Capital raise by cash
This query is : Resolved
10 March 2013
Can we Started a business With Capital raise by Cash????
Cash A/c Dr. 20 lakh
to Capital A/c 20 lakh
(during the year)
it cash collected by relatives as a loan(no records in books)
n can repay in 2nd & 3rd year by withdrawing cash from capital
Capital/Drawing A/c Dr.
to Cash A/c
thanks to take interest in query
Cash A/c Dr. 20 lakh
to Capital A/c 20 lakh
(during the year)
it cash collected by relatives as a loan(no records in books)
n can repay in 2nd & 3rd year by withdrawing cash from capital
Capital/Drawing A/c Dr.
to Cash A/c
thanks to take interest in query
10 March 2013
the repayment you are proposing is in nutshell, buy back of shares, and is governed by Section 77A, 77AA and 77B of the Companies Act,1956.
Please be guided by the stipulations made therein.
Please be guided by the stipulations made therein.
10 March 2013
there is a proprietor business
not company
not company
10 March 2013
Yes you can do it since it is Sole Proprietorship Business. But there is one problem if during the assessment you are asked to show the source of fund of Rs 20 Lacs, how will you show this.
So in my view show this amount as loan taken from relatives and then repay them later.
So in my view show this amount as loan taken from relatives and then repay them later.
10 March 2013
but we can not take loan in cash exceeding 20000
it means for 20 lakh
we have to show 100 person
which is not practically possible
it means for 20 lakh
we have to show 100 person
which is not practically possible
10 March 2013
Gopal one question here. What is the source of the cash? is it out of the economy money/ black money?
10 March 2013
Loan given by relatives on Sunday for safe custody and for use in business. No contravention of section 269SS takes place- ITO v. T.R. Rangarajan [2005] 279 ITR 587 (Mad.)
But in my view it is better to take the amount through cheque.
But in my view it is better to take the amount through cheque.
10 March 2013
thanks sanjay ji
but its a genuine transaction
if a person want to start a business with 20 lacs but he have only 4-5 lacs in hand
and balance he received from relatives in cash
he don't know about the cheque ,, Cash
and started business
and after two year he has to file return and maintain accounts
n u r the consultant
then what will u do in case
but its a genuine transaction
if a person want to start a business with 20 lacs but he have only 4-5 lacs in hand
and balance he received from relatives in cash
he don't know about the cheque ,, Cash
and started business
and after two year he has to file return and maintain accounts
n u r the consultant
then what will u do in case
10 March 2013
nikhil
its received from relatives
we don't know relatives has black or white
its received from relatives
we don't know relatives has black or white
10 March 2013
Gopal,
Sanjay ji has already given u a case law in favor of raising the funds in cash. Though i haven't personally went through the details of this case law, but in case the facts apply to your situation, you may rely on the same. As a matter of precaution please to forward reference check before taking any decision.
Further, if the source of relatives' money is not colored, it should be possible to enter into some sort of documentation to evidence receipt of money from the relatives. This shall make your argument much more believable.
In case the money is bad/black, better refrain from entering into such transaction.
Sanjay ji has already given u a case law in favor of raising the funds in cash. Though i haven't personally went through the details of this case law, but in case the facts apply to your situation, you may rely on the same. As a matter of precaution please to forward reference check before taking any decision.
Further, if the source of relatives' money is not colored, it should be possible to enter into some sort of documentation to evidence receipt of money from the relatives. This shall make your argument much more believable.
In case the money is bad/black, better refrain from entering into such transaction.
10 March 2013
Agree with Nikhil. The onus of showing Source of Funds will rest upon the assessee.
11 March 2013
thanks a lot
11 March 2013
thanks for well explaination by NIKHIL JI
THANKS,
THANKS,
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