TMI Blog2013 (5) TMI 227X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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. - ITA No. 651/Hyd/20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... With regard to the bad debts in respect of chit groups, the assessee explained that irrecoverable amounts of subscription in respect of terminated chit groups outstanding as on 31.3.2009 were written off during the A.Y. 2009-10. For bad debts in respect of running chit groups, the assessee explained that irrecoverable amounts of subscription which were in arrears for 6 months as on 31.3.2009 were written off. The assessee claimed that future instalments of subscription payable by the prized subscribers were not written off. It claimed that these bad debts have been claimed in terms of the method adopted by the assessee from assessment year 1998-99 onwards. 5. Citing from the order of the Tribunal dated 26.7.2004 (page 50 51, para 6.6 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion of the Tribunal, therefore, bad debts relatable to terminated chits are directed to be allowed in respect of the A.Y. 2008 09 also. 8. The CIT(A) observed, with regard to allowability of bad debts relatable to running chits is concerned, that it is seen from Tribunal order that vide par 6.6 (xx) and 6. 6 (xxi) , the Tribunal had set aside the matter for computing bad debts so relatable. Following the decision of Tribunal in assessee's case in the earlier years on this issue, as also continuing the stance taken in assessment year 2005-06 to 2008-09, he directed the Assessing Officer to compute bad debts relatable to running chits as per the directions contained in the said order of Tribunal. Thus, the CIT(A) allowed claim of the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder of the Tribunal for A.Ys. 1995- 96, 1997-98, 1998-99 and 1999-2000 in ITA No.500/Hyd/1999 and 506/Hyd/1999 (1995-96), 294/Hyd/2010 and 327/Hyd/ 2001 (1997-98), 471/Hyd/2002(1998-99), 1049/Hyd/2002 (1999-2000) 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. Thus on similar direction we remit the issue back to the file of the Assessing Officer to re-examine the issue in the light of the order of earlier years i.e., 1995-96, 1997-98, 1998-99 and 1999-2000 (supra). This ground of the assessee is allowed for statistical purposes. 11. The next ground (ground No. 4) is with re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court. He, therefore, reiterated the arguments submitted on this issue in the earlier years. 13. On appeal the CIT(A) followed the earlier order of the Tribunal in assessee's own case reported in 83 ITD 792 (Hyd) for A.Y. 1991-92 to 1994-95 wherein the Tribunal observed as follows:- "The only issue to be decided was whether the principle of mutuality was applicable to the assessee, which was a chit fund company. Admittedly, the assessee was a commercial entity formed to derive profits and gains from the business of chits. It is a settled proposition of law that the principle of mutuality is not applicable to commercial organisations formed with an object of earning profit of commercial nature. Under consideration was the case of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s made out of itself. Thus, the principles of mutuality cannot on this count also be applied to chit fund companies. The assessee was a business concern and its aim was to make profits and, thus, the principles of mutuality could not be applied to it. The issue on hand, was covered by the judgment of the jurisdictional High Court in the case of Kovur Textiles (supra), inasmuch as the assessee had earned income for the purposes of its business and to be utilised only for the purposes of its business. The issue was squarely covered in favour of the revenue by the decision of the jurisdictional High Court in the case of Purushotham Reddy (supra) as the only plank on which. exemption was claimed in that case, was mutuality and nothing else. It ..... X X X X Extracts X X X X X X X X Extracts X X X X
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