2015 (7) TMI 689

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..... Apex Court, held that in the first place the amount paid by way of dividend cannot be construed as interest. It was further held that the dividend/discount cannot be mistaken for interest income in the hands of the subscribers and therefore, there has been no default under the provisions of Section 194A of the Act. Further Section 194A of the Act has no application to such dividends and therefore, it held that there is no obligation on the part of the assessee to make any deductions under Section 194A of the Act before such dividend is paid to its subscribers of the chit. The aforesaid Division Bench decision of the Delhi High Court squarely applies to the facts of the present case. Hence, we do not see any merit in the present appeal. Dec .....

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..... these payments, the assessee failed to deduct TDS amount on the sum earned as income by the customers. Under the scheme, the unsuccessful members in the auction chit will earn dividend and the successful bidders will be entitled to retain the face value till the stipulated time under the scheme. The Department authorities took the view that, the dividend partakes the character of interest and hence amount paid by the company/assessee to its members is interest and was liable for deduction of tax under the provisions of Sections 2(28A) and 194A of the Act. The assessee failed to do the same and therefore, it was treated as a defaulter under the provisions of Section 201 of the Act and was liable to pay interest under Section 201(1A) of the .....

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..... e Act need be made as definition of dividend contemplated under the Chit Fund Act should be adopted and not as per the Income-tax Act or the other law applicable? 7. We have heard the learned Counsel for the parties to the lis. 8. The Division Bench of the Delhi High Court had an occasion to consider the said issue in the case of CIT v. Sahib Chits (Delhi) (P.). Ltd. [2010] 328 ITR 342 (Delhi) . After setting out the statutory provisions viz., Sections 2(28A) and 194A of the Act and the provisions of the Interest Act, 1974 and relying on the various judgments of the Apex Court, held that in the first place the amount paid by way of dividend cannot be construed as interest. It was further held that the dividend/discount cannot be mist .....

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