COMMISSIONER OF INCOME TAX ANDHRA PRADESH Vs. KOVUR TEXTILES AND CO

JUDGEMENT

(1.) This reference is made at the instance of the Commissioner of Income-tax under s. 256(1) of the I.T. Act, 1961 (43 of 1961), for opinion of this court on the following question :

(2.) The assessee is a limited company. It had contributed to a "chit fund" known as Rajarajeswari Financiers for Rs. 25,000 and by September, 1969, had paid eleven instalments. Finally, the company did the chit for Rs. 20,000 on 20/06/1970. The company by that date had paid eleven instalments and had executed a promissory note for Rs. 14,000. In the further facts found, the company as per accounts of the chit fund had received Rs. 1,437 as discount money in the bids made by other contributors.

(3.) The company contributed to another "chit fund" for Rs. 5,000 with monthly instalment of Rs. 250 and paid ten instalments and bid for Rs. 4,480.