https://www.taxtmi.com/caselaws?id=3369 Chit dividend is taxable on accrual under the mercantile system, because the right to receive it arises when the chit is auctioned and the statutory scheme does not permit deferral until the chit closes; the completed contract method is therefore inapplicable for postponing assessment. Chit discount loss is deductible in full in the year it crystallises, since the liability to forego the discount arises when the subscriber becomes the prized subscriber and it is not deferred expenditure or a benefit to be amortised over the remaining chit period. The governing principle is that both income and loss in chit transactions are determined on accrual. en-us Mon, 19 Jun 2006 00:00:00 +0530 Tue, 29 Jul 2008 13:11:00 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=3369 Chit dividend is taxable on accrual under the mercantile system, because the right to receive it arises when the chit is auctioned and the statutory scheme does not permit deferral until the chit closes; the completed contract method is therefore inapplicable for postponing assessment. Chit discount loss is deductible in full in the year it crystallises, since the liability to forego the discount arises when the subscriber becomes the prized subscriber and it is not deferred expenditure or a benefit to be amortised over the remaining chit period. The governing principle is that both income and loss in chit transactions are determined on accrual. Case-Laws Income Tax Mon, 19 Jun 2006 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=3369