Section 106 — Amount borrowed or repaid through negotiable instrument, hundi, etc.
Old Act equivalent: Section 69D of IT Act 1961 Sub-part: Chapter VI — Aggregation of Income
Statutory Text
(1) Where any amount (including interest thereof) is borrowed or repaid through a negotiable instrument or on a hundi, otherwise than an account payee cheque, or through any mode as specified by the Board in this behalf, the amount so borrowed or repaid (including interest paid on the borrowed amount) shall be deemed to be the income of the person borrowing or repaying, as the case may be, for the tax year in which the amount was borrowed or repaid.
(2) Where the amount borrowed under sub-section (1) has been deemed to be the income of any person, such person shall not be liable to be assessed again in respect of such amount under that sub-section on repayment of such amount.
Key Structure
- Applies to: Any person borrowing or repaying through hundi/negotiable instrument not via account payee cheque or Board-specified mode
- Deemed income: Full amount (including interest) — in the year of borrowing or repayment
- Anti-double taxation (sub-section 2): If borrowing was already deemed income, repayment is not taxed again
- Safe modes: Account payee cheque or Board-specified modes (e.g., NEFT, RTGS, UPI)
Cross-References
- s107-charge-of-tax — Section 107: charge at special rates
- s102-unexplained-credits — Section 102: unexplained credits (parallel)
Practical Notes
- This targets cash/hundi transactions — borrowing or repaying through bearer instruments is deemed income.
- Sub-section (2) prevents double taxation: if borrowing was taxed, the repayment is not taxed again.
- The Board may specify additional safe modes beyond account payee cheques — currently includes digital banking modes.