TaxTMI 
TaxTMI 
TaxTMI 
2025 (7) TMI 1437
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.... of income made by the learned Deputy Commissioner of Income Tax, Central Circle-19, Delhi of the appellant at Rs. 199,15,26,500/- as against declared "Nil" income in an order of assessment dated 6.7.2021 u/s 143(3) of the Act. 2. That the learned Commissioner of Income Tax (Appeals) has further erred both in law and on facts in upholding disallowance of Rs. 199,15,26,560/-by denying the exemption u/s 13A of the Act. 2.1 That while confirming the above addition, the learned Commissioner of Income Tax (Appeals) has failed to appreciate the factual substratum of the case, statutory provisions of law and as such, disallowance so made and sustained is highly misconceived, totally arbitrary, wholly unjustified and therefore, unsustainable. 2.2 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that proviso to section 13A of the Act mandates that political parties to file return of income for availing exemption u/s 139 of the Act which includes both returns filed u/s 139(1) and 139(4) of the Act, and since in the instant case the return was filed on 02.02.2019 much before the last date of filing of return of return on 31.03.2019 u/s 139(4) of the Act, th....
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.... and arbitrary since as per audited income and expenditure account as on 31.3.2018 accepted by the authorities below there was excess of income over expenditure of only Rs. 1,71,65,088/- which too ought to have been offset against deficit of Rs. 96,30,18,572/- in the immediately preceding year accepted in the order of assessment u/s 143(3) of the Act. 4. That the learned Commissioner of Income Tax (Appeals) has further erred both in law and on facts in upholding the levy of interest of Rs. 3,51,83,040/-u/s 234A of the Act, interest of Rs. 28,14,64,320/- u/s 234B of the Act and interest of Rs. 3,55,81,089/- u/s 234C of the Act and also fees of Rs. 10,000/- u/s 234F of the Act which are not leviable on the facts and circumstances of the case of the appellant. It is therefore, prayed that the denial of exemption u/s 13A of the Act made and sustained by the learned Commissioner of Income Tax (Appeals) along with interest levied may kindly be deleted and appeal of the appellant be allowed. 3. We now advert to the basic relevant facts. The assessee/appellant, namely, Indian National Congress is admittedly a political party registered under the Representation of Peoples Act, 1951. It....
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.... appellate discussion reading as under: "6. Ground Nos. 2 including 2.1 to 2.8, 3 including 3.1 & 3.2 and 4: 6.1 The relevant part of the assessment order is as under: "10. The above reply of the assessee has been considered in the light of facts of case & provisions of law but found not tenable. 10.1 Section 13A of the Income Tax Act, 1961 which provide for exemption to the income of political parties is subject to certain conditions. These conditions are mentioned in clause (a) to (d) of first proviso to section 13A of the Act. As per these provisions: - Any income of a political party which is chargeable under the head "Income from house property" or "Income from other sources" or "Capital gains" or any income by way of voluntary contributions received by a political party from any person shall not be included in the total income of the previous year of such political party: Provided that- 1. Such political party keeps and maintains such books of account and other documents as would enable the Assessing Officer to properly deduce its income there from; 2. in respect of each such voluntary contribution other than contribution by way of electoral bond in excess of tw....
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....ONS Individual Donors Donation 205.078,647 166,522.229 Donation Congress fund. 688,500 Donation From AICC Members 47,000 2.400 Donation From MIPs 4,876,005 4,554,000 Donation Application Fee - 200,000 Donation (Souvenir) - . Donation From Sympathisers 843,200 312,000 Voluntary fund from PCCIFO - Aid from AICC - . Electoral Bond 50,000,000 Company Donors Donation 9,910,000 162,165,000 Building fund - 1,955,000 Electoral Trust & Foundation 40,000,000 162,254.000 Other Donations 13,065,814 8.300.000 Total 324,509,166 506,264,629 From the above, it is clearly seen that the assessee has recorded the entire receipts as "donations" which strengthen the argument that the assessee has received "donation" of Rs. 32,45,09,156/- including "donation" of Rs. 14,99,000/-in cash from its party members & other persons. 10.3 Further, in the forwarding letter to the report filed by the treasurer of assessee to Election Commission u/s 29C(1) of Representation of peoples Act, 1951 dated 28.09.2018, subject of the report it self makes it evident that the report is being filed in respec....
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.... as 'income from other sources'. The corresponding expenditure incurred by a political party for attaining aims and objects of the party cannot be allowed as a deduction since it is not provided under Section 57of the Act except to the extent that a political party is able to demonstrate that it is able to claim a deduction under Section 57(iii) of the Act." In view of above discussion, it is hereby held that assessee party has violated the provisions of clause (d) of first proviso to section 13A of the Act and therefore is not entitiled to exemption u/s 13A of the Act on contributions and donations received by it 11. Without prejudice to the above discussion, the assessee has also violated the provisions of second proviso to section 13A of the Act by not filing its return of income within the time limit prescribed by section 139(4B) of the Act. section 13A of the I.T. Act. 1961 which provides exemption to the political parties from its income under the head income from house property, capital gain, income from other sources & voluntary contributions received from any person reads as under: - "13A. Any income of a political party which is chargeable under the head "In....
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.... exceeds the maximum amount which is not chargeable to income-tax, furnish a return of such income of the previous year in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and all the provisions of this Act, shall, so far as may be, apply as if it were a return required to be furnished under sub-section (1)." 11.2 Further, as per provisions of section 139(1) of the Act, Every person, if his total income or the total income of any other person in respect of which he is assessable under this Act during the previous year exceeded the maximum amount which is not chargeable to income-tax, shall, on or before the due date, furnish a return of his income or the income of such other person during the previous year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed. 11.3 Thus, under section 139(4B) of the Income tax Act, 1961, political parties are under a statutory obligation to file return of income in respect of each assessment year. If and when the total income of a political party exceeds the maximum amount, which is not chargeable to tax, ....
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....mption u/s 13A of the Act. The following case laws are relied upon wherein it has been held that a political party is not entitled to exemption u/s 13A unless it fulfills all the conditions laid therein: - i. In its own case cited as INC vs. Assistant Commissioner of Income Tax (2004) 91 TTJ Del 857, it has been held by the Hon'ble Delhi High Court that - "On consideration of the facts and circumstances of the case, we are also of the view that the assessed did not maintain proper books of accounts regularly in the course of conduct of the activity and receipt of income and incurring of expenditure. It is evident from the facts of the case that the assessed filed the return merely on the basis of accounts of its Central office without incorporating the accounts of the State and other units. It is also worth noting here that even after several opportunities given by the assessing officer the assessed failed to furnish complete accounts and produce the books of accounts of all the units. The facts of the case clearly establish deliberate disregard and defiance of the provisions of law." ii. In Commissioner of Income Tax vs, INC, ITA No. 180/2001, the Hon'ble Delhi High ....
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....ach donation was less than Rs. 10,000 was a desperate one and not at all convincing. The documents produced did not support such an assertion. The finding of the ITAT that the Assessee satisfied the mandatory conditions for availing the exemption under Section 13A of the Act is nothing short of perverse as it is wholly contrary to and unsupported by the documents on record. A political party which seeks to avail of the exemption cannot be heard to say that it is not possible for it to maintain its accounts on a consolidated basis. As long as a political party continues to avail the exemption from payment of income tax. there can be no excuse for not maintaining its account whether it has one or more state units. Where in any particular FY, a political party is unable to maintain its accounts for any reason whatsoever, or satisfy the pre-conditions set out in the proviso to Section 13A of the Act, an exemption cannot be possibly be granted from payment of income tax for that FY." 11.6 In view of the above discussion, submission of assessee and various provisions of law, it is hereby held that the assessee has also violated the provisions of second proviso to section 13A of the Act....
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....hat any income by way of voluntary contributions received by a political party from any person, proviso b talks about voluntary contribution and proviso d talks about donations. Thus, both donations (proviso d) and voluntary contributions (proviso b) are subset of voluntary contributions (Section 13A). In view of the above discussion, following scenarios can be tabulated as under: Sl. No. When Voluntary contribution/donation is Condition precedent Relevant proviso 1. Less than Rs. 2000/- No condition. Payment can be received by any mode. Proviso d 2. More than Rs. 2000/- but less than Rs. 20,000/- Can not be received in cash. Must be received through banking channel like cheque, draft, RTGS, etc. But no need of maintaining a record of such contribution and the name and address of the person who has made such contribution. When proviso b and d are read jointly. 3. More than Rs. 20,000/- Can not be received in cash. Must be received through banking channel like cheque, draft, RTGS, etc. and also maintain a record of such contribution and the name and address of the person who has made such contribution. Proviso b v. The concept of voluntary contribution v....
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....nsel representing assessee in this factual backdrop has filed his written submissions as under: "MAY IT PLEASE YOUR HONOURS: 1 This appeal arises from aft order dated 28.3.2023 of the learned Commissioner of Income Tax (Appeals)-27, New Delhi. 2 That appellant is a recognized "National Political Party" and is registered under section 29A of the Representation of People Act, 1951 and registered with the Election Commission of Indija as National Political Party. 2.1 That since inception party is doing political activities in line with the object of the party i.e. "The object of Indian National Congress is the wellbeing and advancement of the people of India and the establishment in India by peaceful and constitutional means, of a socialist state based on parliamentary democracy in which there is equality of opportunity and of political, economic and social rights and which aims at world peace and fellowship". 2. 2 CHRONOLOGICAL SEQUENCES OF EVENTS Sr. No. Date Particulars (pages of Paper book) i) 31.12.2018 Due date u/s 139(1) of the Act ii) 2.2.2019 Original return of income declaring Nil income u/s 139(4) of the Act after claiming exemption of Rs. 199,15,26....
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....4.05.2023 Appeal filed in ITA No. 1609D/2023 3 Ground 1 is general 4 Grounds 2 to 3.1 are regarding upholding disallowance of Rs. 199,15,26,560/- by denying the exemption u/s 13A of the Act. 4.1 It is submitted that the learned Assessing Officer in the order of assessment has made the aforesaid denial of exemption on the following basis: i) That appellant has violated the provisions of second proviso to section 13 A of the Act by not filing its return of income within the time limit prescribed by section 139(4B) of the Act (page 27 of order of assessment); and ii) That appellant has also violated the provisions of clause (d) of first proviso to section 13A of the Act since assessee has received donation of Rs. 14,49,000/- in cash from various persons, each donation being more than Rs. 2,000/- (page 27 read with page 24 of order of assessment) 5 Section 13A of the Act reads as under: "Special provision relating to incomes of political parties. 13 A. Any income of a political party which is chargeable under the) head "Income from house property" or "Income from other sources" or "Capital gains" or any income by way of Voluntary contributions received by a political ....
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....ons for availing the benefit of the said Section which are as under: (i) No donations of Rs. 2000/- or more is received otherwise than by an account payee cheque drawn on a bank or an account of payee bank draft or use of electronic clearing system through a bank account or through electoral bonds, (ii) Political party furnishes a return of income for the previous year in accordance with the provisions of subsection (4B) of section 139 on or before the due date under section 139, Further, in order to address the concern of anonymity of the donors! it is proposed to amend the said section to provide that the political parties shall not be required to furnish the name and address of the donors who contribute by way of electoral bond. This amendment will take effect from 1st April. 2018 and will, accordingly, apply in relation to assessment year 2018-19 and subsequent years. 6.2 In view of above it is noted that before insertion of third proviso to section 13A of the Act, filing of the return is not a condition precedent for availing exemption under the Act and therefore the purpose of insertion of aforesaid proviso was to make political parties to file return of income for ....
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....se eligible trust, thereby creating huge demand. 2. In the matter, the memorandum explaining the relevant provisions of the Finance Bill, 2017 reads as under. "as per the existing provisions of said section, the entities registered under section 12AA are required to file return of income under sub-section (4A) of section 139, if the total income without giving effect to the provisions of sections 11 and 12 [exceeds the maximum amount which is not chargeable to income-tax. However, there is no clarity as to whether the said return of income is to be filed within time alloyed u/ s 139 of the Act or otherwise. In order to provide clarity in this regard. it is proposed to further amend section 12A so as to provide for further condition I that the person in receipt of the income chargeable to income-tax shall furnish the return of income within the time allowed under section 139 of the Act. These amendments are clarificatory in nature. These amendments will take effect from 1st April, 2018 and will, Accordingly, apply in relation to assessment year 2018-19 and subsequent years." 3.Additionally, an excerpt of circular 02/2018 dated 15.02.2018 "Explanatory Notes to the Provisions ....
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....political parties to furnish a return of income in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed. It is further noted that section 139(4B) of the Act further states that the provisions of this Act shall apply as if it were a return required to be furnished under sub-section (1). therefore section 139(4B) of the Act envisages furnishing of return of income by political party however it does not provides any time limit for furnishing of such return of income, though (if filed) for application of all the provisions of the Act, such return furnished shall be treated as return of income furnished u/s 139(1) of the Act, 7.2 In this regard it is submitted that the above mentioned interpretation also finds support from the judgment of Hon'ble Apex Court in Common Cause - A Registered Society vs UOI reported in 222 ITR 260 (SC) (pages 85-96 of JPB), wherein the; issue before Hon'ble Supreme Court was that most of the political parties in the country - registered and recognised by the Election Commission - have. for many years, been flouting the provisions of the Income tax Act so that they have not been maintaining ....
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.... third proviso to Sec 13 A, specifically provides that the political party is required to furnish a return of income for the previous year in accordance with the provisions of Sec 4B of Section 139 on or before the due date under that Section 7.4.1 If the intent of the Legislature was to restrict the time limit prescribed under Section 39 (1) of the Ait, it would not have provided for the returns being filed under Section 139(4B) of the Act. It is noteworthy that Section 139 (4B) specifically provides that all provisions of the Act shall so far as maybe apply as if it were a return required |to be furnished under sub section 1 of Section 139. 7.4.2 Thus, sub-section 4B provides for two things: a. All the provisions of the Act apply and b. It creates a deeming fiction that the return will be treated as if it is filed under Section 139(1). It is well established that a fiction is to be given its full effect. This would automatically mean once a return has been filed under Section 139(1) of the act, an assessee cannot be deprived of the benefit of Section 139(4) of the Act. 7.4.3 It is well est. that the very purpose of Section 13A of the Act is to improve transparency of the po....
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....ollowed in series of judgments, details as under: Sr. No. Issue Citation 1. Option exercised by assessee under Explanation (2)(ii) to section 11(1) along with return submitted under section 139(4) had to be regarded as a valid exercise of option within time fixed for furnishing return under section 139(1) 248 ITR 769 (J&K) Ziarat Mir Syed Ali Hamdani 2. That 'due date' for assessee to invest amount of capital gains in purchase/construction of new residential asset or investment in capital gains scheme under section 54F refers to 'extended due date' under section 139(4). 159 ITD 633 (Chennai) G. Ramesh vs. ITO 177 ITD 308 (Mum) ITO vs. Nilima Abhijit Tannu. See also i) 153 ITD 197 (Coch) ITO vs. Smt. Rosamma Korah (In favour of Revenue) ii) 113 TTJ 223 (Bang) Nipun Mehrotra vs. Asst. CIT iii) 52 SOT 159 (Chen) R.K.P. Elayarajan vs. DCIT iv) 50 taxmann.com 176 (Pune) Smt. Neha Rajendra Bhoite vs. DCIT v) 50 SOT 96 (Del) ITO vs. Smt. Sapana Dimri vii) 135 TTJ 75 (Chen) P. Thirumoorthy vs. ITO viii) I TA No. 4648/Mum/2013 dated 06.11.2013 Anil Kumar Omkar Singh Aurora vs. ITO ix) 339 ITR 610 (P&H) CIT vs. Ms. Jagriti Aggarwal x) 259 CTR 388 (P&H) CIT vs. Jagtar ....
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....that political parties that are registered with the Election Commission of India, are exempt from paying income-tax. To avail the exemption, the political parties are required to submit a report to the Election Commission of India as mandated under sub-section (3) of section 29C of the Representation of the People Act. 1951 (43 of 1951) furnishing the details of contributions received by a political party in excess of Rs. 20.000 from any person. However, under existing provisions of the Act, there is no restriction of receipt of any amount of donation in cash by a political party. Secondly, a political party is also required to file its return of income under section 139(4B) of the Act, if its income exceeds the maximum amount not chargeable to tax (without considering the exemption under section 13A). However, filing of the return is not a condition precedent for availing exemption under the said section. In order to discourage the cash transactions and to bring transparency in the source of funding to political parties. it is proposed to amend the provisions of section 13A to provide for additional conditions for availing the benefit of the said section which are as under: ....
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....220Q 50,000 xiv) 392 Shri Rajesh Rana, Kothi No. 844, Sector-17, HUDA AIWPR3248M 50,000 xv) 393 Shri Bhipendra Rana, Kothi No. 844, Sector-17, HUDA AIWPR3250 50,000 xvi) 676 Mrs. P.W. Khongje Sohra East Khasi Hills District ASTPK1503D 45,000 xvii) 677 Smt. Bluebell R. Sangma, vill Dobogra PO Chokput South Garo Hills. DSDPS0601R 60,000 xviii) 712* *Goa Carbon Ltd., Dempo House, A 3,00,000* * Campat, Panjim Goa, RTGS xix) 725 Smt. Geeta Khatan, 65, Bhagwati Kartarpura, Jaipur ACBPK5667Q 27,000 xx) 726 Smt. Shankuntala Rawat, B-107, Karamchari Colony, Alwar CBVPS0010P 30,000 xxi) 729 Shri Nakul Singh, VPO Muroli. The, Rashmi, Distt. Chttorgarh AWBPB7876J 27,000 xxii) 731 Smt. Manjula Devi Raut, VPO Mordii, The, Jothir Dungarpur APMPR1373Q 27,000 xxiii) 740 Smt. Naseem Akhtar, Makadwati Road, Pushkar, Ajmer AABPU3507H 27,000 : xxiv) 742 Smt. Saroj Devi, VPO Rashidpur, Rupwas, Bharatpur. HLPCS2729Q 27,000 Total 14,49,000 *Less RTGS No. x Amount received through from Goa Carbon Ltd. at Sr. viii 3,00,000 &n....
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.... gives to a person or an organisation by a way of help". In the case of E.T. Commissioner v. P.V.G. Raju AIR 1976 SC 140, 142. a donation was described as an owner of a thing who voluntarily transfers the title or possession of the same from himself to another without consideration. 10.3.1. Unlike a contribution, a donation is not linked to a particular purpose and it can be given by any person without specifying any objective. It is a very wide term. 10.4 In view of the above differences, the level of transparency in case of a donation required is much higher under Section 13A of the Act under which it has to be made by a cheque, a draft or an electronic clearing system. The same rigor is not there in case of voluntary contribution which can be made by way of cash. This is not surprising considering it is made from the members themselves. 10.5 The argument of the department that in the accounts, these contributions were characterized as donations but at the time of assessment they were shown as voluntary contributions, is a red herring argument. It is well established that accounting heads are not determinant of the actual transactions. (See CIT v. Arvind Kumar Jain (2012) 2....
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.... the appellant, i.e. Bijli Cotton Mills, its position is that of a trustee. In fact, it was further held by the Court at page 74 as under: "Further, the fact that, the assessee would be having some discretion as regards the manner in which and the time when it should spend the dharmada amounts for charitable purposes would not detract from the position the assessee held qua such amounts namely, that it was under an obligation to utilize them exclusively for charitable purposes. It is true that the assessee did not keep these amounts in a separate bank account but admittedly a separate dharmada account was maintained in the books in which every receipt was credited and payment made there out on charity was debited and the High Court has clearly found that these amounts were never credited in the trading account nor were carried to the profit and loss statement." (Emphasis supplied] 11.7 In the aforesaid case, the Hon'ble Court further held that, the fact amount received as dharmada from the customers was not credited to separate account could not be a basis to hold that a trust had not been created in favour of the purchasers. 11.8 With the parity of the aforesaid reasons in....
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....ting sports; there was no other object and all its constituents were giving grants/ funds only for that purpose. In truth and reality, the assessee was merely acting as a custodial or conduit to the constituents for the purpose of promoting sports activity inside and outside the country. The expenditure incurred by the assessee is only for the purpose of promoting the sports events and activities and in this respect there is no challenge to the finding of fact recorded by the Tribunal. If such expenditure is not allowed, it may amount to taxing the gross receipts of the assessee and not the income, which is not permissible under the income tax law. Moreover, upto the assessment year 2002-03 the assessee was exempt from tax under Section 10(23C); from the assessment year 2006-07 it has been granted registration or a charitable institution under Section 12A making it eligible for the exemption under Section 11." ii) ITA No. 121/204 dated 1.4.2014 CIT vs. M/s Girnar Infrastructure (P) Ltd. (pages 21-22 of JPB) "The Tribunal was of the opinion that when development rights are transferred it has a cost and when the receipt is taxed and the corresponding cost has to be allowed as exp....
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....s no income, then, on the argument of the revenue, the expenditure would have to be ignored as it would not be liable to be deducted. This would indeed be a strange and highly anomalous result and it is difficult to believe that the legislature could have ever intended to produce such illogicality. Moreover, it must be remembered that when a profit and loss account is cast in respect of any source of income, what is allowed by the statute as proper expenditure would be debited as an outgoing and income would be credited as a receipt and the resulting income or loss would be determined. It would make no difference to this process whether the expenditure is X or Y or nil, whatever is the proper expenditure allowed by the statute would be debited. Equally, it would make no difference whether there is any income and if so, what, since whatever it be, X or Y or nil, would be credited. And the ultimate income or loss would be found. We fail to appreciate how expenditure which is otherwise a proper expenditure can cease to be such merely because there is no receipt of income. Whatever is a proper outgoing by way of expenditure must be debited irrespective of whether there is receipt of in....
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....d then too disallowance can be made to the extent of Rs. 11,49,000/-; and no more. 13.1 It is here also respectfully submitted that the voluntary contributions received by the political party cannot be taxed as "income" as there is no such head of income income under section 14 and it is also not included within the meaning of section 2(24(iia) of the Act. Furthermore, there is no mechanism provided for computing income from voluntary contributions. Reliance is placed in this regard on the judgments of Hon'ble Apex Court in the case of Commr. of Expenditure Tax v. P.V.G. Raju reported in (1976) 1 SCC 241 and CIT v. Harprasad & b. (P) Ltd. reported in (1975) 3 SCC 868. In fact voluntary contributions received by a political party are in the nature of "capital receipts" and not "income from other sources" and cannot be taxed unless specifically made taxable by law. It is submitted that all receipts are not "income". Reliance is also placed in this regard on the judgment of Hon'ble Apex Court in the case of Parimisetti Setharamamma vs. CIT reported in 57 ITR 532. It is submitted that voluntary contributions are not attributable to the assessee but to the will and pleasure of the con....
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....Act, 1961 (hereinafter referred to as the "Act") dated 06.07.2021 passed in the case of the assessee for AY 2018-19. 2. For AY 2018-19, the due date for filing of Income Tax Return u/s 139 of the Act was 30.09.2018. This date was extended to 31.12.2018. The assessee filed its Return for AY 2018-19 on 02.0|2.2019 declaring Nil income (at Pg. 22 of Written Submission/lst Compilation of Revenue). The case of the assessee was selected for scrutiny and a Notice u/s 143(2) of the Act was issued on 23.09.2019. 3. On 06.07.2021, an Assessment Order u/s 143(3) was passed (at Pg. 54 of Written Submission/lst Compilation of Revenue), finding that the assessee was not eligible for exemption u/s 13 A of the Act for the relevant AY and therefore assessing the total income of the assessee for AY 2018- 19 at Rs. 199,15,25,560/-. The said addition was made by the AO on arriving at the following findings:- i) The assessee received donations exceeding Rs. 2000/- otherwise than by way of an account payee cheque or an account payee bank draft or use of electronic system through a bank account or through a prescribed electronic mode or through electoral bond, in violation of clause (d) of the firs....
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....India (1992) Supp 1 SCC 594 at Para 69 (at Pg. 162 of 2nd Compilation of Revenue). Further, a provision starting with proviso introduced by way of an amendment is often construed as a non-obstante clause (See Georgia Railroad Banking Co. vs. Smith, (1888) SCC Online US SC 288 at Pg. 234 of 2nd Compilation of Revenue; McDonald et al. vs. United States (1948) SCC Online US SC 116 at Pg. 237 of 2nd Compilation of Revenue). 11. Terminal point under the third proviso for filing of return for getting the benefit of Section 13A is "on or before the due date". The term "due date" is defined specifically in Explanation- 2 to Section 139(1). 12. Legislature does not use words which are surplusage (See Ashwini Kumar Ghose vs. Arabinda Bose (1952) 2 SCC 237 at Para 26 (at Pg. 1 of 2nd Compilation of Revenue); Hardeep Singh vs. State of Punjab (2014) 2 SCR 1 at Para 41 (at Pg. 92 of 2nd Compilation of Revenue)). 13. Once a word has been defined in a statute, the same meaning has to be accorded to the word when it is use! in more than one place, else the object of the definition clause would be defeated (Bhagwati Developers Pvt. Ltd., vs. Peerless General Finance and Investment Company Ltd....
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....he Finance Act, 2017 (at Pg. 1 of 1st Paperbook of assessee) - "Secondly, a political party is also required to file its return of income under section 139(4B) of the Act, if its income exceeds the maximum amount not chargeable to tax (without considering the exemption under sectionl3A). However, filing of the return is not a condition precedent for availing exemption under the said section. " 19. The aforesaid observation records the position as it stood prior to the amendment made by way of the Finance Act, 2017. 20. The assessee has completely misread the explanatory notes, by relying on the very mischief which the legislature wanted to cure or rectify. 21. The assessee has fulher relied upon a CBDT Circular bearing F. No. 173/193/2019- ITA-I dated 23.04.2019. This Circular however deals with filing of Charitable Trusts in accordance with Section 12A of the Act. 22. In Section 12A(ba) of the Act which is a dispensation applicable to charitable institutions, the Legislature consciously does not use the phrase "due date". Section 12A(ba) uses the pl rase "time allowed under that section" which is different from the word "due date'' used in Section 139(4). When a situatio....
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.... on 02.02.2019 whereas the due date for filing of return expired on 31.12.2018 as per Section 139(4B). Assessee has failed to meet with the requirement of clause (d) of the first proviso to Section 13A of the Act 30. The assessee received donations exceeding Rs. 2000/- otherwise than by way of an account payee cheque or an account payee bank draft or use of electronic system through a bank account or through a prescribed electronic mode or through electoral bond, in violation of clause (d) of the first proviso to Section 13A of the Act. 31. The assessee contends in this regard that there is a distinction between "voluntary contribution" and "donation" and that the sum of Rs. 11,49,000/- received by it was "voluntary contribution" and not "donation". 32. However, the assessee itself made no distinction in law or in fact regarding the donation and contribution. This is evident from a reading of the findings at Para 10.2 of the assessment order and the extract of balance sheet at the end of the said Para (at Pgs. 77-78 of Written Submission/1st Compilation of Revenue). 33. The aforesaid extract from the balance sheet of the assessee is reproduced hereinbelow: - Note No.12 ....
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....n" as per the Cambridge English Thesaurus at Pg. 100 of 3rd Compilati on of Revenue, include "contribute". 41. Reliance is placed on the Judgment of the Hon'ble High Court of Madras dated 31.10.2022 in CIT vs. MAC Public Charitable Trust Tax Case Appeal no. 303 of 2022 (at Pg. 102 of 3rd Compilation of Revenue). At Para 65 of the said Judgment @ Pg. 217, the Hon ble High Court discusses the meaning of the term Voluntary Contribution. In this context it was held by the Hon'ble Court that voluntary contribution cannot he in exchange for membership etc. Capitation fee which was collected in the name of "donation" was held to not amount to voluntary contribution. In this regard it was held at Para 64 at Pg. 216 of 3rd Compilation of Revenue that "The fact that a long-winding and indirect route has been adopted for capitation fee to reach the institution cannot change the character of the payment from an illegal capitation fee to a voluntary contribution/donation. " Clearly the two words are used interchangeably even by the Hon'ble Courts. 42. Another clue lies in Section 115BBC(3) according to which donation means any voluntary contribution. Claim for deduction of expenses from v....
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....ant submissions of the assessee before the Hon'ble Supreme Court are extracted hereinbelow:- "7. The Hon'ble Delhi High Court, in Para 124 of the impugned judgment has declared as a matter of law that: "124. The legal position is that no deduction can be allowed with respect to the expenditure incurred by the political party for any purpose whatsoever if it fails to comply with the basic requirements of Section 13A of the Act. " [hereinafter referred to as the impugned finding] 8. This finding, as elaborated below, is contrary to the scheme of the Income Tax Act. It has no foundation in the Us and in the questions that arose for the High Court's adjudication. The Hon'ble High Court has erroneously held that if a political party fails to comply with the conditions laid down in Section 13A, then not only is it not entitled to claim exemption under that Section, but also that it cannot claim any expenses incurred by it on its political activities during the year in question. *** 11. The impugned finding was recently relied upon by the Income Tax Authorities in upholding a tax demand for Rs. 105.17 crores for AY 2018-19, after disallowing the expenses of Rs. 197.43 crores leg....
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....on u/s 57(iii), the dominant purpose for incurring such expense has to be the earning of the income. Reliance in this regard is placed on the Judgment of the Hon'ble High Court of Gujarat in Sarabhai Sons (P.) Ltd. v. Commissioner of Income- Tax, (1993) 201ITR 464 at Para 9 (at Pg. 320 of Written Submission/lst Compilation of the Revenue) and the Judgment of the Hon'ble Higi Court of Bombay in Commissioner of Income-Tax v. Amritaben R. Shah, (1999) 238 ITR 777 at Para 8 (Pg. 326 of Written Submission/lst Compilation of the Revenue). 54. The claim of the assessee that they should be treated as an ordinary assessee and expense should be allowed, is not factually or legally borne out. 55. Reference may be made to Para 10.5 of AO's order at Pg. 80 of Written Submission/lst Compilation of the Revenue. Even before the AO it is not the assessee's case that they have spent the amount on which deduction is now claimed, to earn the voluntary contribution. Their case is that they have spent it to meet objects of the political party. They never set up a case under Section 57(iii). 56. The Assessee relies on the Judgment of CIT u Fr. Mullers Charitable Institutions (2014) 363 ITR 230 (Pg.....
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....2.02.2019 would be held as the one filed within the "due" date or not. There would be hardly any dispute between the parties that the assessee; a political party, is granted exemption under section 13A of the Act subject to certain conditions enumerated therein; and, one of them is the third statutory proviso thereto (inserted by the Finance Act, 2017 w.e.f. 01.04.2018) that a return has to be furnished in accordance with the provisions of sub-section 139(4B) of the Act. There would be again no quarrel that section 139(4B) of the Act envisages the authorized person of such a political party to "furnish a return of such income......... in the prescribed form and verified in the prescribed manner........." and "all the provision of this Act, shall, so far as may be, apply as if it were a return required to be furnished under sub-section (1)". We further deem it appropriate to observe that section 139(1) of the Act in explanation 2 prescribes the "due" date for various categories of persons; all upto 31st October of the concerned assessment year, as the last day only. It is in this factual backdrop that the assessee's endeavour before us is to invoke section 139(4) of the Act that the....