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TMI Blog2019 (4) TMI 1433X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 appellant, therefore, contents that CIT (A)'s conclusion that these receipts are revenue receipts is not acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 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 Entrance Fees of Rs. 23,960/- and Membership Fees of Rs. 74,850/- to tax by making additions to the income of the assessee , vide assessment order dated 05.01.2015 passed by the AO u/s 143(3) of the 1961 Act. 4. Aggri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the Membership fee and Entrance fee collected by the appellant is revenue receipt and is therefore, taxable. 6.3 The ground of appeal is therefore dismissed." 5. Being Aggrieved by the appellate order dated 27.12.2017 passed by learned CIT(A) , the assessee has now ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee 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 matter to the file of the AO for denovo adjudication of the matter after considering terms and conditions attached to different types of membership as contained in bye laws , by holding as under : "We have examined the issue. Just because the assessee has stated that these amounts ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rcumstances , we are of the view that end of justice will be met if the issues in these appeals are restored to the file of the A.O for fresh adjudication after considering various clauses of bye laws concerning different types of membership and rights attached thereto, application forms for making members and other terms and conditions governing various types of membership including entitlements on becoming member , refund of entrance fees and membership fee on cessation of being member of the assessee, minutes of meetings etc.. The AO is directed to give proper and adequate opportunity of being heard to the assessee in accordance with principles of natural justice in accordance with law. The AO shall admit all relevant evidences and explanations submitted by assessee in denovo assessment proceedings in its defence. We direct the AO to frame denovo assessment within time allowed by law as we have noted that almost seven years have elapsed since tribunal directed AO to frame denovo assessment for AY 2007-08 and 2008-09 but the AO has not yet passed denovo assessment for those years. The appeal of the assessee is allowed for statistical purposes. We order accordingly. 7. In the res ..... X X X X Extracts X X X X X X X X Extracts X X X X
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