269ss

The section speaks about the amount and  does not speak about anything like kgs., pounds, nos. , property etc. etc... 

It is criminal offence  to melt or destroy currency of any country and the law of land will take its own course.

269SS will be attracted in such case as the loan taken is in an amount.  Again I would like to add here (as you have added too much to define money ..........) that amount does not mean Rs. only. It emans Dollars, Pounds, Yens,........etc.. which can be expressed in terms of  an amount. 

In this case repayment will, again, be governed by Section 269T.

First of all, I respost the query in an easy readable format. 

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If i accept a loan in kind [some precious metal not authorized as currency of the country ] then whether it gets covered under sec 269ss?? 

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According  to me it shouldn't be as it's supported by the various case laws one of them is Asstt. Cit vs Ruchika Chemicals & Investment (P) Ltd. Clause (iii) of Explanation to section 269SS clarifies the purport of "loan or deposit" as loan or deposit of money. 

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When this Explanation is read with the main section it brings to light that only the transactions of loans or deposits which are covered within the ambit of this section are that of "money'.

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If the loan or deposit transaction is not that of money, then it would go out of the purview of section 269SS and resultantly no penalty under section 271D can be imposed. 

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The term 'money' has not been defined in this section. It was fairly admitted by-both the sides that the term 'money' is not defined anywhere in the Income Tax Act, 1961. No authority is required to be cited for the proposition that if a term or an expression is not defined in the Act, then the meaning to be assigned to it is as is understood in common parlance. 

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The Hon'ble Supreme Court had the occasion to consider the meaning of term "money" in Kasturi and Sons Ltd. (supra), in the context of section 41(2) and it was laid down as under : "It is obvious that the legislature has deliberately used the word 'moneys'. Wherever the legislature intended to refer to payment in kind other than cash or money, it has taken care to provide specifically therefore. 

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For example, in section 41(1) itself, the legislature has used the expression, "whether in cash or in any other manner whatsoever". There are several sections in the Act which refer to benefits other than cash through the value thereof can be ascertained in terms of cash or benefits which are convertible in cash (see sections 17, 23(3), 28(iv), 40A(2)(a), 93(4)(c)), 

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For example, section 28(iv) speaks of the value of any benefit or perquisite, whether convertible into money or not, arising from business or profession When the legislature has instead of using any word such as 'benefit' used only the term 'money', it can refer only to money as understood in the ordinary common parlance." 

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The Shorter Oxford English Dictionary defines "money" as a current coin; metal stamped in pieces as a medium of exchange and measure of value, b. Hence, anything serving the same purposes as coin, late ME. c. in mod. use applied indifferently to coin and to such promissory documents representing coin (esp, bank-notes) as are currently accepted as a medium of exchange". 
The Law Lexicon by Sh. P. Ramantha Iyer defines 'money' as under : Money (moneta)-That metal, be it gold or silver, which receives authority by the prince's impress to be current; for as wax is not a seal without a print, so metal is not money without impression. (Co. Ltd. 207). Money is said to be the common measure of all commerce, through the world, and consists principally of three parts, the material whereof it is made, being silver or gold; the denomination or intrinsic value, given by the king, by virtue of his prerogative; and the King's stamp thereon. (1 Hale's Hist. P.H. 188). 

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The definition of the term 'money' in these dictionaries and as laid down by Apex Court is a pointer to the fact that 'money' means 'cash'. When clause (iii) of the Explanation is read with main section, the natural coroliary that follows is that the restriction contained in section 269SS is against accepting loan or deposit in cash alone. 

The other modes of loans or deposits including creation of credit through transfer entries are outside the scope of section 269SS in the same way above transaction will be outside the perview of sec 269ss........ 

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Q2:::if in the above trans. only if i accept currency of any country as loan & melt it & sell it the market [hidden transaction of melting & selling it] & then repay in cash .269ss will be attracted....

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Suppose i hv taken some silver bar [250 gms] from a person on repayment date I hv to return to him silver only [that too 250 gms] & some charges[quantity oly like 10 gms for 4 months etc] for keeping or using that silver. 

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Now 1st ques is that whether it attracts 269ss or not? 2nd ques is whether it will be treated as valid transactions? 

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3rd whether it wil be like some benami trans/diversion of income to kiths & kins?.

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I congratulate to post such a good query at caclubindia to break some barriers to the explanations which are generally accepted and/or assumed. 

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I treat the query as a "documentary film" on Money. 

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The intention of the lestilation to insert this section is to stop cash transactions in the name of loans which were generally resorted by the tax evaders.

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During the surveys and search in the past ( till this section was not inserted ), many assessees used to explain before the income tax department that money lying with them is in the form of laon which they have accepted from others. 

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That is why in u/s Section 269SS and 269T any amount of loan or deposit of Rs.20,000/- or more is required to be dealt through banking channel. The language itself is clear not to include other transactions which are not pertaining to money.

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It is crystal clear that transactions with bank are made in term of rupees and/or foreign currency only.

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Due to the various development in commercial transactions, now-a-days; bank give loans on Gold also.

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The loans in kind are not directly covered under the provisions of section 269SS.

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The section reads as under : 

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No person, after the 30th June, 1984 ..........otherwise than account payee cheque or account payee draft if, -

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a. the amount of such loan or deposit or the aggregate amount of such loan and deposit; or 

b. ......

c........

is Twenty Thousand or more:

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The things taken on loan in kind; can never be covered when such a plain language of Rs.20,000 or more is used in the section. 

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The moment a loan reaches or exceeds Rs.20,000/- the section is applicable. 

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There may be wide fluctuations in the prices of gold or silver everyday (even every short span of time ). It means a gold of some grams available at  Rs.19,500/- in the Morning would not be covered and the same grams of gold of Rs.20,000/- would be covered in the Evening if prices goes up !

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Many times typothetical questions are raised by the querist and ultimately they confuse without focusing on the material which is readily available. 

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It is good to be eager to learn more and more about the subject. But without having a commentary on the subject; it would be difficult to understand the heart of the subject.

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I can't limit my opinion for a particular query.  I always have a broad view of the query keeping in mind where it should go ultimately.

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Regarding second  query I agree with CA Paras Bafna. 

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In nutshell, we should not try to break the provisions of the law in a whimsical manner. 

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Follow what law wants from the  assessees to follow

rather than assessees try to find out ways not to follow.

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Thankyou sir for the information

Good Reply by various experts

Very Nice reply in very Simple Way by Surendra Sir,

Thanks for making it easy to understand.

As requested by one member, I am posting full text of Section 269SS : 

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No person shall, after the 30th day of June, 1984, take or accept from any other person (hereafter in this section referred to as the depositor) any loan or deposit otherwise than by an account payee cheque or account payee bank draft if, - 

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(a) The amount of such loan or deposit or the aggregate amount of such loan and deposit; or 

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(b) On the date of taking or accepting such loan or deposit, any loan or deposit taken or accepted earlier by such person from the depositor is remaining unpaid (whether repayment has fallen due or not), the amount or the aggregate amount remaining unpaid; or 

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(c) The amount or the aggregate amount referred to in clause (a) together with the amount or the aggregate amount referred to in clause (b), is twenty thousand rupees or more : 

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Provided that the provisions of this section shall not apply to any loan or deposit taken or accepted from, or any loan or deposit taken or accepted by, - 
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(a) Government; 

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(b) Any banking company, post office savings bank or co-operative bank;

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(c) Any corporation established by a Central, State or Provincial Act; 
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(d) Any Government company as defined in section 617 of the Companies Act, 1956 (1 of 1956); 

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(e) Such other institution, association or body or class of institutions, associations or bodies which the Central Government may, for reasons to be recorded in writing, notify in this behalf in the Official Gazette : 

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Provided further that the provisions of this section shall not apply to any loan or deposit where the person from whom the loan or deposit is taken or accepted and the person by whom the loan or deposit is taken or accepted are both having agricultural income and neither of them has any income chargeable to tax under this Act. 
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Explanation : For the purposes of this section, - (i) "Banking company" means a company to which the Banking Regulation Act, 1949 (10 of 1949) applies and includes any bank or banking institution referred to in section 51 of that Act; 
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(ii) "Co-operative bank" shall have the meaning assigned to it in Part V of the Banking Regulation Act, 1949 (10 of 1949); 
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(iii) "Loan or deposit" means loan or deposit of money.
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( Humour ) 

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Disclaimer : 

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The suffix SS should not be misconstrued as abbreviation of Sneha Sunshine. 

How a precious metal bar be deposited thru an A/C payee instrument u/s 269SS. Jewellers are regularly depositing & giving jewellary / metal bars to & from gold smiths & common persons without any tax implication. So such long explantion is not reqd.

main to SSS hoon...

Originally posted by : CA SURENDRA KUMAR RAKHECHA
	( Humour )  . Disclaimer :  The suffix SS should not be misconstrued as abbreviation of Sneha Sunshine.

The suffix SS can  be well construed in  e. x..p...a....n.....d......e.......d form as   

 " Surendra Sir" . 

(For Sneha -Section 269 SSS  is not going to  be inserted  as this is the  sunset year for the Income Tax Act. )

Sun Set  itself  can be abbreviated as  SS.