Sec 269
This query is : Resolved
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.
Can A partner give Rs. 1.00 lac to his partnership firm in cash without Violation of Sec 269SS or 269TT.
12 January 2016
We cannot violate 269SS/TT. However we can resort to capital intro
12 January 2016
your mean I can do so
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?
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?
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