Clarification for the purposes of clause (c) of Section 269ST of the Income-tax Act, 1961 in respect of dealership/distributorship contract in case of Co-operative Societies

Section 269ST inter-alia prohibits receipt of an amount of two Jakh rupees or more
(hereinafler referred to as ‘the prescribed limit ‘) by a person, in the circumstances specified therein,
through modes other than by way of an account payee cheque or an account payee bank draft or usc
of electronic clearing system through a bank account or through such other electronic mode as may
be prescribed.

2. References have been received in respect of Milk Producers’ Cooperative as to whether
   under the provisions of Section 269ST of the Act, receipt(s) in cash in a day of bank holiday/closure
   of bank day within ‘the prescribed limit’ from a distributor against sale of milk when payments
   were through bank on all other days is to be consic!-.:red as a single transaction or whether all such
   receipts in cash in a previous year would be aggregated in respect of transactions with a distributor
   to treat it as onc event or occasion.
3. With respect to the reference at Para 2 above, it is clarified that in respect of Co -operative
   Societies, a dealership/ distributorship contract by itself may not constitute an event or occasion
   for the purposes of clause (c) of Section 269ST. Receipt related to such a dealership/distributorship
   contract by the Co-operative Society on any day in a previous year, which is within ‘the prescribed
   limit’ and complies with clause (a) as well as clause (b) of Section 269ST, may not be aggregated
   across multiple days for purposes of clause (c) of St;ction 269ST for that previous year.

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