Sec 269

Save Share

This query is : Resolved

CA Shyam Agarwal (Querist)

12 January 2016 Hello

Can A partner give Rs. 1.00 lac to his partnership firm in cash without Violation of Sec 269SS or 269TT.

C.A. Mayur J. Raiyani

C.A. Mayur J. Raiyani (Expert)

12 January 2016 We cannot violate 269SS/TT. However we can resort to capital intro

CA Shyam Agarwal

CA Shyam Agarwal (Querist)

12 January 2016 your mean I can do so

Aashok Kumar Sharma online

Aashok Kumar Sharma

(Expert)

23 July 2025 ### Section 269SS and 269TT Overview

Section **269SS** and **269TT** of the **Income Tax Act** primarily deal with **acceptance and repayment of loans or deposits** in **cash**, and they aim to **curb black money and tax evasion**.

* **Section 269SS** prohibits a person from accepting any loan or deposit of **₹20,000 or more** in cash.
* **Section 269TT** prohibits the repayment of loans or deposits of **₹20,000 or more** in cash.

These sections are applicable to both individuals and entities, and violations can result in penalties.

---

### Can a Partner Give ₹1.00 Lac to His Partnership Firm in Cash?

You are asking whether a **partner** can contribute **₹1,00,000 in cash** to his **partnership firm** without violating Sections **269SS** and **269TT**.

**Key Points to Consider:**

1. **Section 269SS applies to the receipt of loans or deposits** by a person, including partnership firms, and **prohibits cash receipt of ₹20,000 or more**. However, the contribution of capital by a **partner** to the firm is **not treated as a loan or deposit**.

2. **Capital Contribution by Partner**: When a partner contributes capital to the firm, it is generally not considered a loan or deposit under these provisions. Therefore, **capital contribution** by a partner to a partnership firm is typically **not subject to the restrictions** under **Section 269SS**.

3. **Limit on Cash Transactions**: There is no specific cap under Section 269SS on how much **cash** a partner can contribute. However, the **₹1,00,000 cash contribution** could be subject to scrutiny under other laws (e.g., the **Prevention of Money Laundering Act (PMLA)** or **black money laws**), especially if it is not properly documented.

4. **Partner’s Contribution in Cash**: Although the contribution itself is not specifically covered under 269SS, it is a **good practice** to maintain proper records and **document the contribution properly** as a **capital contribution**. Ensure it is not misinterpreted as a **loan or deposit** from the partner to the firm.

---

### Conclusion

* **Section 269SS does not apply to capital contributions** made by a partner to a partnership firm. Therefore, the partner **can contribute ₹1,00,000** in cash to the firm **without violating Section 269SS**, provided it is properly recorded as a capital contribution and not as a loan.

* **Be mindful of other applicable regulations** that govern cash transactions and ensure **proper documentation** to avoid any potential scrutiny.

---

Would you like assistance in drafting the capital contribution agreement or any further clarification?

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now