TMI Blog2011 (12) TMI 633X X X X Extracts X X X X X X X X Extracts X X X X ..... cted against the order of the CIT(A)-II, Hyderabad dated 9.3.2011 for the assessment year 2004-05. 2. The Revenue raised the following grounds of appeal: 1. The order of the CIT(A) is contrary to law. The CIT(A) ought to have sustained the order u/s. 201 201(1A) of the Act. 2. The CIT(A) ought to have held that the dividend allowed to non prized subscribers by due drawal of the chits, p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d or interest as the case may be. 5. The CIT(A) did not consider, or attach any significance to the expression in respect of section 2(28A) refers to any moneys borrowed or debt incurred (including a deposit, a claim or similar right or obligation). Dividend being nothing but discounted amount foregone by prized subscriber on account of his drawal of chit, it is nothing but a debt incurred by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 44 of 2008 order dated 24.7.2009 wherein it was held that the amount 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, therefore, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contribution per head during that period. When the chit is auctioned every month, 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 (subsc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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