M/S. Shriram Chits (P) Ltd.,, Hyderabad vs Assessee on 19 March, 2013
11. The next ground (ground No. 4) is with regard to
upholding the taxability of foreman dividend at Rs. 8,44,39,492.
Brief facts of the issue are that during the assessment
proceedings, the Assessing Officer found that the above
referred dividend income on company's chits was claimed as
not taxable in view of the decision of Hon'ble Punjab and
Haryana High Court in the case of Soda Silicate and Chemical
Works (179 ITR 588). However, the Assessing Officer concluded
that the contributors to the chit were not contributors to the
mutual society. Besides, the profit arising as dividend on the
chit subscribed by the Foreman is not distributed among the
subscribers but among the share holders of the assessee
company. He further found that Department's contention had
been upheld by the Tribunal for Asst. Years 1999-2000, 2000-01
and 2001-02 as reported in 83 ITD 792, besides in the
assessee's own appeals for the A.Ys. 2002-03 to 2007-08. He
also referred to the decision of the Tribunal Delhi Bench in the
case of Sarvpriya Chits Pvt. Ltd. vs. CIT (60 ITD 674) wherein it
was held that in case of chit fund business, principle of
7 ITA No. 651/Hyd/2012
M/s. Shriram Chits (P) Ltd.