Sri Chigurupati Varaprasad,, Visakhapatnam v. The ACIT, Circle-2(1)., Vijayawada

ITA 100/VIZ/2008 | 1999-2000
Pronouncement Date: 05-05-2010 | Result: Partly Allowed

Appeal Details

RSA Number 10025314 RSA 2008
Assessee PAN AAZPC9497Q
Bench Visakhapatnam
Appeal Number ITA 100/VIZ/2008
Duration Of Justice 2 year(s) 2 month(s) 29 day(s)
Appellant Sri Chigurupati Varaprasad,, Visakhapatnam
Respondent The ACIT, Circle-2(1)., Vijayawada
Appeal Type Income Tax Appeal
Pronouncement Date 05-05-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted DB
Tribunal Order Date 05-05-2010
Date Of Final Hearing 13-04-2010
Next Hearing Date 13-04-2010
Assessment Year 1999-2000
Appeal Filed On 06-02-2008
Judgment Text
ITA NO.100 & 101/VIZAG/2008 PAGE 1 OF 8 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV JUDICIAL MEMBER AND SHRI BR BASKARAN ACCOUNTANT MEMBER ITA NOS.100 & 101/VIZAG/2008 ASSESSMENT YEARS: 1999-2000 & 2000-01 CHIGURUPATI VARAPRASAD VIJAYAWADA VS. ACIT CIRCLE-2(1) VIJAYAWADA (APPELLANT) PAN NO: AAZPC 9497 Q (RESPONDENT) APPELLANT BY: SHRI G.V.N. HARI CA RESPONDENT BY: SHRI G.S.S. GOPINATH DR ORDER PER SHRI SUNIL KUMAR YADAV JUDICIAL MEMBER: THESE APPEALS ARE PREFERRED BY THE ASSESSEE AGAINS T THE RESPECTIVE ORDERS OF THE CIT (A) ON COMMON GROUNDS. FOR THE SA KE OF REFERENCE WE EXTRACT THE GROUNDS RAISED IN APPEAL NO.100 OF 2008 AS UNDER: 1. IN ASSUMING JURISDICTION BY ISSUING NOTICE U/S 148 BASED ON A AUDIT OBJECTION WHICH AMOUNTS TO CHANGE OF OPI NION. 2. IN ADDING GROSS CHIT LOSSES OF RS.1 68 286/- DUE TO BIDDING WITHOUT NETTING OF CHIT DIVIDENDS OF RS.4 5 5 864/- 3. IN DISALLOWING THE LOSS WITHOUT CONSIDERING THE FACT THAT THE APPELLANT HAS EXTENDED THE FUNDS FOR HIS BUSINE SS PURPOSE. 4. IN ASSESSING INCOMES (CHIT DIVIDENDS) DEHORS THE CHI T LOSSES WHICH THE ASSESSEE HAS NOT EARNED. 5. IN NOT GRANTING SUFFICIENT OPPORTUNITY TO BRING THE FACTS ON RECORD. 6. IN NOT TREATING THE INCOME/LOSS FROM CHITS AS SEPARA TE SOURCE OF INCOME ASSESSABLE UNDER INCOME FROM OTHER SOURCES. 2. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y PERUSED THE ORDERS OF THE LOWER AUTHORITIES. THE FACTS IN BRIEF BORNE OUT FROM THE RECORD ARE THAT THE RETURNS OF INCOME FILED BY THE ASSESSE E FOR THE IMPUGNED ASSESSMENT YEAR WERE PROPOSED U/S 143(1) OF THE I-T ACT. LATER ONE NOTICE ITA NO.100 & 101/VIZAG/2008 PAGE 2 OF 8 U/S 148(1) WAS ISSUED BY THE AO HAVING NOTED THAT T HE INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. CONSEQUENTLY THE ASS ESSMENT WAS FRAMED U/S 143(3) R.W.S. 147 OF THE I-T ACT. DURING THE CO URSE OF THE ASSESSMENT PROCEEDING THE AO NOTED THAT THE ASSESSEE CLAIMED A N AMOUNT OF RS.1 68 286/- IN A.Y 1999-2000 AND RS.5 14 417/- IN AY 2000-01 AS CHIT BID LOSS AND DEBITED THE SAME TO THE P&L A/C. THE AO HA VING RELIED UPON THE CBDT INSTRUCTION NO.1175 DATED 16-5-1978 AND THE JU DGMENT OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. KO VUR TEXTILES & CO (136 ITR 61) DISALLOWED THE CLAIM OF CHIT BID LOSS ON THE GR OUND THAT THE CHIT AMOUNT HAD NOT BEEN UTILIZED FOR THE BUSINESS PURPO SE OF THE ASSESSEE. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT (A) AND REITERATED ITS CONTENTION THAT ITS CLAIM SHOULD BE ALLOWED. THE CI T (A) HAS ALSO AFFORDED AN OPPORTUNITY TO THE ASSESSEE TO PLACE RELEVANT EV IDENCE TO PROVE THAT THE BID AMOUNTS WERE UTILIZED IN HIS BUSINESS. BUT THE ASSESSEE COULD NOT FILE ANY EVIDENCE BEFORE THE CIT (A) TO ESTABLISH THAT T HE BID AMOUNT WAS UTILIZED FOR THE PURPOSE OF BUSINESS. THE CIT ACCOR DINGLY CONFIRMED THE DISALLOWANCE AND DISMISSED THE APPEAL OF THE ASSESS EE IN BOTH THE ASSESSMENT YEARS. 3. NOW THE ASSESSEE HAS PREFERRED AN APPEAL BEFORE THE TRIBUNAL MAINLY ON TWO ISSUES. THE FIRST ISSUE RELATES TO THE VALID ITY OF THE OPENING OF REASSESSMENT AND IN THIS REGARD WE FIND THE ORIGINA L ASSESSMENT WAS FRAMED U/S 143(1) OF THE IT ACT. AS SUCH THERE WAS NO APPLICATION OF MIND OF THE AO TO THE CLAIMS RAISED BY THE ASSESSEE IN I TS RETURN OF INCOME. HE HAS REOPENED THE ASSESSMENT AFTER HAVING NOTED THAT THE INCOME CHARGEABLE TO THE TAX HAS ESCAPED THE ASSESSMENT. O UR ATTENTION WAS ALSO INVITED ON THE JUDGMENT OF THE HONBLE APEX COURT I N THE CASE OF ACIT VS. RAJESH JHAVERI STOCK BROKERS (291 ITR 500 (SC) IN S UPPORT OF THE CONTENTION THAT IF THE ASSESSMENT IS FRAMED U/S 143 (1) IT CAN BE REOPENED U/S 147 (3) OF THE ACT IF THE AO FORMS A BELIEF THA T THE INCOME CHARGEABLE TO TAX IS ESCAPED ASSESSMENT. LD COUNSEL FOR THE ASSES SEE DID NOT RAISE MUCH ARGUMENT ON THE VALIDITY OF THE REOPENING OF THE AS SESSMENT. WE HOWEVER ITA NO.100 & 101/VIZAG/2008 PAGE 3 OF 8 EXAMINED THE ISSUE AND ARE OF THE VIEW THAT THE REO PENING OF THE ASSESSMENT IS VALID IN THE LIGHT OF THE JUDGMENT OF THE APEX COURT IN THE CASE OF RAJESH JHAVERI STOCK BROKERS (SUPRA). 4. IN THE NEXT ISSUE IS THE MAIN ISSUE WHICH RELATES TO THE DISALLOWANCE OF CHIT BID LOSS. IN THIS REGARD LD COUNSEL FOR THE ASSESSEE HAS PLACED RELIANCE UPON THE FOLLOWING JUDGMENT OF THE JURISDI CTIONAL HIGH COURT AND THE ORDERS OF THE TRIBUNAL IN SUPPORT OF HIS CONTEN TION THAT HE IS ENTITLED FOR THE CHIT BID LOSS AS BUSINESS LOSS: I) JANATA AGENCIES (P) LTD. VS. ITO 1 ITD BOMBAY (321) II) ITO VS. MK EXPORTS BHIMAVARAM (ITA NO.196/VIZA G/2008) III) SHRI JAYA CHANDA SAGANTI VS. ITO ITA NO.604 T O 607/HYD/2003 RELIANCE WAS ALSO PLACED UPON THE FOLLOWING JUDGMEN TS OF THE MADRAS HIGH COURT: I) BILAHARI INVESTMENT (P) LTD. VS. CIT 294 ITR 353 (M AD) II) BILAHARI INVESTMENT (P) LTD. VS. CIT 288 ITR 39 (MA D) 5. THE LD COUNSEL FOR THE ASSESSEE FURTHER CONTENTE D THAT THE CHIT AMOUNT OR THE BID AMOUNT WAS UTILIZED FOR THE BUSIN ESS OF THE ASSESSEE AS SUCH WHATEVER LOSS IS SUFFERED ON ACCOUNT OF CHIT B ID LOSS HAS TO BE ALLOWED AS A BUSINESS LOSS. 6. LD DR ON THE OTHER HAND HAS SUBMITTED THAT HE HA S NO DISPUTE WITH REGARD TO THE ALLOWANCE OF THE CLAIM OF CHIT BID LO SS AS BUSINESS LOSS BUT IT SHOULD BE SUBJECT TO THE CONDITION THAT THE CHIT AM OUNT OR BID AMOUNT MUST HAVE BEEN UTILIZED FOR THE PURPOSE OF BUSINESS. THE AO WHILE DISALLOWING THE CLAIM OF THE ASSESSEE HAS PLACED RELIANCE UPON THE INSTRUCTIONS OF THE CBDT NO.1175 DATED 16/5/1978 THROUGH WHICH IT HAS BEEN C LARIFIED THAT MEMBERS WHO TAKE THE MONEY EARLIER FROM THE CHIT WILL NECES SARILY HAVE TO CONTRIBUTE ITA NO.100 & 101/VIZAG/2008 PAGE 4 OF 8 MORE WHICH MEANS THAT THEY INCUR LOSS WHICH IS NOTH ING BUT INTEREST PAID FOR MONEYS TAKEN IN ADVANCE. THE CLAIM OF SUCH A LOSS W ILL HAVE TO BE CONSIDERED FOR THE PURPOSE OF ALLOWANCE ACCORDING T O THE PROVISIONS OF THIS ACT DEPENDING UPON HOW THE MONEY WAS UTILIZED BY TH E SUBSCRIBER. DURING THE COURSE OF THE ASSESSMENT PROCEEDING THE ASSESSE E WAS SPECIFICALLY ASKED TO EXPLAIN AS TO HOW THE CHIT OR BID AMOUNT W AS UTILIZED BY THE ASSESSEE. THE ASSESSEE COULD NOT PLACE ANY EVIDENCE TO PROVE THAT THE BID AMOUNT WAS UTILIZED FOR THE BUSINESS PURPOSE. ACCOR DINGLY THE AO WAS FORCED TO DISALLOW THE CLAIM OF THE ASSESSEE AS IT WAS NOT ALLOWABLE EITHER U/S 36(1) (III) OR U/S 57 OF THE ACT. 7. BEFORE THE CIT (A) THE ASSESSEE WAS AFFORDED ONE MORE OPPORTUNITY TO FILE A CASH FLOW STATEMENT OR OTHER EVIDENCE TO PROVE THAT THE CHIT OR BID AMOUNT WAS UTILIZED FOR THE BUSINESS. PURPOSE. CIT (A) HAS DISCUSSED THE METHODOLOGY ADOPTED IN THE CHIT BUSINESS. BEFORE TH E CIT (A) THE COUNSEL FOR THE ASSESSEE SPECIFICALLY STATED THAT THE ASSES SEE IS NOT IN A POSITION TO ESTABLISH UTILIZATION OF THE FUND IN BUSINESS SINCE THE ASSESSEE CANNOT TAKE OUT THE ACCOUNTS FROM COMPUTER DUE TO PASSAGE OF TI ME. CIT (A) ACCORDINGLY FOLLOWING THE JUDGMENT OF THE JURISDICT IONAL HIGH COURT IN THE CASE OF KOVUR TEXTILES & COMPANY CONFIRMED THE DISA LLOWANCE MADE BY THE AO. 8. SIMILAR IS THE POSITION BEFORE THE TRIBUNAL AND THE ASSESSEE IS NOT ABLE TO PRODUCE ANY EVIDENCE TO PROVE THAT THE CHIT AMOUNT WAS UTILIZED FOR THE BUSINESS PURPOSE. 9. LD DR FURTHER INVITED OUR ATTENTION THAT THE JU DGMENT REFERRED TO BY THE ASSESSEE AND CONTENTED THAT THE JURISDICTIONAL HIGH COURT IN THE CASE OF KOVUR TEXTILES & COMPANY (SUPRA) HAS ALLOWED LOSS O N CHIT FUNDS AS A BUSINESS LOSS ONLY FOR THE REASONS THAT CHIT HAD BE EN ENTERED INTO BY THE ASSESSEE FOR THE PURPOSE OF FINDING FINANCE FOR BUS INESS AND THE CHIT AMOUNT BID HAVE BEEN UTILIZED FOR THE BUSINESS. IN CASE OF JANATA AGENCIES ITA NO.100 & 101/VIZAG/2008 PAGE 5 OF 8 (SUPRA) THE ISSUE WAS WHETHER THE LOSS INCURRED IN CHIT FUND TRANSACTIONS CAN BE ALLOWED AS A BAD DEBT AND IN THIS REGARD THE TRIBUNAL HAS HELD THAT THE LOSS INCURRED IN CHIT FUND CANNOT BE ALLOWED AS A BAD DEBT. IN THE CASE BILAHARI INVESTMENT (P) LTD. (SUPRA) THE ASSESSEE WAS INVOLVED IN CHIT ACTIVITIES AND IT WAS A BUSINESS ACTIVITY. THEREFOR E THE MADRAS HIGH COURT HAVE HELD THAT THE DIVIDEND TO BE TAXED IN THE YEAR OF ACCRUAL SO ALSO DISCOUNT HAS TO BE ALLOWED IN FULL IN THE YEAR OF A CCRUAL ITSELF. IN THE CASE OF MK EXPORTS (SUPRA) THE TRIBUNAL HAS FOLLOWED THE EA RLIER ORDER OF THE TRIBUNAL IN THE CASE OF JAYA CHAND SAGANTI (SUPRA) IN WHICH DOCTRINE OF MUTUALITY WAS APPLIED AND CHIT DIVIDEND WAS NOT HEL D TO THE INCOME OF THE ASSESSEE. IN THAT CASE THE ISSUE WAS WHETHER DIVIDEN D INCOME IS CHARGEABLE TO TAX OR NOT. IN ANY OF THE AFORESAID ORDER OR THE JUDGMENT THE IMPUGNED ISSUE I.E. ALLOWABILITY OF CHIT OR BID LOSS AS A BU SINESS LOSS WAS NOT INVOLVED. MORE SO NO DIRECT NEXUS BETWEEN THE CHIT AMOUNT AND THE BUSINESS ACTIVITY OF THE ASSESSEE WAS ESTABLISHED IN THE INSTANT CASE . THUS THE AFORESAID JUDGMENT CANNOT BE RELIED UPON IN SUPPORT OF THE CO NTENTION OF THE ASSESSEE. 10. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAR EFULLY PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND THE JUDGMENT RE FERRED TO BY THE PARTIES. DURING THE COURSE OF THE ASSESSMENT PROCEEDING THE ASSESSEE WAS SPECIFICALLY ASKED BY THE AO TO PLACE SOME EVIDENCE THAT THE CHIT OR BID AMOUNT WAS UTILIZED FOR THE PURPOSE OF THE BUSINESS BUT THE ASSESSEE WAS BADILY FAILED TO PRODUCE ANY EVIDENCE. THE AO HAS P LACED RELIANCE UPON THE CIRCULAR NO.1175 DATED 16-5-1978 ISSUED BY THE CBDT IN THIS REGARD AND MADE IT CLEAR THAT THE CLAIM OF SUCH LOSS WILL HAVE TO BE CONSIDERED FOR THE PURPOSE OF ALLOWANCE ACCORDING TO THE PROVISIONS OF THIS ACT DEPENDING UPON HOW THE MONEY WAS UTILIZED BY THE SUBSCRIBER. FOR T HE SAKE OF REFERENCE WE EXTRACT THE RELEVANT CONTENTS OF THE CIRCULAR AS UN DER: IN THE HANDS OF THE SUBSCRIBERS A FEW WILL BE RECE IVING MORE THAN WHAT THEY HAVE SUBSCRIBED. THIS EXTRA AMOUNT I S IN THE NATURE OF INTEREST AND AS SUCH TAXABLE. MEMBERS WHO TAKE THE ITA NO.100 & 101/VIZAG/2008 PAGE 6 OF 8 MONEY EARLIER FROM THE CHIT WILL NECESSARILY HAVE T O CONTRIBUTE MORE WHICH MEANS THAT THEY INCUR LOSS WHICH IS NOT HING BUT INTEREST PAID FOR MONEYS TAKEN IN ADVANCE. THE CLAI M OF SUCH A LOSS WILL HAVE TO BE CONSIDERED FOR THE PURPOSE OF ALLOWANCE ACCORDING TO THE PROVISIONS OF THIS ACT DEPENDING U PON HOW THE MONEY WAS UTILIZED BY THE SUBSCRIBER THROUGH THIS CIRCULAR THE BOARD HAS CLARIFIED THA T THE MEMBERS WHO TAKE THE MONEY EARLIER FROM THE CHIT WILL NECESSARILY HA VE TO CONTRIBUTE TO MORE WHICH MEANS THAT THEY INCUR LOSS WHICH IS NOTHING B UT INTEREST PAID FOR MONEYS TAKEN IN ADVANCE. THE CLAIM OF SUCH LOSS WIL L HAVE TO BE CONSIDERED IN ACCORDANCE WITH THE PROVISIONS OF THE ACT DEPEND ING UPON HOW THE MONEY WAS UTILIZED BY THE SUBSCRIBER. THE AO RELYIN G UPON THE CIRCULAR AND ALSO JUDGMENT OF THE JURISDICTIONAL HIGH COURT IN T HE CASE OF CIT VS. KOVUR TEXTILES & COMPANY 136 ITR 61 HAD DISALLOWED THE CL AIM OF THE ASSESSEE FOR THE REASON THAT THE ASSESSEE COULD NOT PROVE TH AT THE MONEY WAS UTILIZED FOR THE BUSINESS PURPOSE. SIMILAR WAS THE POSITION BEFORE THE CIT (A) AND ALSO BEFORE US. NOTHING IS PLACED ON RECORD TO ESTABLISH THAT THE BID OR CHIT AMOUNT WAS UTILIZED FOR THE PURPOSE OF BUSI NESS OF THE ASSESSEE. IN THE CASE OF CIT VS. KOVUR TEXTILES THE JURISDICTION AL HIGH COURT HAS ALLOWED THE CHIT LOSS AS A BUSINESS LOSS AFTER HAVING OBSER VED THAT CHIT AMOUNT WAS UTILIZED FOR THE BUSINESS OF THE ASSESSEE. 11. AS PER SEC.36 AND 37 ONLY THOSE EXPENSES ARE TO BE ALLOWED WHICH ARE INCURRED FOR THE BUSINESS PURPOSE. UNLESS THE A SSESSEE PROVES THAT THE CHIT AMOUNT WAS UTILIZED FOR THE BUSINESS PURPOSE THE CHIT LOSS OR BID BUSINESS LOSS CANNOT BE ALLOWED AS BUSINESS LOSS. T HE MADRAS HIGH COURT IN THE CASE OF BILAHARI INVESTMENT (SUPRA) HAS NOT EXA MINED THIS ASPECT. IN THOSE CASES ASSESSEE HAS SUBSCRIBED CHIT AS A BUSIN ESS ACTIVITY. IN THAT CASE THEIR LORDSHIPS OF THE MADRAS HIGH COURT HAD HELD T HAT THE DIVIDEND HAD TO BE TAXED IN THE YEAR OF ACCRUAL SO ALSO DISCOUNT HA D TO BE ALLOWED IN FULL IN THE YEAR OF ACCRUAL ITSELF. THE IMPUGNED QUESTION W AS NOT BEFORE THE MADRAS HIGH COURT. IN THOSE CASES THE CHIT AMOUNTS WAS UTILIZED IN THE BUSINESS ACTIVITY OF THE ASSESSEE. IN THE CASE OF MK EXPORTS (SUPRA) THE ITA NO.100 & 101/VIZAG/2008 PAGE 7 OF 8 TRIBUNAL HAS FOLLOWED THE EARLIER ORDER OF THE TRIB UNAL IN THE CASE OF JAYA CHAND SAGANTI VS. ITO (SUPRA) AND HAS HELD THAT THE CHIT DIVIDEND INCOME IS NOT ASSESSABLE TO INCOME TAX ON THE GROUND OF PR INCIPLES OF MUTUALITY. IN THE CASE OF JAYA CHAND SAGANTI THE TRIBUNAL THOUGH EXAMINED VARIOUS CASE LAWS BUT FINALLY CONCLUDED THAT IN THE CASE OF CHI T FUND BUSINESS DOCTRINES OR PRINCIPLES OF MUTUALITY HAS TO BE APPLIED AND SO CALLED DIVIDEND IS NOT ASSESSABLE TO TAX. SINCE THE PARAMETER OF THE CHIT FUND CANNOT BE SAID TO PROVE ANY PROFIT TO ITS SUBSCRIBERS AS A BODY AND T HE INCOME REPRESENTED BY PARTICIPATION OF SURPLUS IS GOVERNED BY PRINCIPLES OF MUTUALITY AND THUS THE SURPLUS ARISING OUT OF BIDDING OF CHIT BY ONE OF TH E SUBSCRIBER IS NOT ASSESSABLE TO THE INCOME TAX. IF THE PRINCIPLES OF MUTUALITY ARE TO BE APPLIED IN THE CASE OF CHIT ACTIVITIES THE BID LOSS WOULD NOT TO BE ALLOWED AS A BUSINESS LOSS. THUS THE JUDGMENTS REFERRED TO BY THE ASSESSEE ARE NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. IN THE INSTANT CASE THE ASSESSEE COULD NOT PLACE EVEN A SINGLE DOCUMENT TO ESTABLISH THAT THE CHIT AMOUNT WAS UTILIZED FOR THE PURPOSE OF BUSINESS. THUS THE CHIT OR BID LOSS CANNOT SAID TO BE BUSINESS LOSS OF THE ASSESSEE AND IS NOT ALLOWABLE EXPENDITURE EITHER U/S 36(1)(III) OR 57 OF THE ACT AS HELD BY T HE REVENUE. 12. THE ALTERNATIVE PLEA OF THE ASSESSEE THAT THE A SSESSEE HAS OFFERED THE DIVIDEND RECEIVED ON CHIT FUND AS AN INCOME AND THUS HE IS ENTITLED FOR A SET OFF OF LOSS SUFFERED IN CHIT FUND ACTIVITIES AR E ALSO EXAMINED AND WE ARE OF THE VIEW THAT IF THE CHIT FUND ACTIVITIES ARE CO NSIDERED TO BE THE ACTIVITIES OTHER THAN THE BUSINESS ACTIVITIES THE NET INCOME OR LOSS ACCRUED OUT OF CHIT FUND ACTIVITIES ARE TO BE SEPARATELY COMPUTED AND A SSESSED. UNDISPUTEDLY THE ASSESSEE HAS OFFERED THE DIVIDEND INCOME TO TAX . IN FOREGOING PARAS WE HAVE ALREADY HELD THAT CHIT AMOUNT WAS NOT UTILISED IN HIS BUSINESS ACTIVITIES MEANING THEREBY THE CHIT FUND ACTIVITIE S IS NOT A PART OF THE BUSINESS ACTIVITIES. WHATEVER INCOME DERIVED ON ACC OUNT OF DIVIDEND INCOME IS AN INCOME FROM OTHER SOURCES AND IN THAT CASE WH ATEVER EXPENDITURE ARE INCURRED TO EARN THE DIVIDEND INCOME IS LIABLE TO B E ALLOWED U/S 57(III) OF THE ACT. IN THESE CIRCUMSTANCES WE ARE OF THE VIEW THAT THE NETTING BETWEEN THE ITA NO.100 & 101/VIZAG/2008 PAGE 8 OF 8 CHIT FUND LOSS AND DIVIDEND INCOME IS TO BE ALLOWED AND THE RESULTANT WOULD BE ASSESSED TO TAX. ACCORDINGLY WE DIRECT THE AO TO ALLOW THE NETTING BETWEEN THE CHIT FUNDS AND THE CHIT DIVIDEND INCOME AND ASSESS THE RESULTANT IN ACCORDANCE WITH THE LAW. 13. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PART LY ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 5 TH MAY 2010. SD/- SD/- (B R BASKARAN) (SUNIL KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER PVV/SPS VISAKHAPATNAM DATE: 05-05-2010. COPY TO 1 SHRI CHIGURUPATI VARA PRASAD 16 KCP COLONY KAN URU VIJAYAWADA 2 THE ACIT CIRCLE-2(1) VIJAYAWADA 3 4 THE CIT(A) VIJAYAWADA THE CIT VIJAYAWADA 5 THE DR ITAT VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM