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2015 (10) TMI 64 - AT - Income TaxDisallowance on account of non refundable deposit received - whether the amount of deduction is liable to be taxed as income of the assessee as per provision of section 41? - Held that:- As decided in CIT vs. Ramala Sahkari Chini Mills Ltd. [2005 (3) TMI 82 - ALLAHABAD High Court] the word “may” in the bye-laws had to be construed as “shall” and the board was bound to allot shares to the members in relation to the deposits, after full repayment to the Government and the financial institutions. The existence of the other features such as transferability of the deposit to another member and the provision for refund of the deposited amount to the member in case of cessation of membership or to his legal heirs in case of death indicated that the deposited amount could not be treated as money belonging to the assessee-society. The payment of interest at a specified rate from year to year was consistent only with the fact that the deposited amount still belonged to the members. And the fact that the deposited amounts were credited to the individual accounts of the members corroborated the circumstance that the deposits belonged to the members. The amounts deducted from the cane price towards the non-refundable deposits were not trading receipts of the assessee. Thus in the present case non-refundable deposit received by the assessee is not revenue receipts, therefore, not exigible to tax. Accordingly, the addition confirmed by the ld. CIT(A) is deleted - Decided in favour of the assessee.
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