9911796707
TMI Blog2014 (2) TMI 456X X X X Extracts X X X X X X X X Extracts X X X X ..... total monthly subscription and instead, they pay the monthly subscription after deducting the amount of dividend earned. Members who have bid for the chit in auction have the liability to keep the contribution to the chit till the end of the chit period and the prized members get dividend in future months also - the payment to the subscribers of a chit towards dividend does not partake the charac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugh elaborate common grounds have been raised in these appeals, the only common issue involved in these appeals is with regard to cancellation of orders passed u/s. 201 and 201(1A) of the Income-tax Act, 1961 with reference to non-deduction of tax on chit dividend paid / distributed by the assessee, which according to the appellant/Revenue, represents the interest as per section 2(28A) and was wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt disbursed by a chit fund company to the members from the contribution cannot be treated as interest. As the payment made/disbursed to the subscribers/members is not interest, the question of deducting any tax at source from it would not arise. In the case of a chit fund, there is no borrowing of money nor any debt is incurred and as such the provisions of section 194A and 2(28A) of the Act are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th, the bidder takes the chit for an amount which is less than the face value of the chit. The difference between the face value and the auctioned value during every period is gross dividend generated in this period. This amount of dividend gets distributed among all the members (subscribers) equally. The members (subscribers) need not pay the total monthly subscription and instead, they pay the m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Funds (P)Ltd., Hyderabad, dated 31.10.2011, that the payment to the subscribers of a chit towards dividend does not partake the character of interest. In this view of the mat ter, we uphold the orders of the CIT(A) impugned in these appeals, in holding that the assessee is not liable to deduct TDS u/s. 194A of the Act and not liable for interest u/s. 201(1) and 201(1A) of the Act, and consequently ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
