Rukmini Sahakari Bank Ltd, Ahmednagar V. Assistant Commissioner of Income tax,

ITA 84/PUN/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 5793 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 3 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-05-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 08-05-2019
• Assessment Year: 2013-2014
• Appeal Filed On: 11-01-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Capital asset; Bonafide belief; Capital receipt

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI VIKAS AWASTHY, JM . / ITA NO.84/PUN/2017 / ASSESSMENT YEAR : 2013-14 SHRI RUKMINI SAHAKARI BANK LTD., A/P SHRIGONDA DAUND JAMKHED ROAD, TALUKA : SHRIGONDA, AHMEDNAGAR. PAN : AAAAS5122Q. . / APPELLANT V/S THE ASST.COMMISSIONER OF INCOME-TAX, CIRCLE, AHMEDNAGAR. . / RESPONDENT ASSESSEE BY : SHRI ABHAY AVCHAT. REVENUE BY : SHRI RAJESH GAWALI. / ORDER PER VIKAS AWASTHY, JM : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDE R OF COMMISSIONER OF INCOME TAX (APPEALS) 2, PUNE DATED 19.09.2016 FO R THE ASSESSMENT YEAR 2013-14. 2. THE SOLITARY GROUND RAISED BY THE ASSESSEE IN APPEAL IS : THE LEARNED ASSISTANT COMMISSIONER OF INCOME TAX, A HMEDNAGAR, CIRCLE, AHMEDNAGAR HAS ERRED IN MAKING ADDITION OF RS.2,71,535/- ON ACCOUNT OF NOMINAL MEMBERSHIP FEE, ENTRANCE FEE ETC ., BEING DIRECTLY CREDITED TO RESERVE FUND ACCOUNT AND THE COMMISSIONE R OF INCOME TAX (APPEALS) 2 HAS ERRED IN CONFIRMING THE SAME. / DATE OF HEARING : 08.05.2019 / DATE OF PRONOUNCEMENT: 09.05.2019. 2 ITA NO.84/PUN/2017 3. SHRI ABHAY AVCHAT APPEARING ON BEHALF OF ASSESSEE SU BMITTED THAT THE ASSESSEE IS A CO-OPERATIVE SOCIETY ENGAGED IN BANKING BUSINESS. IN SCRUTINY ASSESSMENT PROCEEDINGS, THE ASS ESSING OFFICER (AO) INTER-ALIA MADE ADDITION OF RS.2,71,335/- IN RESPECT OF : 1. NOMINAL MEMBERSHIP FEE RS.1,35,640/- 2. ENTRANCE FEE RS.400/- 3. BUILDING FUND CONTRIBUTIONS FROM MEMBERS RS.1,35,295/- THE LD.A.R. SUBMITTED THAT THE ASSESSEE HAS NOT ROUTED T HE AFORESAID AMOUNTS THROUGH PROFIT AND LOSS ACCOUNT AS THE SAME W ERE NOT IN THE FORM OF INCOME BUT ARE CAPITAL IN NATURE. THEY WERE DIRECT LY CREDITED TO THE RESERVE FUND ACCOUNT. THE LD.A.R. POINTED THAT IN THE PAST, THE ASSESSEE HAS BEEN CONSISTENTLY FOLLOWING SAME METHOD OF ACCOUNTING ENTRANCE FEE, NOMINAL MEMBERSHIP FEE AND BUILDIN G FUND CONTRIBUTIONS RECEIVED FROM MEMBERS. THE DEPARTMEN T NEVER RAISED ANY OBJECTION AND NO ADDITIONS WERE MADE IN THE P AST. THE AO MADE ADDITION OF THE AFORESAID AMOUNTS AS THE AUTHORIZED REPRESENTATIVE OF ASSESSEE AGREED FOR ADDITION. THE CONC ESSION WAS GIVEN BY A.R. OF THE ASSESSEE UNDER BONAFIDE BELIEF THAT THE AFORESAID RECEIPTS ARE REVENUE IN NATURE. 4. ON THE OTHER HAND SHRI RAJESH GAWALI REPRESENTING T HE DEPARTMENT VEHEMENTLY SUPPORTED THE FINDINGS OF CIT(A) IN CONFIRMING THE ADDITION. THE LD.D.R. SUBMITTED THAT THE AMOUN TS COLLECTED BY ASSESSEE FROM ITS MEMBERS IN THE FORM OF ENT RANCE FEE, NOMINAL MEMBERSHIP FEE AND BUILDING FUND CONTRIBUTIONS ARE REVENUE RECEIPTS. THE ASSESSEE WITHOUT REFLECTING THE SAID AMOUNTS IN 3 ITA NO.84/PUN/2017 PROFIT AND LOSS ACCOUNT, HAS DIRECTLY CREDITED THE AMOUN TS IN RESERVE FUND ACCOUNT. FURTHER, AUTHORIZED REPRESENTATIVE OF THE ASSESSEE DURING ASSESSMENT PROCEEDINGS HAD AGREED FOR THE ADDITIO N OF AFORESAID AMOUNTS. THEREFORE, THE ASSESSEE IS ESTOPPED B Y ITS OWN ACT AND CONDUCTED TO CHALLENGE THE ADDITION BEFORE THE APPELLATE FORUM. 5. WE HAVE HEARD THE SUBMISSIONS MADE BY REPRESENTATIV ES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF AUTHORITIES BELOW. UNDISPUTEDLY, THE AUTHORISED REPRESENTATIVE OF THE ASSES SEE BEFORE THE ASSESSING AUTHORITY HAD GIVEN CONCESSION FOR THE AD DITION OF THE AFORESAID AMOUNTS. THEREAFTER, THE ASSESSEE FILED APPEAL BE FORE CIT(A) AND ASSAILED ADDITION IN RESPECT OF ENTRANCE FEE, NOMINAL MEMBERSHIP FEE AND BUILDING FUND CONTRIBUTIONS. THE CIT(A) REJECTED THE PLEA OF THE ASSESSEE PRIMARILY ON THE GROUND THAT AD DITION HAS BEEN MADE ON THE BASIS OF CONCESSION GIVEN BY A.R. OF THE ASSESSEE. 6. WE ARE OF CONSIDERED VIEW THAT WHERE CONCESSION IS GIV EN BY THE AUTHORISED REPRESENTATIVE OF ASSESSEE BEFORE THE AO UN DER MISTAKEN BELIEF OR ERRONEOUSLY, THE ASSESSEES RIGHT TO ASSAIL SUCH ADDITION ON MERITS BEFORE THE APPELLATE FORUM WOULD NOT IMPINGE [CIT VS . DAYARAM VASUDEO 193 ITR 602 (BOM)]. IN THE INSTANT CASE WE OBSERVE THAT THE AMOUNTS OF ADDITION ARE VERY SMALL. A PERUSAL OF ASSESSMENT ORDER SHOWS THAT INITIALLY THE A.R. OF ASSESSEE RESISTED TH E ADDITION BUT LATER ON AGREED FOR THE SAME. UNDER THE GIVEN SET OF FACTS, THE CONCESSION BY A.R. WOULD NOT DEBAR THE ASSESSEE TO IMPUG N ADDITION BEFORE THE TRIBUNAL. 4 ITA NO.84/PUN/2017 7. THE ASSESSEE HAS RECEIVED FOLLOWING AMOUNTS I.E., ENTRAN CE FEE RS,400/-, NOMINAL MEMBERSHIP FEE 135,640/- AND BUILDIN G FUND CONTRIBUTIONS RS.1,35,295/- FROM ITS MEMBERS AND HAS DIRE CTLY CREDITED THE AMOUNTS TO RESERVE FUND ACCOUNT WITHOUT REFLECTING THE SAME IN PROFIT AND LOSS ACCOUNT. THE CONTENTION OF ASSE SSEE THAT THESE AMOUNTS ARE IN THE NATURE OF CAPITAL RECEIPTS. IN SO FAR AS THE AMOUNTS RECEIVED UNDER THE HEAD BUILDING FUND CONTRIBUTIO NS CONCERNED, THE NOMENCLATURE ITSELF SUGGESTS THAT THE AM OUNTS RECEIVED BY THE ASSESSEE FROM ITS MEMBERS ARE FOR THE P URPOSE OF CONSTRUCTING / ACQUIRING CAPITAL ASSET. THEREFORE, THE C ONTRIBUTIONS RECEIVED BY THE ASSESSEE FROM ITS MEMBERS UNDER THE H EAD BUILDING FUND CONTRIBUTIONS ARE CAPITAL IN NATURE. 8. AS REGARD THE AMOUNTS RECEIVED UNDER THE OTHER TW O HEADS NAMELY, ENTRANCE FEE AND NOMINAL MEMBERSHIP FEE, THE L D.A.R. HAS FILED A COPY OF PRUDENTIAL NORMS ON CAPITAL ADEQUACY, CIRCU LAR DATED 01.08.2009 ISSUED BY RESERVE BANK OF INDIA AND EXTRACT OF ASSESSEES BYE-LAWS. A PERUSAL OF THE ABOVE DOCUMENTS SHOW THAT T HERE IS REFERENCE OF ACCOUNTING TREATMENT TO BE GIVEN TO NOMINA L MEMBERS FEE COLLECTED. THESE DOCUMENTS HAVE BEEN PLACED ON RECO RD BY THE ASSESSEE FOR THE FIRST TIME BEFORE TRIBUNAL. THE RECEIPT OF ENTRANCE FEE AND NOMINAL MEMBERSHIP FEE BY ASSESSEE FROM THE MEM BERS IS PERENNIAL. THEREFORE, WE DEEM IT APPROPRIATE TO RESTORE THIS ISSUE BACK TO THE FILE OF AO TO ASCERTAIN THE NATURE OF RECEIPTS IN THE LIGHT BYE-LAWS OF THE ASSESSEE AND MASTER CIRCULAR OF R.B.I. ON CAPITAL ADEQUACY (SUPRA). WHILE RE-EXAMINING THESE ISSUES THE AO SHALL 5 ITA NO.84/PUN/2017 GRANT REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE , IN ACCORDANCE WITH LAW. 9. IN THE RESULT, APPEAL OF ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON THURSDAY, THE 09 TH DAY OF MAY, 2019. SD/- SD/- (R.S. SYAL) (VIKA S AWASTHY ) VICE PRESIDENT JUDICIAL MEMB ER PUNE; DATED : 09 TH MAY, 2019. YAMINI !'#$%&%# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. 4. 5 6. CIT(A)-2, PUNE. PR. CIT-1, PUNE. '#$ %%&',&', / DR, ITAT, A PUNE; $,-./ GUARD FILE. / BY ORDER //TRUE COPY // /01%2&3 / SR. PRIVATE SECRETARY &', / ITAT, PUNE.