TaxTMI 
TaxTMI 
2013 (5) TMI 583
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the Act for violation of the provisions of sec. 269T of the Act. 2. The facts relating to the issue under consideration are stated in brief. While completing the assessment of the assessment year 2004-05, the assessing officer noticed that the assessee had repaid following loans in cash, in violation of the provisions of sec. 269T of the Act. As per the provisions of sec. 269T of the Act, the loan or deposits of Rs.20,000/- or more have to be paid by account payee cheques or account payee demand draft. Name of Person Principal amount Interest amount Total Sri K. Venkateswara Rao, Rajahmundry Rs.18,000/- Rs.3,240/- Rs.21,240/- Sri Sunkara Sathiraju, Kakinada Rs.18,000/- Rs.3,240/- Rs.21,240/- Sri M.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....during the year under consideration, he paid interest amount to both the parties out of his agricultural income. Since they insisted on repayment of loan amount also,he directed the cashier to repay the loan amount also from out of his liquor business. Later he collected the amount paid by him from out of agricultural income, i.e., the interest amount, from the cashier of liquor shop. However, the accountant of the assessee has passed a single entry in the books of account towards payment of interest and the principal amount of loan. 5. We notice that the Ld CIT(A) has taken the view that the repayment of part of loan would not absolve the assessee from the rigors of sec. 269T as long as the aggregate amount paid in an year is Rs.20,000/....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hall be attracted, if they are paid together. In the instant cases, the entries made in the books of account show that the assessee has repaid loan amount together with interest has exceeded Rs.20,000/- or more. 9. A careful perusal of the provisions of sec. 269T would show that the said provisions are attracted only if the principal and the interest are paid together and further the aggregate amount of such payment is Rs.20,000/- or more. According to the assessee, he has been paying interest on these two loans at the end of every year. In the year under consideration also, according to him, the interest was paid prior to the payment of principal amount and the principal amount of Rs.18,000/- each was paid subsequently. Thus, the claim ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... notice that the tax authorities have taken the view that the capital balance of ex-partner would partake the character of loan, once interest is paid on the said amount. Accordingly, they have held that the repayment of the same would attract the provisions of sec. 269T of the Act. 11. The fact that the balance outstanding in the name of Sri M. Suryanarayanamurthy represents is capital balance is not disputed. There does not appear to be any difference of opinion with regard to the fact that the repayment of capital balance in cash would not attract the provisions of sec. 269T of the Act, since it does not constitute loan or deposit. Since the assessee has paid interest on the outstanding balance, the tax authorities have taken the view....