REQUIREMENT AS TO MODE OF 2[J2] [ACCEPTANCE, PAYMENT OR] REPAYMENT
IN CERTAIN CASES TO COUNTERACT EVASION OF TAX
3[J3] [269SS. Mode of
taking or accepting certain loans and deposits 4[J4] :-
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,
(a) The amount of such
loan or deposit or the aggregate amount of such loan and deposit; or
(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
(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 5[J5] [twenty] thousand rupees or more:
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,
(a) Government;
(b)
Any banking company, post office savings
bank or co-operative bank;
(c) Any corporation established by a Central,
State or Provincial Act;
(d) Any Government company as defined in section
617 of the Companies Act, 19566[J6] (1 of 1956);
(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 notify7[J7] in this behalf in the
Official Gazette:
8[J8] [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.]
Explanation.for the purposes of
this section,
9[J9] [(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;]
(ii) "Co-operative bank" shall have
the meaning assigned to it in Part V of the Banking Regulation Act, 1949 (10 of
1949);
(iii) "Loan or
deposit" means loan or deposit of money.]
1[J10] [269T. Mode of repayment of certain loans or
deposits:-
No branch of a banking
company or a co-operative bank and no other company or co-operative society and
no firm or other person shall repay any loan or deposit made with it otherwise
than by an account payee cheque or account payee bank
draft drawn in the name of the person who has made the loan or deposit if2[J11]
(a) The amount of the
loan or deposit together with the interest, if any, payable thereon, or
(b) The aggregate amount
of the loans or deposits held by such person with the branch of the banking
company or co-operative bank or, as the case may be, the other company or
co-operative society or the firm, or other person either in his own name or
jointly with any other person on the date of such repayment together with the
interest, if any, payable on such loans or deposits,
Is twenty thousand rupees
or more:
Provided that where the repayment is by a branch of a banking
company or co-operative bank, such repayment may also be made by crediting the
amount of such loan or deposit to the savings bank account or the current
account (if any) with such branch of the person to whom such loan or deposit
has to be repaid:
3[J12] [Provided
further that nothing contained in this section shall apply to repayment of any
loan or deposit taken or accepted from
(i) Government;
(ii) Any banking company, post office savings bank
or co-operative bank;
(iii) Any corporation established by a Central, State
or Provincial Act;
(iv) Any Government company as defined in section 617 of the
Companies Act, 1956 (1 of 1956);
(v) 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.]
Explanation.For the purposes of this section,
(i) "Banking
company" shall have the meaning assigned to it in clause (i) of the Explanation to section 269SS;
(ii) "Co-operative
bank" shall have the meaning assigned to it in Part V of the Banking
Regulation Act, 1949 (10 of 1949);
(iii) "Loan or
deposit" means any loan or deposit of money which is repayable after
notice or repayable after a period and, in the case of a person other than a
company, includes loan or deposit of any nature.]
DEPARTMENTAL
VIEW
1. Payment of interest of Rs. 10,000
or more will have to be made in the manner provided in section 269T. If the
amount of repayment after including the interest of Rs.
10,000 or more the provisions of this section would be attracted because the
interest accrued on the deposit and credited to the account periodically or
otherwise partakes the character of a deposit and as a result becomes a deposit
itself. [Circular No. 479 dated 16th January, 1987]
2. Where a 'kachcha arhatiya' sells goods belonging to an agriculturist the
sale proceeds thereof which remain with him cannot be regarded as a deposit
made by the agriculturist. Further where the 'kachcha
arhatiya', remits only a part of the sale proceeds to
the agriculturist the unremitted part of the sale
proceeds would also not assume the character of deposit and therefore the
repayment of such sale proceeds would not fall within the purview of section
269T. [Circular No. 556, dated 23rd February, 1990]
1[J13] [269TT. Mode of repayment of Special Bearer
Bonds, 19912[J14] :-
Notwithstanding anything
contained in any other law for the time being in force the amount payable on
redemption of Special Bearer Bonds, 1991, shall be paid only by an account
payee cheque or account payee bank draft drawn in the
name of the person to whom such payment is to be made.]]
[J1]Chapter XXB inserted by the Income-tax (Second Amendment) Act, 1981, w.e.f. 11-7-1981.
[J2]Inserted by the Finance Act, 1984, w.e.f. 1-4-1984.
[J3]Ibid.
[J4]See Circular No. 522, dated 18-8-1988. Section 269SS is constitutionally valid: Asstt Director of Inspection v Shanthi (A B) (2003) 255 ITR 258 (SC).
[J5]Substituted for "ten" by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989.
[J8]Inserted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989.
[J9]Substituted by the Finance Act, 1985, w.e.f. 1-4-1986. Prior to the substitution, clause (i) read as under:
"(i) "banking company" shall have the meaning assigned to it in clause (a) of the Explanation to sub-section (8) of section 40A;"
[J10]Substituted by the Finance Act, 2002, w.e.f. 1-6-2002. Prior to the substitution, section 269T,
as inserted by the Income-tax (Second Amendment) Act, 1981, w.e.f.
11-7-1981 and amended from time to time, read as under:
"269T.
Mode of repayment of certain deposits.(1) No company (including a banking
company), co-operative society or firm shall repay to any person any deposit
otherwise than by an account payee cheque or account
payee bank draft where the amount of the deposit, or where the amount of the
deposit is to be repaid together with any interest, the aggregate of the amount
of the deposit and such interest, is ten thousand rupees or more:
Provided
that where the repayment is by a banking company or co-operative bank, such
repayment may also be made by crediting the amount of such deposit to the
account (if any) with such company or bank of the person to whom such deposit
has to be repaid:
Provided
further that nothing in this sub-section shall apply to or in relation to the
repayment of any deposit on or after the date on which the Income-tax (Second
Amendment) Act, 1981, receives the assent of the President.
(2) No
branch of a banking company or a co-operative bank and no other company or
co-operative society and no firm or other person shall repay any deposit made with
it otherwise than by an account payee cheque or
account payee bank draft drawn in the name of the person who has made the
deposit if
(a) the amount of the deposit together with interest, if any,
payable thereon, or
(b)
the aggregate amount of the deposits held by such person with the branch of the
banking company or co-operative bank or, as the case may be, the other company
or co-operative society or the firm, either in his own name or jointly with any
other person on the date of such repayment together with the interest, if any,
payable on such deposits,
is twenty
thousand rupees or more:
Provided
that where the repayment is by a branch of a banking company or co-operative
bank, such repayment may also be made by crediting the amount of such deposit
to the savings bank account or the current account (if any) with such branch of
the person to whom such deposit has to be repaid:
Provided
further that nothing in this sub-section shall apply to or in relation to the
repayment of any deposit before the date on which the Income-tax (Second
Amendment) Act, 1981, receives the assent of the President.
Explanation.For the purposes of this section,
(i) "banking
company" shall have the meaning assigned to it in clause (i) of the Explanation to section 269SS;
(ia) "co-operative bank" shall have the meaning assigned to
it in Part V of the Banking Regulation Act, 1949 (10 of 1949);
(ii)
"deposit" means any deposit of money which
is repayable after notice or repayable after a period and, in the case of a person
other than a company, includes deposit of any nature."
Earlier, section 269T was amended by the Finance Act, 1984, w.e.f. 1-4-1984; Finance Act, 1985, w.e.f. 1-4-1986 and Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989.
[J11]See Circular Nos. 479, dated 16-1-1987; 522, dated 18-8-1988 and 556, dated 23-2-1990. Footnote of p. 1.980
[J12]Inserted by the Finance Act, 2003, w.r.e.f. 1-6-2002.
[J13]Inserted by the Income-tax (Second Amendment) Act, 1981, w.e.f. 19-9-1981.
[J14]See Circular No. 318, dated 1-1-1982.