Can chit fund Loss be debited in PL account by the company. Is it admissible expenses?? if yes, mention the section
CA Rashi Agrawal
(Chartered Accountant)
(102 Points)
Replied 14 August 2013
If any person organises Chit Funds and for this purposes brings the members together, administers the Chit Funds and thereby earns commission, etc., profits made by such a person is income from business and if for any special reason there is loss then it is business loss. Normally there should be no loss to the organiser unless he takes over the liability of some of the members. In such a case the unrecovered amount due from such members will have to be treated as bad debts and the test to be adopted in usual business assessment for the allowance of bad debts would be applicable in such cases also.
CAclubindia
