Section269T- Conversion of loan into share application money

3774 views 8 replies

If a loan given by a Co.A ( by account payee cheque) to Co. B, is converted into shares of Co. B ( on default by co. B to repay within stipulated time period of 2 years), will it attract the rigour of Section 269T ? Will it be considered as payment otherwise than by an account payee cheque in terms of said section ?

Replies (8)
As far as my view is concerned 269T should be interpreted literally and thus adjustment entries will come under the purview of the said section....
Appreciate that money had come by an account payee cheque to co. B. Only change in character of payment. Shares are being allotted to the same person. Similar clauses of conversion are there in the Loan Agreements of Financial Institutions.
i understood that and kept my view...guess we need more suggestions
section 269T mandates amount to be repaid by account payee cheque only . However , if reasonable cause is there , no penalty under section 269T can be levied . In my opinion , there is reasonable cause here.
pls clear my views in e-tds thanks
Hi Dinesh, Please have a look at the link hope this would clear your doubts for e-tds https://www.incometaxindia.gov.in/archive/TDSreturns.pdf
Section 269T applies in case of repayment of loans and advances . In this case there is no repayment and only conversion of loan into share app. money , therefore penalty will not beimposed .
Section 269 is vey much applicable in this case but if it has been paid by Account payee cheque then there is no any problem only auditor is supposed to Declare in his tax audit report. Furhter in this case section 2(22) e is also mapplicable , if transaction taken place in between closely held companies. Furhter award of loan and its converson in to Share capital are two diffrent things. Loana amount can be converted in to share capital .

Leave a Reply

Your are not logged in . Please login to post replies

Click here to Login / Register  

Company
06 July 2026
C.A./CA Inter OR pursuing C.A./GST/Accounts/Audit/IT - Head

Arvindkumar Maniar & Co.

Rajkot

CA

View Details
Company
ARTICLESHIP 24 June 2026
ARTICLE ASSISTANT

BHUPINDER SHAH AND COMPANY

New Delhi

CA Inter

View Details
Company
06 July 2026
Accountant

Agarwal Anoop and Associates

Noida

CA Final

View Details
Company
22 June 2026
Finance Manager- Chartered Accountant

Triveni Turbine Limited

Bengaluru

CA

View Details
Company
Featured 24 June 2026
HEAD - AUDIT AND TAXATION

A R JADHAV AND ASSOCIATES

Mumbai

CA Inter

View Details
Company
22 June 2026
Accountant

Global Image Technologies Private Limited

New Delhi

MBA

View Details
Company
ARTICLESHIP 20 June 2026
Articleship

RB KESHRI & CO

Mumbai

B.Com

View Details
Company
Featured 15 June 2026
Senior Auditor

N. Dhawan & Co

New Delhi

CA Inter

View Details