Applicability of sec 269ss

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

27 August 2012 Dear experts pl clarify the following,
One of the client has accepted the cash hand loan, from her father and return the same by cash in the same asst. year, father is also assess to tax

In the above situation will the provisions of sec.269SS apply or not?
Pl clarify

CA Ghanshyam Joshi

CA Ghanshyam Joshi (Expert)
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28 August 2012 Will be covered under section 269SS for accepting and 269T for repayment if loan amount is twenty thousand or more

27.1 MODE OF TAKING OR ACCEPTING CERTAIN LOANS AND DEPOSITS
[SECTION 269SS]
Section 269SS provides that no person shall accept any loan of Rs.20,000 or more from any
other person except by account payee cheque or account payee bank draft. This requirement
also applies in cases where on the date of taking or accepting a loan or deposit from a person,
any earlier loan or deposit taken or accepted from the same person and remaining unpaid on
that date, is twenty thousand rupees or more. The requirement also applies if the aggregate
amount of such earlier loan or deposit and to amount of loan or deposit proposed to be taken
or accepted from that person is twenty thousand rupees or more.
The requirement will not however, apply to loan or deposit taken or accepted from, or any loan
or deposit taken from or accepted by Government, any banking company, post office saving
bank or any cooperative bank, any corporation established by a Central, State or Provincial
Act: or any Government company as defined in section 617 of the Companies Act, 1956. The
provisions of this section will also not apply to any loan or deposit taken, or accepted from, or
any loan or deposit taken from or accepted by, any institution, association or body which the
Central Government may, for reasons to be recorded in writing in this behalf notify in the
Official Gazette. This requirement will not apply to those cases where the persons involved in
the transaction derive income only from agriculture or where neither of them has any income
chargeable to tax under the Act.
The expression “loan or deposit” in this section will mean any loan or deposit of money.

Section 271D provides for penalty for failure to comply with the provisions of section
269SS – If a person takes or accepts any loan or deposit in contravention of the provisions of
section 269SS, he shall be liable to pay, by way of penalty, a sum of equal to the amount of
the loan or deposit taken or accepted. Such penalty shall be imposed by the Joint
Commissioner.

Querist : Anonymous

Querist : Anonymous (Querist)

28 August 2012 Sir, thank you very much for your detailed reply, sir, in that case shall I treat this as gift from father to daughter and gift from daughter to father to avoid the provisions of sec 269SS?

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CA Ghanshyam Joshi

CA Ghanshyam Joshi (Expert)
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29 August 2012 better to take help of your local CA. Explain him the transactions in detail with documentary evidences and take advice.