Mr. A is a member of Chit and has picked up his share of chit before its completion. He has used this money for business purposes. How do we account for loss on chit in our books and return. The period of chit is for 25 months and cover 3 financial year. 1) Can we account for loss at the end of the chit period in the last financial year or 2) We have to show it on yearly basis proportionately after adjusting the dividend of that period. The assessee is maintaining books mercantile basis.
Which of the above two method accepted as per income tax point of view for claiming chitty loss as business expenditure? Both are accepted as per income tax point of ( completed Contract method (1) and percentage of completion method(2))
Kindly clarify
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