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TMI Blog2011 (9) TMI 1068X X X X Extracts X X X X X X X X Extracts X X X X ..... ng that the payment of dividend to the subscribers of a chit towards dividend does not partake the character of interest and accordingly the assessee is not liable to deduct TDS u/s. 194A of the Act and not liable for interest u/s. 201(1) and 201(1A) of the Act. X X X X Extracts X X X X X X X X Extracts X X X X ..... consideration in the case of Marga Soochi Chit Pvt. Ltd., in I.T.A. No. 995/Bang/2008 and also in the case of Sahib Chits (Delhi) (P) Ltd., before the Delhi High Court in I.T.A. 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 subscriber ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e chit. The members of the chit participate in this auction for the pooled money during that interval. The bid amount is divided by the number of members thus determining the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hit Funds Ltd. and M/s. Vinutna Chit Funds (P) Ltd., in ITA Nos. 804 & 805/Hyd/2011 order dated 11th August, 2011 deciding the issue in favour of the assessee. 6. In view of the above findings of the various courts, we are of the opinion that the CIT(A) is justified in holding that the payment of dividend to the subscribers of a chit towards dividend does not partake the character of interest and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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