TMI Blog2013 (5) TMI 583X X X X Extracts X X X X X X X X Extracts X X X X ..... amount and the principal amount were paid in two different occasions. The claim of the assessee, if accepted, would not lead to contravention of the provisions of sec. 269T since the principal amount repaid was less than Rs.20,000/- in both the cases. It is seen that the said claim was not controverted by the tax authorities. Since, it was claimed that he has been paying interest to these creditors at the end of every year there appears to be some veracity in the claim that he paid interest initially. Since the principal amount outstanding was less than Rs.20,000/- in each case, the said explanation also constitutes reasonable cause. With regard to the amount repaid to Sri M. Suryanarayanamurthy, the claim of the assessee that the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ddl.CIT) u/s 271E of the Act for violation of the provisions of sec. 269T of the Act. 2. The facts relating to the issue under consideration are stated in brief. While completing the assessment of the assessment year 2004-05, the assessing officer noticed that the assessee had repaid following loans in cash, in violation of the provisions of sec. 269T of the Act. As per the provisions of sec. 269T of the Act, the loan or deposits of Rs.20,000/- or more have to be paid by account payee cheques or account payee demand draft. Name of Person Principal amount Interest amount Total Sri K. Venkateswara Rao, Rajahmundry Rs.18,000/- Rs.3,240/- Rs.21,240/- Sri Sunkara Sathiraju, Kaki ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arch. It was further submitted that the assessee is having agricultural income also and during the year under consideration, he paid interest amount to both the parties out of his agricultural income. Since they insisted on repayment of loan amount also,he directed the cashier to repay the loan amount also from out of his liquor business. Later he collected the amount paid by him from out of agricultural income, i.e., the interest amount, from the cashier of liquor shop. However, the accountant of the assessee has passed a single entry in the books of account towards payment of interest and the principal amount of loan. 5. We notice that the Ld CIT(A) has taken the view that the repayment of part of loan would not absolve the assessee fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble thereon is twenty thousand rupees or more, then the provisions of sec. 269T shall be attracted, if they are paid together. In the instant cases, the entries made in the books of account show that the assessee has repaid loan amount together with interest has exceeded Rs.20,000/- or more. 9. A careful perusal of the provisions of sec. 269T would show that the said provisions are attracted only if the principal and the interest are paid together and further the aggregate amount of such payment is Rs.20,000/- or more. According to the assessee, he has been paying interest on these two loans at the end of every year. In the year under consideration also, according to him, the interest was paid prior to the payment of principal amount and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not cleared by that time, the assessee has agreed to pay interest thereon. We notice that the tax authorities have taken the view that the capital balance of ex-partner would partake the character of loan, once interest is paid on the said amount. Accordingly, they have held that the repayment of the same would attract the provisions of sec. 269T of the Act. 11. The fact that the balance outstanding in the name of Sri M. Suryanarayanamurthy represents is capital balance is not disputed. There does not appear to be any difference of opinion with regard to the fact that the repayment of capital balance in cash would not attract the provisions of sec. 269T of the Act, since it does not constitute loan or deposit. Since the assessee has pai ..... X X X X Extracts X X X X X X X X Extracts X X X X
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