The Madras High Court In The Case Of Bilahari Investments Pvt. Ltd.,Vs. C.i.t. Reported In 288 Itr 39(Mad), Took The Same View And This View Ofthe Madras High C v. Bilahari Investment Pvt. Ltd., Reported In [2008] 299 Itr1

THE HON’BLE THE CHIEF JUSTICE SRI KALYAN JYOTI SENGUPTA AND THE HON’BLE Ms. JUSTICE G. ROHINI I.T.T.A.Nos.64 & 22 of 2013 DATED: 9.7.2013 Between:Commissioner of Income Tax (TDS),Hyderabad. … AppellantAndM/s.Vijay Bhargavi Chit FundLtd., …RespondentHyderabad.…Respondent THE HON’BLE THE CHIEF JUSTICE SRI KALYAN JYOTI SENGUPTA AND THE HON’BLE Ms. JUSTICE G. ROHINI I.T.T.A.Nos.64 of 2013 & 22 of 2013 Common Judgment:(per the Hon’ble the Chief Justice Sri Kalyan JyotiSengupta) We have heard the learned counsel for the appellant and gone throughthe impugned judgment and order of the learned Tribunal in relation to theassessment year 2004-05. I.T.T.A. No. 64 of 2013 is sought to be preferred on the followingsuggested question of law: 1) Whether on the facts and in the circumstances of the case, the Appellate Tribunal was justified in holdingthat the discount paid by the Foreman to the subscribers ina chit fund transaction does not partake the character ofinterest within the meaning of Section 2(28A) of the IncomeTax Act and hence the assessee is not under obligation tocause deduction of tax at source under Section 194A of theIncome Tax Act ? It appears from the impugned judgment and order of the Tribunal thaton an identical issue, 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)Pvt. Ltd., in I.T.A. No. 44 of 2008, it was held that the amount disbursed by achit fund company to the members from the contribution cannot be treated asinterest as payment disbursed to the subscribers is not interest. Therefore, the question of deducting any tax at source from the chit fund company wouldnot arise. In the case of a chit fund company, there is no borrowing of moneynor any debt is incurred and as such, the provisions of Sections 194 and2(28-A) of the Income Tax Act do not attract. The Madras High Court in the case of Bilahari Investments Pvt. Ltd.,vs. C.I.T. reported in 288 ITR 39(Mad), took the same view and this view ofthe Madras High Court was confirmed by the Supreme Court in the case ofC.I.T. vs. Bilahari Investment Pvt. Ltd., reported in [2008] 299 ITR1. Therefore, we are of the view that the question raised herein issquarely covered by the aforesaid decisions. Hence, we are not going toadmit the appeal to unsettle the settled issue. I.T.T. A. No. 64 of 2013 isaccordingly dismissed. In so far as the other appeal, namely, I.T.T.A. No. 22 of 2013 isconcerned, in view of the dismissal of I.T.T.A. No. 64 of 2013, we are of theview that this appeal admitted by us on 19.6.2013 is also required to bedismissed, as the issue raised therein is identical. The appeals are accordingly dismissed. ___________________ K.J. SENGUPTA, CJ _________________ G. ROHINI, J 09.07.2013pnb