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CAN TRUSTEE GIVE LOAN TO TRUST BY CASH

G.SUNDARARAJAN (COMPUTER ) (37 Points)

26 January 2011

SIR,

PLEASE CLARIFY, IN CHARITABLE TRUST, CAN TRUSTEE OR MANAGING TRUSTEE GIVE LOAN TO TRUST BY CASH?. IS IT ALLOWABLE IN INCOME TAX ACT?.

WITH REGARDS

SUNDAR

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9 Replies

prateek (accounts finance taxation & Audit) (35 Points)
Replied 26 January 2011

yes trustee can give loans in cash without any limit & it will be allowed as deduction in Income Tax Act.

1 Like

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Shubhankar Limaye (B.Com.) (174 Points)
Replied 26 January 2011

For loans taken in cash in excess of Rs. 20000 provisions of section 269SS get attracted and the recipient will have to pay a penalty equal to loan accepted.

Further as the transaction is of granting loan, there is no question of it being allowed as deduction under the Act.

G.SUNDARARAJAN (COMPUTER ) (37 Points)
Replied 26 January 2011

SIR,

Whether Section 269SS and 269T of the Income Tax Act will attracted for loan from Managing Trustee or trustee by Cash in Charitable Trust. Please clarify.

with reagrds

Sundar

prateek (accounts finance taxation & Audit) (35 Points)
Replied 28 January 2011

SEC 269SS & T WILL APPLY IN CASE OF COMPANIES & NOT IN CASE OD TRUSTS.............

Shubhankar Limaye (B.Com.) (174 Points)
Replied 28 January 2011

Prateek,

I beg to differ from your view.

Section 269SS reads as under:

"53[Mode of taking or accepting certain loans and deposits.

54269SS. No person shall, after the 30th day of June, 1984, take or accept from any other person (hereafter in this section referred to as the depositor), any loan or deposit otherwise than by an account payee cheque or account payee bank draft if,—

(a) the amount of such loan or deposit or the aggregate amount of such loan and deposit ; or

(b) on the date of taking or accepting such loan or deposit, any loan or deposit taken or accepted earlier by such person from the depositor is remaining unpaid (whether repayment has fallen due or not), the amount or the aggregate amount remaining unpaid ; or

(c) the amount or the aggregate amount referred to in clause (a) together with the amount or the aggregate amount referred to in clause (b),

is 55[twenty] thousand rupees or more :

Provided that the provisions of this section shall not apply to any loan or deposit taken or accepted from, or any loan or deposit taken or accepted by,—

(a) Government ;

(b) any banking company, post office savings bank or co-operative bank ;

(c) any corporation established by a Central, State or Provincial Act ;

(d) any Government company 56 as defined in section 617 of the Companies Act, 1956 (1 of 1956) ;

(e) such other institution, association or body or class of institutions, associations or bodies which the Central Government may, for reasons to be recorded in writing, notify 57 in this behalf in the Official Gazette :

58[Provided further that the provisions of this section shall not apply to any loan or deposit where the person from whom the loan or deposit is taken or accepted and the person by whom the loan or deposit is taken or accepted are both having agricultural income and neither of them has any income chargeable to tax under this Act.]

Explanation.—For the purposes of this section,—

59[(i) “banking company” means a company to which the Banking Regulation Act, 1949 (10 of 1949), applies and includes any bank or banking institution referred to in section 51 of that Act ;]

(ii) “co-operative bank” shall have the meaning assigned to it in Part V of the Banking Regulation Act, 1949 (10 of 1949) ;

(iii) “loan or deposit” means loan or deposit of money.]"

Thus this section makes it amply clear that it is applicable to all assessees except for the exceptions listed therein.

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Cally Bale (none) (21 Points)
Replied 12 December 2011

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michaelK (NA) (46 Points)
Replied 12 December 2011

yes i think trustee can give the loan ...prateek si right as far as my concern Mobile Banking Service

Kapil Ramesh Khivansara (Chartered Accountant) (166 Points)
Replied 13 March 2015

can any one provide case law relating to above matter

kuttan (Advocate Supreme Court) (28 Points)
Replied 18 December 2015

Trust can take loan from Trustees. Income tax assessment procedure and mode of investment by charitable trusts and NGOs are explained here Income tax assessment procedure and mode of investment by charitable trusts and NGOs