Repayment of loan by Book entries

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

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 ?

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

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.

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.

here the debtor was A, now the debtor will be B in books of accounts of A, 

it looks odd in views of general eyes, so how the taxman will handle it? 

better to adjust the same with bank entries !!

Kindly check the above link  /forum/details.asp?mod_id=13170&offset=1

You will get the answer needed

The provsions of Section 269 will not apply when adjustment is made vide book entries as there are various case laws on the same