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Issues:
1. Addition of capital loss due to chit fund transactions for the assessment year 1986-87. Analysis: The appeal and cross-objection in this case relate to the assessment year 1986-87 and involve the addition of Rs. 12,322 as capital loss by the Income Tax Officer (ITO) due to the difference between the contribution made to and the prize money received from a chit fund. The assessee, a registered firm, subscribed to a chit with a gross value of Rs. one lac in January 1982. The firm received a chit prize of Rs. 68,520 in September 1983, after paying a total of Rs. 80,882 in instalments. The prize money was utilized for business purposes, and the difference of Rs. 12,322 was debited to the profit & loss account, which was disallowed by the ITO. Upon appeal, the Commissioner of Income Tax (Appeals) accepted the assessee's claim and allowed the amount of Rs. 12,322. The Revenue challenged this decision before the Tribunal, where the Departmental Representative acknowledged that the issue was covered by a previous Tribunal decision but sought to keep the issue alive. The Tribunal considered the facts and submissions, including the previous decision, and upheld the CIT(A)'s order, emphasizing that the funds received from the chit fund were used for business purposes, making the loss deductible under relevant provisions of the Income Tax Act. Additionally, the Tribunal referenced a High Court decision where a similar claim for business loss due to chit fund transactions was allowed, further supporting the conclusion reached in the present case. Ultimately, both the Revenue's appeal and the assessee's cross-objection were dismissed, affirming the allowance of the capital loss in question.
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