1980 (5) TMI 50

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....llowance of loss of Rs. 9,500 which according to the assessee was deductible while computing his income. The ITO held that the amount contributed towards chits had no connection with the business carried on by the assessee and, therefore, the loss suffered on that account could not be said to be of revenue nature. The assessee went in appeal to the AAC, who uphold the view taken by the ITO. 2. ....

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....ompany in order to raise the loan for the purchase of another truck. In support of the condition imposed by the Finance Company a certificate dt. 31st Oct., 1979 of that Company was filed. It was explained that the assessee was a man of small means and he could not take chits of Rs. 5,000 per month with a view to affect savings or win prizes and the transaction was entered into solely for business....

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....secured in respect of its loan of Rs. 76,914 due to the security of the truck, the assessee's contributions to the chit fund of the Finance Co were absolutely unsecured and that the assessee's move turned out to be a sound one for his business as a subsequently disaster struck the Finance Co. 3. Neither the ITO nor the AAC have appreciated the assessee's submissions in entirety and in correct p....

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....d that later on New Suraj Financiers & Chit Fund Co came to grief. The assessee in his letter to the ITO in para 3 had also clearly brought out the fact that he was feeling insecure about his investment with the Chit Fund of the Finance Co. Viewing in this factual background and considering the authorities cited on behalf of the assessee, I have no doubt that the loss of Rs. 9,500 suffered by the ....