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TMI BlogSection 69D of the Income-tax Act, 1961--Clarification regardingX X X X Extracts X X X X X X X X Extracts X X X X ..... e is invited to Board's Circular No.208 (F.No.208/7/76-ITA.II)* dated 15th November, 1976, in which the provisions of section 69D of the Income-tax Act, 1961, were explained. 2. A "hundi" in common commercial parlance, denotes an indigenous form of bill of exchange, by and large in vernacular language, which is being used by the mercantile community in India. The hundis can be broadly classified ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rchaser), (ii) the drawer (an indigenous banker or a vyapari), (iii) the drawee (normally an indigenous banker but can also be a vyapari), and (iv) the payee. If the payee is also the rakhya the parties will be three. Darshani hundi is payable at sight, i.e., immediately on presentation. A Muddati (Usance) hundi, generally involving two parties, is payable after a stipulated period of time mention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ird party 'D'. (iii) 'A' has an account with an indigenous banker 'C' who has granted a credit facility to 'A' and handed over a hundi book to him. 'A' draws amounts through such hundis payable either to self, or bearer or third party. Such an arrangement arises out of the credit facility already granted and, therefore, no debtor-creditor relationship has arisen between the parties because of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th reference to the facts and circumstances of such cases so as to determine whether or not there is a borrowal on such hundis.
7. The contents of this circular may please be brought to the notice of all the officers working in your charge for their information and necessary action.
Yours faithfully,
Sd. J.P. Sharma,
SECRETARY, CENTRAL BOARD OF DIRECT TAXES.
* See [1977] 107 ITR (St.) 195. X X X X Extracts X X X X X X X X Extracts X X X X
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