INCOME TAX OFFICER Vs. B NAGESWARA RAO
INCOME TAX APPELLATE TRIBUNAL
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1. This is a departmental appeal for assessment year 1989-90 directed against the order of the Deputy Commissioner of Income-tax (Appeals), A-Range, Hyderabad dated 22-3-1991. The question before this Tribunal is whether the chit loss is entitled to be set off against other income of the assessee. The facts leading the appeal are the following. -
(2.) The assessee is an employee of Midhani. He also used to contribute to certain chit funds for purpose of raising finance with the intention of buying a plot. The dividends received from the said chit funds were disclosed as income from other sources. The statement of computation of total income filed for assessment year 1989-90 was furnished to me. Under the head income from other sources, the assessee disclosed dividend income from two companies amounting to Rs. 70. He also showed under the head income from other sources, the bonus which he derived on the bid of chit conducted by Sree Ganapaneni Chits. He showed the bonus amount at Rs. 3,665. He also showed loss of Rs. 22,500 from Sree Ganapaneni Chits. The overall result under the head chit income was a loss of Rs. 18,835. Deducting Rs. 70 which he derived as dividend income from the loss figure, the ultimate figure which he had shown under the head income from other sources was a loss of Rs. 18,765. This was adjusted from out of his income from property as well as from salary and the gross total income was shown at Rs. 43,410.20 and after claiming deduction under sections 80C and 80CCA, the total income was shown at Rs. 14,240 in round figures. As already stated the assessee had furnished the computation of his income filed before the Income-tax Officer for assessment year 1989-90, the assessment was completed under section 143(3) by the assessment order dated 29-3-1990 on a total taxable income of Rs. 36,735. The Income-tax Officer stated that the assessee claimed loss on lifting chit from Sree Ganapaneni Chit Fund to the extent of Rs. 22,500. He further stated in his assessment order that this amount was paid to the assessee on 11-3-1989 as per the bank pass book produced. The Income-tax Officer stated that it was admitted by the authorised representative of the assessee that the assessee had not utilised any of the amounts for the purpose of earning the income. In view of this since the chit auction amount was not utilised for any income deriving purpose, the same is not set off against other incomes and so he disallowed Rs. 22,500 and added it to the income returned. Thus, he determined the taxable income in the hands of the assessee at Rs. 36,735. Aggrieved against the addition thus made. the assessee went on appeal before the Deputy Commissioner (Appeals).
Before the Deputy Commissioner (Appeals), it is claimed on behalf of the assessee that the dividends received from chit funds were disclosed as income from other sources in the earlier years. Therefore, when the assessee bid for the chit in the auction, the loss resulting therefrom was entitled to be claimed as deduction under other sources. The Income-tax Officer disallowed the claim on the ground that the amount realised was not utilised for any income deriving purpose. The Deputy Commissioner (Appeals) agreed with the contentions of the assessees authorised representative and held that having assessed the dividends received in the earlier years, it is quite fair that the assessee is allowed loss resulting from bidding for the chit in this year. Against the impugned Order of the Deputy Commissioner (Appeals), the present appeal is brought by the revenue.
(3.) I have heard Shri C. V. Surya Prakash Rao, the learned Departmental Representative and Shri. M. J. Narasimheswar, learned counsel for the assessee. There are three decisions in favour which are as follows.;
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