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Repayment of loan by Book entries

KAMAL (k ) (79 Points)

05 February 2011

There is a Debit Balance of Rs 5 lacs of C in books of A and a Credit balance of 5 lacs in of C in Books of B. Can A and B make journal entries wherein A credits 5 lacs of C and Debits to B and similarly B debits C and credits A. Does section 269 apply

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7 Replies

U S Sharma (glidor@gmail.com) (21056 Points)
Replied 05 February 2011

who are A&B, as per your question they are different parties, how and why they will do this ?

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Originally posted by : U S Sharma
	who are A&B, as per your question they are different parties, how and why they will do this ?

KAMAL (k ) (79 Points)
Replied 05 February 2011

They are parties and have no problem Secondly Both A & B are relations A is individual and B Karta of HUF of individual

U S Sharma (glidor@gmail.com) (21056 Points)
Replied 05 February 2011

if A&B agrees to do it, then no prob, but HUF and individual both have diff tax identity, so without transaction how they can do it, its not known.

KAMAL (k ) (79 Points)
Replied 05 February 2011

I will explain A is an HUF and has given a loan to C for 5 lacs. B is an individual and has taken a loan of 5 lacs from the same C. Now A wants to Credit 5 lacs of C by debiting the same to B. Likewise B also wants to Debit 5 lacs to C and credit the same of A. C has no objection and also wants to Pass journal entries Likewise. There is apparently no problem because all are agreeable. Now my querry is do provisions of Section 269 of IT Act have any effect because Repayment of loan or deposit exceeding 20000 can only be done by account payee cheque only..... Please advice what would be better course so that no penal provisons of IT act become applicable.