10 March 2013
the repayment you are proposing is in nutshell, buy back of shares, and is governed by Section 77A, 77AA and 77B of the Companies Act,1956.
Please be guided by the stipulations made therein.
10 March 2013
Yes you can do it since it is Sole Proprietorship Business. But there is one problem if during the assessment you are asked to show the source of fund of Rs 20 Lacs, how will you show this.
So in my view show this amount as loan taken from relatives and then repay them later.
10 March 2013
Loan given by relatives on Sunday for safe custody and for use in business. No contravention of section 269SS takes place- ITO v. T.R. Rangarajan [2005] 279 ITR 587 (Mad.)
But in my view it is better to take the amount through cheque.
10 March 2013
thanks sanjay ji but its a genuine transaction if a person want to start a business with 20 lacs but he have only 4-5 lacs in hand and balance he received from relatives in cash he don't know about the cheque ,, Cash and started business and after two year he has to file return and maintain accounts n u r the consultant then what will u do in case
Sanjay ji has already given u a case law in favor of raising the funds in cash. Though i haven't personally went through the details of this case law, but in case the facts apply to your situation, you may rely on the same. As a matter of precaution please to forward reference check before taking any decision.
Further, if the source of relatives' money is not colored, it should be possible to enter into some sort of documentation to evidence receipt of money from the relatives. This shall make your argument much more believable.
In case the money is bad/black, better refrain from entering into such transaction.
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