2012 (7) TMI 1089 - AT - Income Tax

Summary

Issues involved: Determination of whether membership fees and entrance fees collected by the assessee are capital receipts or revenue receipts for the purpose of taxation.

Summary:
The Appellate Tribunal ITAT Mumbai heard two appeals by the assessee Thane Bharat Sahakari Bank Ltd. against the orders of the Ld CIT (A), Thane. The assessee contended that the receipts collected at the time of admission to the membership of the Bank were one-time receipts credited to the capital account, thus constituting capital receipts and not income. The Assessing Officer taxed the membership and entrance fees as revenue receipts, considering them part of normal banking activity. The CIT (A) upheld this view without examining the nature of the amounts. The Tribunal noted discrepancies in the amounts collected compared to the bye-law requirements and remitted the issue to the AO for fresh examination. The Tribunal emphasized the need for a detailed assessment of the nature of the receipts to determine their classification as capital or revenue, setting aside the previous orders for reconsideration based on facts and law.

In conclusion, the appeals were allowed for statistical purposes, and the issue of the nature of the membership and entrance fees was remitted to the AO for further examination and clarification.