Veershaiv Cooperative Bank Ltd. Vs ACIT (ITAT Pune)
The Income Tax Appellate Tribunal (ITAT) Pune, in the case of Veershaiv Cooperative Bank Ltd. vs. ACIT, addressed the classification of one-time nominal membership and share transfer fees as either capital or revenue receipts. The issue pertained to the Assessment Year 2017–18, during which the Cooperative Bank credited fees amounting to ₹17,54,900 directly to its Reserve Fund, classifying them as capital receipts. The Assessing Officer, however, considered these fees to be revenue in nature and made corresponding additions, which were later upheld by the Commissioner of Income Tax (Appeals). This led the assessee to appeal to the ITAT.
The core of the dispute revolved around whether B-Class fees, Member Share Entrance fees, and Admission fees received once from members constituted revenue or capital receipts. The assessee argued that such receipts had consistently been treated as capital and credited to the Reserve Fund per the bank’s bylaws and cooperative regulations. Supporting its stance, the assessee referred to prior ITAT rulings in its own cases for earlier years (AYs 2009–10, 2012–13, 2013–14, and 2014–15), where similar fees were held to be capital in nature. The Tribunal took into account these past rulings and also referred to the Supreme Court’s observations in Peerless General Finance & Investment Co. Ltd., which noted that subscriptions and membership fees typically qualify as capital receipts.
