Hi Friends,
Please express ur views on this:-
IF A COMPANY CONVERTS AN UNSECURED LOAN INTO SHARE CAPITAL BY PAASING A RESOLUTION THEN SEC 269 T GETS ATTRACTED OR NOT??
Views supported with legal grounds will be highly appreciated...
Thanks
Amir
(Learner)
(4016 Points)
Replied 31 December 2009
Come on Friends,
Atleast write what u all feel..even if not sure on legal grounds??
Mohammed Dalal
(Chartered Accountant)
(163 Points)
Replied 01 January 2010
Hi amir
Since sec 269 T deals with the payment of Loan, the conversion is not covered by it
Therefore,i think there should be no problem.
Amir
(Learner)
(4016 Points)
Replied 01 January 2010
Brother U R RITE THAT SEC 269 T DEALS WITH THE REPAYMENT OF LOAN OTHER THAN A/C PAYEE CHEQUE/DRAFT...IN THE PRESENT CASE BDUE TO CONVERSION OF LOAN INTO CAPITAL THE LOAN STAND REPAID.....
shailendra
(C.A. FINAL)
(189 Points)
Replied 01 January 2010
Dear Amir sir,
In my opinion what the basic objective of insertion of section 269T was to regulate or control the flow of cash in the industry. All the people were following the practice of taking or giving cash to other people and thus not maintaining the audit trail for the department. Due to this sec 269T was introduced.
I agree with your contention that conversion of loan into share capital will result into repayment of loan.
But i don't think that 269T will be attracted because it don't violate the basic objective of sec 269 T, because adequate audit trail would be maintained here.
Sometimes we have to take take the logical interpretation and not the interpretation by the plain reading of the text and that's what i have done here.
Amir
(Learner)
(4016 Points)
Replied 02 January 2010
Hi Shailender,
AS FAR AS MY UNDERSTANDING GOES, I COMPLETELY AGREE WITH U...I JUST WANTED THE VIEWS OF OTHERS AS WELL...
Sunil
(Trader)
(2611 Points)
Replied 02 January 2010
Amir.
Section 269 T is self explanatory and rigid. It says Payees A/C Cheque and Draft as the ONLY means of repayment. It has given Banking Companies a specific exemption of crediting the customer account directly. It has given no other relaxation of book adjustments as means of repayment.
It is now entirely upto assessee to make his interpretations regarding INTENTIONS of government. Eventually is it worth the time to get into legal hassles of appeals and then reference to High Courts / Supreme Court? There are diverse judgements at all levels and I am sure there will be one SC judgment contradicting another.
Under such circumstances,I would suggest to assessees not to look at saving bank charges on D/Ds etc. or check clearing. In the long run I am sure the legal hassles will cause more grief and expenses.
sriram
(CA)
(281 Points)
Replied 11 January 2010
sec 269T deals wit repayment of loan amount as per statement its conversion of loan in to shares which is other form of repayin the loan . So i tnk sec 269 T applies
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