2010 (11) TMI 451

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..... conducting the business - The tax authorities at best can verify whether such discount/rebate was given or not - In this case the discount/rebate given by the assessee is not in dispute - Therefore, the rebate of 1 per cent given by the assessee to the subscribers for payment of subscription amount in time has to be necessarily considered as business expenditure u/s. 37(1) of the Act - Do not fin .....

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..... rises for consideration in both the appeals is with regard to disallowance of rebate said to be given to the subscribers of the chits. Shri Syed Jameeluddin, the learned representative for the assessee submitted that the assessee firm conducts chit business. In the course of the business transactions the assessee gave 1 per cent discount/rebate to the subscribers who pay the subscription one day i .....

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..... hly instalment. Therefore, it is not necessary for giving any discount/rebate to the subscribers for making the payment in time. According to the learned Departmental Representative, Chit Fund Act provides for every protection to the chit fund company to recover its money in time. Therefore, discount/rebate said to be given by the assessee cannot be said to be a business expenditure. 4. We hav .....

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..... interest and penalty for delayed payment, it cannot be said that the discount/rebate said to be given by the assessee is not for the business. In other words, mere enabling provision in the Chit Fund Act to levy penalty and interest for delayed payment of subscription cannot be a reason for coming to the conclusion that the discount/rebate is not necessary for conducting the business successfully .....

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..... y the assessee to the subscribers for payment of subscription amount in time has to be necessarily considered as business expenditure under s. 37(1) of the Act. We do not find any reason to disallow the claim of the assessee merely because there is an enabling provision in the Chit Fund Act for levy of penalty and interest for delayed payment of subscription. 6. In view of the above discussion .....

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