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2013 (5) TMI 227 - AT - Income TaxBad debts in respect of chit groups - Held that:- The amount of loss incurred by the assessee has to be allowed on both running and terminated chits if irrecoverable if the prized chit amount has gone out of the hands of the assessee. Bad debts can be allowed to the extent of instalments defaulted by the prized subscribers and written off as bad debt in the books of the assessee. Accordingly, AO directed to decide the issue in the light of the order in assessee's own case dated 26.7.2004 wherein the Tribunal remitted the issue back to the file of the Assessing Officer to see whether the assessee made a claim of bad debt and written off in the books of account. Taxability of foreman dividend upheld - Held that:- The issue considered by the Madras High Court in CIT vs. Shriram Chits and Investments Ltd. [2012 (12) TMI 134 - MADRAS HIGH COURT] as relied upon by assessee is relating to allowability of contribution of the assessee as a foreman in the place of a defaulted subscriber as bad debt u/s. 36(1)(vii) or as a business loss u/s. 28(1). As concerned in assessee's present case with regard to taxability of foreman dividend received it was categorically held by the Tribunal in earlier years as there is no applicability of "mutuality" on this income. Being so, we are inclined to follow the earlier order of this Tribunal and dismiss this ground.
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