Sec. 269 SS and TT

Dear Hardik,

269ss and 269T are clauses of Tax audit and are applicable when loan is taken in excess of Rs.20000/- and for repayment of the said loan.

I appreciate the answer given by Bhavin Bhadra, Articled Clerk which is based on his practical experience.  Articled clerks should try to give answer. If  something wrong is (t)here ;  it would be rectified here. 

Sec. 269SS : Acceptance of loans of Rs.20,000 or more otherwise than account payee cheque or draft.

Sec. 269T : Repayment of loans of Rs.20,000 or more otherwise than account payee cheque or draft.

These provisions are applicable to all without only restrictions to tax audit cases. 

In Tax audits; these are specifically to be reported. 

Tutorials  :

Once the amount of loan reaches or crosses Rs.20,000; no further loan should either be taken or repaid otherwise than by account payee cheque or bank draft.

For example; one can take loan of Rs.19,999/- in cash (Not Rs.20,000/-). The next amount he cannot take otherwise than the modes described above. 

Similarly; if the amount of loan crosses Rs.19,999/- the repayment must be made only through account payee cheque or draft.

If one does not follow the provisions of these sections-

A PENALTY EQUAL TO THE AMOUNT OF THE  LOAN IS LEVIABLE  

by the  Income-Tax Department.

Exception :

If loan is repaid in cash to the Bank, Govt., Govt. Co., and SMCs. etc.; then these provisions are not applicable. 

Sir,

Provisions of sections 269SS and TT are applicable for Gold Loan..?

In gold loan repayment is it necessary to comply with such provision.?

Please advice.

Originally posted by : Senthil Kumar
	Sir,   Provisions of sections 269SS and TT are applicable for Gold Loan..? In gold loan repayment is it necessary to comply with such provision.?   Please advice.

The query is not clear. Do you mean GOLD taken as loan ?  

Gold loans means loans taken against Gold. The provisions of  269T are applicable to loan or deposit of any nature.

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Gold Loan can be  repaid in cash to a Bank - Second Proviso of Section 269T

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Sometimes, the account is settled by selling the gold to the lender and balance amount is received/paid.

In my opinion, adjustment of existing loan is tantamount to repayment of loan.

In my personal view, it may be allowed in such cases where gold is a capital asset of the borrower

or there is no alternative available to THE BORROWER to repay the loan. 

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Expert opinions are required on this issue. 

In addition to Surender Sir's reply,

The MP High Court in the case of CIT Vs Indore Plastics Pvt Ltd (2003) 262 ITR 163, held that section 269SS lack application where receipt is neither a deposit nor a loan. Mere adjustment of amount which owed to a company will not fall within the meaning of section 269SS of the IT Act, 1961.

Is sec 269T and 269SS apply to secured loan or unsecured loans?

69ss and 269T are clauses of Tax audit and are applicable when loan is taken in excess of Rs. 20000/- and for repayment of the said loan.

Dear Members,

I need your advice on two issues

1. What is the consequences upon a person giving loan. Does a person would be liable to any penalty if he give loan forgetting the consequences being faced by the person accepting that loan.

2. Companies like muthooth finance give loan in HARD CASH against pledge of gold upto 10 Lakhs. How do these companies and the person taking loan escape the provision of Sec 269SS & 269T.

Thank You

Please reply
slgabhi @ gmail.com

please anyone tell me,

where to show loan given to directors in our 3cd report ?.....

If deposit is accepted by way of book entries. For example, XYZ company accepts deposit from ABC company by debiting the current account of ABC company in the books of XYZ company. Is this contravention of Section 269SS? Please reply urgently.

Dear Members, I need your advice on two issues 1. What is the consequences upon a person giving loan. Does a person would be liable to any penalty if he give loan forgetting the consequences being faced by the person accepting that loan. 2. Companies like muthooth finance give loan in HARD CASH against pledge of gold upto 10 Lakhs. How do these companies and the person taking loan escape the provision of Sec 269SS & 269T. Thank You

 

Section 269SS an 269T is about acceptance and repayment of loan. In my opinion since NBFC is not a bank, the above sections will be applicable to the person receiving the loan.