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Issues:
- Whether the chit loss can be set off against other income of the assessee? Analysis: The case involves a departmental appeal for the assessment year 1989-90 concerning the allowance of chit loss to be set off against the assessee's other income. The assessee, an employee of a company, participated in chit funds to raise finance for purchasing a plot. The dividends received from the chit funds were disclosed as income from 'other sources'. The assessee also incurred a loss from a chit fund bid. The Income-tax Officer disallowed the chit loss claim, stating it was not utilized for income-earning purposes. The Deputy Commissioner (Appeals) allowed the deduction, considering the dividends received in earlier years. The revenue appealed against this decision. In the hearing, the Departmental Representative and the counsel for the assessee presented arguments. The Tribunal referred to relevant case laws to analyze the issue. It cited the decision in CIT v. Sri Purushottama Reddy, where the High Court held that income not assessable under any other head should be taxed under 'other sources'. Another case, CIT v. Kovur Textiles & Co., supported allowing chit bid losses as business losses if utilized for business purposes. However, the case of Soda Silicate & Chemical Works v. CIT held that chit fund contributions and receipts were not income or losses for tax purposes. The Tribunal noted conflicting decisions but followed the A.P. High Court's stance, allowing the chit loss deduction. Ultimately, the Tribunal dismissed the revenue's appeal, upholding the Deputy Commissioner (Appeals)'s decision to allow the chit loss deduction against the other income of the assessee. The judgment emphasized adherence to the A.P. High Court's decision and rejected the revenue's contention based on the Punjab & Haryana High Court's ruling.
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