Sec 269

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CA Shyam Agarwal (Querist)
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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)
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12 January 2016 We cannot violate 269SS/TT. However we can resort to capital intro

CA Shyam Agarwal

CA Shyam Agarwal (Querist)
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12 January 2016 your mean I can do so

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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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.

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### 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.

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### 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.

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

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