M/S. Margadarsi Chit Fund Ltd.,, Hyd. vs The Addl. Commr. Of I.T.
2025 Latest Caselaw 6843 Tel

Telangana High Court

M/S. Margadarsi Chit Fund Ltd.,, Hyd. vs The Addl. Commr. Of I.T. on 2 December, 2025

Author: P.Sam Koshy

Bench: P.Sam Koshy

IN THE HIGH COURT FOR THE STATE OF TELANGANA
                AT HYDERABAD

     THE HONOURABLE SRI JUSTICE P.SAM KOSHY
                     AND
           THE HONOURABLE SRI JUSTICE
            SUDDALA CHALAPATHI RAO

                     W.P.No. 28440 OF 2009

                            02.12.2025
Between:

M/s Margadarsi Chit Find Limited,
Rep. by its Managing Director,
Smt.Ch.Shailaja,
Hyderabad.
                                                    ...Petitioner
                               AND

The Additional Commissioner of Income Tax,
Range 16, Ayakar Bhavan, Basheerbagh,
Hyderabad.

                                                  ...Respondent

ORDER:

(per Hon'ble Sri Justice P.Sam Koshy)

Heard Mr. Kailash Nath P.S.S, learned counsel representing

Mr. T.Bala Mohan Reddy, learned counsel for the petitioner and

Mr. K.Sudhakar Reddy, learned Senior Standing Counsel for the

Income Tax Department for the respondent. Perused the record.

2. The present is a writ petition assailing the show cause notice

issued by the department dated 14.12.2009 under Section 271(1)(c)

of the Income Tax Act, 1961 seeking explanation as to why penalty

should not be imposed pursuant to the assessment order dated

14.12.2009 so far as the assessment year 2007-2008 is concerned.

3. The assessment order was already under challenge before

this Court in W.P.No.28441 of 2009 which stood partly allowed

vide order passed today i.e., 02.12.2025. The order of assessment

so far as the chit contribution to the subscribers being treated as

interest and dividend being set aside holding that it would not be

treated as interest and dividend in terms of the judgment of the

Delhi High Court in the case of COMMISSIONER OF INCOME

TAX VS. SAHIB CHITS (DELHI) (P) LTD., 1 and also two of

the writ petitions decided by this High Court in W.P.No.26553 of

2005 decided on 29.01.2024 and W.P.No.1562 of 2008 decided on

26.06.2025, the order of the Assessing Officer to that extent stands

set aside.

ITA No.44 OF 2008 DATED 24.07.2009 of High Court of Delhi at New Delhi

4. In view of W.P.No.28441 of 2009 being partly allowed and

the major portion of the order getting setting aside, we do not find

any good ground in sustaining the show cause notice in the given

facts any further. Nonetheless, the right of the Department would

stands reserved to initiate appropriate proceedings so far as the

other issues are concerned, if at all if such a situation still survives.

5. The present writ petition, accordingly, stands disposed of

with the aforesaid liberty. There shall be no order as to costs.

Consequently, miscellaneous petitions pending, if any, shall

stand closed.

_____________________ P.SAM KOSHY, J

_________________________________ SUDDALA CHALAPATHI RAO, J 02.12.2025 Lrkm/Vpt