29 June 2011
Dear Experts, In the case of Partnership firm as on 31-03-2011 ,on eof the partner was retired and the retiring partner has received his share in cash exceeding Rs. 20000/-. on 20-04-2011. I want to know that whether continuing partnership firm can paid cash to retiring partner - whether section 269T is attracted ?
29 June 2011
The credit balance in the capital account of retiring partner is on account of his capital contribution made earlier and due to accumulated profits. He has not given any loan or advance to the firm.
On this ground, I can say that the firm can pay the balance to the partner as it is repayment of capital and not the repayment of loan as prescribed U/s 269T.
In the above case law, CIT (A) remained of the same view as I have replied above. But the tribunal has considered the matter as if the retiring partner has kept the amount deposited with the firm and as such Section 269T becomes applicable. However, the above case is related with penalty U/s 271E and decided in favour of the assessee yet it is clear that the view expressed by me does not stand good.
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