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2009 (7) TMI 75 - HC - Income TaxSurplus on Chit Funds or Discount on Chit Funds – scope of section 2(28A) as Interest - deduction of TDS u/s 194A – Non deduction of TDS, assessee in default u/s 201 – Held that - a chit agreement clearly does not fall within the ambit of “money lending” or “debt incurred” and, therefore, will not be covered by the definition of “interest” as contemplated by the Act - Assessing Officer proceeds on the basis as if the contribution given by the subscribers/members every month amounts to deposit with the chit fund company, i.e. the assessee, and on that basis he proceeds as if the assessee is working as a banker and, therefore, the amount of bid disbursed equally among members is to be treated as ‘interest’ payable on money borrowed. This approach is fallacious on the face of it - the amount disbursed to the members from their contribution cannot be treated as ‘interest’ – No TDS u/s 194A is not deducible
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