{"id":40771,"date":"2016-03-29T12:43:30","date_gmt":"2016-03-29T07:13:30","guid":{"rendered":"http:\/\/www.scconline.com\/blog\/?p=40771"},"modified":"2016-04-15T16:45:02","modified_gmt":"2016-04-15T11:15:02","slug":"political-parties-should-maintain-properly-audited-accounts-of-voluntary-contributions-government-directed-to-take-measures-to-check-use-of-money-power-in-polls","status":"publish","type":"post","link":"https:\/\/www.scconline.com\/blog\/post\/2016\/03\/29\/political-parties-should-maintain-properly-audited-accounts-of-voluntary-contributions-government-directed-to-take-measures-to-check-use-of-money-power-in-polls\/","title":{"rendered":"Political parties should maintain properly audited accounts of \u2018voluntary contributions\u201d"},"content":{"rendered":"

Delhi High Court<\/strong>: While disposing of an appeal filed by the Indian National Congress for exemption from income tax for the assessment year 1994-95, the Court held that proper auditing of accounts of political parties is imperative and critical for free and fair elections, as they deal in large sums of public money. This would also infuse transparency and accountability into functioning of parties. Further the Court ruled that political parties should satisfy the requirement of the Income Tax Act, 1961, for maintaining properly audited accounts of income received through voluntary contributions. If this is not done, a party cannot claim exemption from paying income tax on these contributions. The Congress party had challenged an Income Tax Appellate Tribunal’s order which had held that the accounts of the assessee for 1994-95 were incomplete and therefore, the exemption under the Act was not available to it.<\/p>\n

The Division Bench, comprising of S. Muralidhar and Vibhu Bakhru, JJ. said the Income Tax Appellate Tribunal was correct in its decision to deny exemption to the Congress party under Section 13-A of the Income Tax Act. Under Section 13-A, income by way of voluntary contributions to a political party is not taxed. This exemption can only be availed if the party in question maintains a book of accounts with respect to these contributions. In contributions of Rs.10,000 or more, the donor\u2019s name and address will have to be recorded.<\/p>\n

In its judgment, the Court observed that most of the public funds spent by political parties to fight elections were unaccounted and called for a slew of legislative measures to check the influence of such money on the electoral process. The Bench held that the Indian National Congress was not entitled to this exemption, as it had failed to maintain properly audited accounts for the year, and held that \u201cthe voluntary contributions received by the INC during the assessment year in question have to be treated as income from other sources.\u201d The Court asked the government to consider Law Commission\u2019s 255th report on electoral reforms that said only up to Rs 20 crore or 20% of the total contribution of a political party\u2019s entire collection (whether cash\/cheque), whichever is lesser, can be anonymous. Apart from this, the details and amounts of all donations and donors (including PAN cards, wherever applicable) needed to be disclosed by political parties, regardless of their source or amount. The Court also asked the government to consider the Commission\u2019s recommendation that each recognised political party should maintain accounts clearly and fully disclosing all the amounts received and the expenditure incurred by them. The Court also observed that political parties are an essential part of our democracy and are dealing in large sums of public money, much of which is unaccounted, the proper auditing of the accounts of the political parties is both imperative critical to the conduct of free and fair elections. The recommendations of Law commission should receive serious and urgent attention at the hands of the executive and the legislature if money power should not be allowed to distort the conduct of free and fair elections. [Commissioner of Income Tax Delhi-Xi v. Indian National Congress (I)\/All India Congress Committee<\/em>, ITA Nos. 145\/2001 & 180\/2001, Decided on 23-03-2016]<\/p>\n","protected":false},"excerpt":{"rendered":"

Delhi High Court: While disposing of an appeal filed by the Indian National Congress for exemption from income tax for the assessment <\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[3,10],"tags":[],"class_list":["post-40771","post","type-post","status-publish","format-standard","hentry","category-casebriefs","category-highcourts"],"yoast_head":"\nPolitical parties should maintain properly audited accounts of \u2018voluntary contributions\u201d | SCC Times<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" 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