Question And Answer
Subject: political donations
Querist: bks
Answered by:
Date: April 30, 2023
Query asked by bks

when registration of a political party is cancelled  after survey/search, whether donor will lose deduction of the sums donated before that date ?

Whether old case laws will apply or not ?





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Answer given by

In CIT v. Chotingrai Tea & Others (2002) 258 ITR 529 / (2003) 126 Taxman 399 / 179 CTR 103 (SC) the Court held that once it was found that the assessee had fulfilled all the conditions which had been laid down under section 35CCA of the Act for claiming deduction of the amount donated by it, there was no further obligation on the part of the assessee to see that the amount was utilized for the purpose for which it was donated. Further, the deduction was allowed on the certificate furnished and it was not for the assessee to show whether the institution to which the money had been donated was carrying on rural development work as envisaged under section 35CCA of the Act. Accordingly the order of High Court was affirmed. The ratio is applicable to donation to pollical party . If the revenue is able to prove that the money has come back to the aassessee , the disallowance may be confirmed . The provision of section 115BBE may not be applicable . The assessee should request for cross examination of the parties to whom the donation was given . If the political party confirms the receipt of the donation , the disallowance cannot be made . Whether penalty is leviable or not is debatable issue . Prosecution is not automatic .

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