High Court Of Punjab & Haryana
New Suraj Financiers & Chit Fund Co. (P) Ltd. vs. CIT
Section 4
Asst. Year 1972-73
Gokal Chand Mital & S.S. Sodhi, JJ.
IT Ref. No. 53 of 1982
19th July, 1989
Counsel Appeared
Mahajan, Advocate, for the Assessee : L.K. Sood, Advocate, for the Revenue
S. SODHI, J.:
The matter here pertains to two questions referred for the opinion of this Court the first of which stands covered by our earlier decision in IT Ref. No. 36 of 1981 (New Suraj Financiers and Chit Fund Co. Pvt. Ltd. vs. CIT (1989) 179 ITR 476) decided on March 14,1989.
2. The question read as under:
“Whether, on the facts and circumstances of the case, when income from property has been separately assessed and no loan-in cash has been advanced by the assessee to New Suraj Transport Co. (P.) Ltd. and only transfer entries has been passed whereby New Suraj Transport Co. (P.) Ltd., has been debited by the assessee with Rs. 1,29,450 representing the sale consideration of the property in question sold as per sale deed dated April 25, 1974, Rs. 15,534 assessed under the head ‘Interest’ could be legally assessed as income of the assessee ?”
3. In view of our judgment in New Suraj Financiers and Chit Fund Co. Pvt. Ltd.’s case (supra), this question is answered in the negative, in favour of the assessee. The other question posed is in the following terms : “Whether, on the facts and in the circumstances of the case, the amount of Rs. 6,32,408 received as interest was chargeable to -tax as the income of the assessee-company for the asst. yr. 197273 ?”
4. To explain the factual background giving rise to this question, the assessee was running two chit funds, one known as “Premium Deposit Scheme II” and the other “Premium Deposit Scheme III”. The broad features of these schemes were that subscribers had to pay Rs. 500 and Rs. 400, respectively, which amount was to be paid back to them on the expiry of the period of the scheme along with a fixed amount as interest thereon. The other way of becoming a subscriber was payment of interest of Rs. 150 and Rs. 100, respectively, under these schemes. During the currency of the schemes, a kind of lottery was held every month and the successful subscriber was paid a lump sum in addition to what he would be entitled to at the end of the period of the scheme. The question arose as to whether these amounts of Rs. 150 and Rs. 100, respectively, that were paid under the schemes to become subscribers thereof, were to be treated as income accruing to the assessee in the assessment year in which they were paid or was it to be chargeable to income-tax spread over the duration of the entire period of the scheme. It is in these circumstances that the question posed came to be referred for the opinion of this Court, the sum mentioned therein being the amount received by the assessee as interest under the schemes, i.e., Rs. 150 and Rs. 100 per subscriber, respectively.
6. No exception can be taken to the view taken by the Tribunal that the amount in question must be held to be chargeable to tax as income of the assessee-company during the asst. yr. 1972-73. The important point to note is that the amount of interest, namely, Rs. 150 or Rs. 100, as the case may be, was payable at the very beginning to enable the subscriber to participate in the chit fund scheme. According to the scheme, the subscriber had no option but to pay the whole amount at the very beginning. In other words, a subscriber was legally bound to make payment at particular time and the assessee had a corresponding legal right to receive it at that time. The time of its accrual was thus fixed. No occasion was thus provided, in these circumstances, for postponing the accrual of such income to the assessee. This being so, this question has clearly to be answered in the affirmative, in favour of the Revenue and against the assessee.
This reference is disposed of accordingly. There will, however, be no order as to costs.
[Citation :181 ITR 44]
