Intercompany Book Entery Section 269SS

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kumar vikas jain (Querist)

29 February 2008 we have a company and there is one subsidiary of this. parent company has made payment through account payee cheque payble to a land owner for purchasing the land in the name of subsidiary company. Is this book entry in the books of parent company as loan given and in the books of susidiary company as loan taken is against the section 269SS of income tax act

Sanjeev Kumar Sharma

Sanjeev Kumar Sharma (Expert)

01 March 2008 Yes, according to my knowledge there should be book entries in both the companies

Late CA Sampat Jain

Late CA Sampat Jain (Expert)

01 March 2008 SECTION 269SS STATES THAT LOAN IS TO BE TAKEN BY ACCOUNT PAYEE CHEQUE . IT DOES NOT STATE THAT A/C PAYEE CHEQUE TO BE IN THE NAME OF BORROWER. SECTION 269T HAS GOT A CONDITION THAT REPAYMENT HAS TO BE MADE BY A/C PAYEE CHEQUE ISSSUED IN THE NAME OF DEPOSITOR . SIMILAR RESTRICTION IS NOT THERE IN CASE OF SECTION 269SS. NOW YOU CAN ARGUE THAT SUBSIDIARY COMPANCY HAS RECD THE LOAN BY A/C PAYEE CHEQUE AND THEN HANDED OVER IT TO THE LANDLORD. IN THAT WAY THE LOAN IS BY ACCOUNT PAYEE CHEQUE ONLY. SO NO VIOLATION OF SECTION 269SS.

R.V.RAO

R.V.RAO (Expert)

01 March 2008 YES YOU NEED TO COMPLY SEC 269SS OF IT ACT BY PASSING ENTRIES IN BOTH COMPANIES BOOKS AS LOAN GIVEN AND TAKEN.
BUT YOU NEED NOT COMPLY WITH SEC 372A OF COMPANY'S ACT IF IT IS A LOAN BETWEEN HOLDING AND SUBSIDIARY.
ALSO UNDER SEC 372A OF CO'S ACT, NO COMPLIANCE REQUIRED IF LOAN WAS MADE BY A PRIVATE LTD. CO. UNLESS IT IS SUBSIDIARY OF A PUBLIC CO.
R.V.RAO

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