Chit Loss allow under Income Tax Act or not?

Yes chit loss is allowed

If you contribute the chit out of the business funds for the purpose of the business the loss incurred on bidding or on closure of the chit (in case the money received is lesser than the money you paid) the said loss can be treated as business loss.

AP High Court has accepted the loss as a business loss.

However it remains to be seen whether ABC Ltd a real estate company has been authorised for Chit under MoA and AoA.

If such activity is sort of debt MF then any gain or loss may be STCG or LTCG. Lots depend on Chit Funds' modus operandi.

Yes... I agreed to Mr Ramakrishnan view...

@ Mr Pankaj Arora.,

Yes... Chit loss can be allowed.