.S. Rajpurohit

Hearing: 25.09.2024Pronounced: 26.09.2024

Assessee by : Shri Nemin Shah Revenue by : Shri B.S. Rajpurohit Date of hearing : 25.09.2024 Date of pronouncement : 26.09.2024 आदेश / ORDER PER INTURI RAMA RAO, AM :

This is an appeal filed by the assessee directed against the order of National Faceless Appeal Centre, Delhi dated 18.04.2024 passed u/s.250 of the Income-tax Act, 1961 (hereinafter also called ‘the Act’) for the assessment year 2018-19.

Briefly, the facts of the case are that the appellant is a District Cooperative Central Bank engaged in the business of banking. The Return of Income for the A.Y. 2018-19 was filed on 30.10.2018 declaring Nil income. Against the said return of income, the assessment 2 was completed by the Assessing Officer vide order dated 05.02.2021 passed u/s.143(3) r.w.s. 143(3A) & 143(3B) of the Act at a total income of Rs.10,47,173/-. While doing so, the AO brought to tax a sum of Rs.10,47,173/- being entrance fees received from the Nominal Members holding it to be a Revenue receipt, rejecting the contention of the appellant that it is a Capital receipt.

Being aggrieved, an appeal was filed before the NFAC who vide impugned order confirmed the action of the AO in the absence of necessary evidence on record showing that it is a Capital receipt placing on the decision of Hon’ble Supreme Court in the case of Chowringhee Sales Bureau Pvt. Ltd. Vs. CIT (1973) 87 ITR 541.

Being aggrieved, the appellant is in appeal before the Tribunal in the present appeal.

We heard the rival submissions and perused the material on record. The solitary issue that arises for our consideration is whether entrance/Membership fee received from Nominal Members constitute Capital receipt or not. This issue can be decided only with reference to the terms and conditions contained in the Bye-laws of the Society and Master Circular of RBI. We find the Coordinate Bench of this Tribunal in assessee’s own case in order dated 08.03.2023 for the A.Y. 2012-13 had remanded the issue to the file of AO by holding as under :

8. On perusal of the impugned order as well as assessment order, we note that no discussion made by both the authorities brining to tax receipt on account of nominal/entrance fee. Therefore, in view of the same, we deem it proper to remand the issue to the file of AO for its 3 fresh consideration to ascertain the nature of receipts in the light of Bye-laws of the assessee and Master Circular of RBI on Capital Adequacy and decide whether the said receipts constitutes of capital or revenue receipts. The assessee is liberty to file evidences, if any, in support of its claim. Thus, ground No.5 raised by the assessee is allowed for statistical purpose.

Following the same parity of reasoning, we remand this issue to the file of AO. We order accordingly.

In the result, the appeal filed by the assessee is partly allowed for statistical purposes.

THE JALGAON DISTRICT CENTRAL CO OPERATIVE BANK LTD,JALGAON vs. DY. COMMISSIONER OF INCOME TAX, CIRCLE 1, JALGAON

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