2002 (9) TMI 414 - AT - Income Tax

Summary

Issues:
Appeal against deletion of addition of Rs. 2,72,000 as revenue receipt for life membership fees for a magazine for assessment year 1991-92.

Analysis:
The revenue appealed against the deletion of Rs. 2,72,000 by the CIT(A) as revenue receipt for life membership fees for a magazine. The Assessing Officer argued that the amount was revenue, not capital, as claimed by the assessee. The CIT(A) deleted the addition based on evidence that the amount was refundable to subscribers and used for business purposes. The revenue contended that since no refunds were made in 15 years and magazine expenses were debited to the profit & loss account, the fees should be revenue. The assessee argued the fees were refundable but no subscriber demanded refunds. The Tribunal noted the previous year's treatment, rejected res judicata, and found the interest earned on subscriptions sufficient for supplying magazines. However, it questioned if the interest covered all expenses. As no refunds were made in 15 years and other subscriptions were treated as revenue, the Tribunal held the life membership fees as revenue, reversing the CIT(A)'s decision.

In conclusion, the Tribunal allowed the revenue's appeal, restoring the Assessing Officer's order regarding the treatment of the life membership fees as revenue receipts for the magazine.