Can any 1 explain Sec 269SS (Mode of accepting certain loans ,deposits) & Repayment of the same in simple terms? (Pls dont extract the Section itself here.
18 July 2010
An assessee normally borrows money for his business needs and repays as per his convenience. Before the introduction of these sections what normally businessmen will do when they fall short of cash balance on hand (presumably because of suppression of sales and disproportionate investments out of black money) they will credit amounts in sundry parties name and bring cash balance. To curtail this practice, the law was amended any loan or deposit in excess of Rs.20000/- shall be only by account payee cheque or Demand Draft. (269SS). If it is otherwise then the credit will be disallowed and added to income. This is the essence of Sec. 269SS. Sec. 269T is with regard to repayment of deposits of any credits in the books of account in excess of Rs.20000/-. In such cases any repayment(even if it is Re.1/-) it should be by account payee cheque or DD.
So, some people started crediting amounts in cash in excess of Rs.20000/- and make entries of repayment within that year so it is not reflected in the balance sheet. This is called squaring up during the year.
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