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Scroll.in
a day ago
- Business
- Scroll.in
I-T tribunal rejects Congress' plea for tax break on Rs 199 crore income
The Income Tax Appellate Tribunal on Monday dismissed an appeal by the Congress seeking tax exemption on an income of Rs 199 crore for the assessment year 2018-'19, Live Law reported. The tribunal rejected the party's claim under Section 13A of the 1961 Income Tax Act, observing that the Congress had filed its tax returns late and violated rules related to cash donation limits. A bench of Judicial Member Satbeer Singh Godara and Accountant Member M Balaganesh ruled: 'The assessee's return filed on [February 2, 2019] is not within the 'due' date to make it eligible for the impugned exemption.' The deadline for filing the income tax return for 2018-'19 was December 31, 2018. Its tax tiling for the year also did not provide details about contributions worth Rs 14.4 lakh out of the total donations worth Rs 142.8 crore it had received that year. Due to its non-compliance with the provisions to claim exemption, the Income Tax Department had issued notices to the Congress in September 2019, January 2020 and March 2020, demanding a tax of Rs 94.4 crore on an assessed income of Rs 199.1 crores for 2018-'19. The assessment order dated July 6, 2021, had denied the entire exemption claim, making the full receipt amount taxable. The Congress challenged the assessment order in August 2021 and applied for a stay on the recovery of the amount demanded by the Income Tax Department in October 2021. Later that month, an assessment officer disposed of the application, directing the Congress to pay 20% of its outstanding tax liability, failing which it would be treated as a defaulter. However, the Congress did not pay the 20% tax amount, leading the Income Tax Department to issue a letter in January 2023 to the Congress requiring the party to deposit and liquidate its tax liability. The Congress challenged this before the Commissioner of Income Tax (Appeals), the Income Tax Appellate Tribunal and the Delhi High Court, being denied relief at every forum. The High Court had criticised the Congress for 'badly' handling the matter and said that somebody from the Congress' office 'went off to sleep' from 2021. In April 2024, less than three weeks before polling began in the Lok Sabha elections, the Congress received tax notices for seven other assessment years. Are political parties exempt from income tax? Under Section 13A of the 1961 Income Tax Act, registered political parties will be exempt from paying tax on the income they receive provided they fulfil certain conditions. The party must maintain a book of accounts recording its income. It must maintain a record of the names and addresses of each person who contributes a sum over Rs 20,000 to it. The party's accounts must be audited by a chartered accountant. It must only accept contributions over Rs 20,000 via cheque, demand draft, electronic clearing system or other prescribed electronic modes. To claim an exemption, the treasurer of the party must submit a report listing all donations over Rs 20,000 received by the party in a financial year to the Election Commission by the due date for filing income tax returns. The provision also requires parties to file a tax return for the previous year. If any of these conditions are not satisfied, the party will not be able to claim income tax relief, according to Section 13A of the Income Tax Act and Section 29C of the 1951 Representation of the People Act.
Time of India
a day ago
- Business
- Time of India
I-T tribunal rejects Cong plea for tax exemption on ₹199cr income
NEW DELHI: The Income Tax Appellate Tribunal Tuesday rejected an appeal from Congress against the I-T department for withdrawing a tax exemption to the party for the assessment year 2018-19 and adding Rs 199 crore as its income through donations. Tired of too many ads? go ad free now The tribunal, headed by judicial member Satbeer Singh Godara and comprising M Balaganesh, declined to interfere with the department's assessment order against Congress. The I-T order rejected Congress's tax exemption for not filing returns for AY 2018-19 by the due date, and thus, added the income of Rs 199 crore to the party, on which it will be liable to pay tax. The appellate tribunal also refused to allow Congress to net its income against the expenditure on the grounds that it had violated section 13(A) of the I-T Act. The order also found violations of receiving cash donations of more than Rs 14 lakh, which were over Rs 2,000 each. Election Commission guidelines mandate that any donation above Rs 2,000 has to be through bank transfer. Congress's appeal was first rejected by the Commissioner of I-T (Appeal) after which the party approached the tribunal in March 2023. "Whether the assessee's impugned section 13A exemption claim violates clauses (b) and (d) of the first proviso thereto is concerned, we have already held that its return filed on Feb 2, 2019, was a time barred one, and the same stands academic and rejected accordingly," the bench observed. On the question of "netting" basis - claiming corresponding expenditure against receipts - the tribunal noted that the "High Court's decision has concluded the very issue in the department's favour - 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 the Act's section 13A. Tired of too many ads? go ad free now " "We thus conclude that given the fact the assessee has been held to have violated section 13A, third proviso in not filing its return within the prescribed due date, its impugned netting claim also deserves to be declined in very terms," the tribunal said dismissing Congress' appeal.
Time of India
a day ago
- Politics
- Time of India
ITAT rejects Congress appeal against tax demand of Rs 199 cr
The Income Tax Appellate Tribunal (ITAT) Monday dismissed an appeal filed by Congress challenging a tax demand of ₹199.15 crore for assessment year 2018-19. The tribunal rejected the party's claim for tax exemption under Section 13A due to late return filing and violations of cash donation limits, establishing strict compliance requirements for political parties seeking tax benefits. "All these assessee's (Congress) vehement submissions fail to evoke our concurrence," ruled the quorum of judicial member Satbeer Singh Godara and accountant member M Balaganesh. Referring to a leading Supreme Court judgment and a March 2016 high court ruling, the tribunal in its July 21 ruling held that an exemption mentioned in a tax statute must be "strictly complied with". The 50 page ITAT order referring to the two rulings (SC and HC) said "this is for the precise reason that so far as an interpretation of such an exemption provision in a fiscal statute is concerned", not only the high court has made it clear "that Section 13A has to be strictly complied with" but also the Supreme Court in a 2018 ruling "has settled the issue that it is not liberal but stricter interpretation only in a taxing statute which has to be employed in an exemption claim". Live Events Dismissing Congress's appeal, the tribunal held "that being the case and in light of the fact that even Section 139(4B) has stipulated filing of return within the 'due' date i.e. required to be furnished u/s 139(1), we are of the considered view that the above former clause in fact restricts any further liberalism herein as clearly incorporating the expression of 'due' date". "Therefore, the moment there is violation of such a 'due' date, Section 13A third proviso gets attracted, so as to result in denial of exemption to the party concerned," the order said.
News18
a day ago
- Business
- News18
Congress Denied Tax Exemption Of Rs 199.15 Crore, Tribunal Cites Lapses, Donor Rule Violations
Last Updated: The Income Tax Appellate Tribunal rejected the argument that late returns should be treated like charitable trusts, stressing political parties must strictly file within deadline In a significant legal setback for the Congress, its tax exemption claim for Rs 199.15 crore was denied due to procedural lapses and violation of donation rules. The Income Tax Appellate Tribunal (ITAT) on Tuesday dismissed the appeal made by the Congress and upheld an income‑tax demand of Rs 199.15 crore. It also rejected the party's argument that late returns should be treated like charitable trusts under Section 12A, stressing that political parties must strictly file within the statutory deadline. The ITAT found that the Congress violated two critical conditions under Section 13A, which governs tax exemptions for political parties. It noted that the Congress filed its income tax return on February 2, 2019, missing the mandatory extended deadline of December 31, 2018, as specified under Section 139(4B). The Congress received cash contributions of a total of Rs 14.49 lakh from various donors, with individual donations exceeding the permissible limit of Rs 2,000 under Section 13A provisions. While the party provided donor names and PAN details – mostly from its own elected MLAs and MPs – the tribunal ruled that the cash payment method itself violated the law. The bench, comprising judicial member Satbeer Singh Godara and accountant member M Balaganesh, stated that Section 13A represents a special exemption that must be applied with strict adherence to all conditions, with any breach rendering the entire exemption invalid. The tribunal dismissed an attempt by the Congress to distinguish between 'voluntary contributions" and 'donations," noting that the party itself made no such differentiation in its records or Election Commission filings. Additionally, the ITAT rejected the party's plea that only surplus funds after expenses should be taxed, instead ruling that once Section 13A exemption is denied, all voluntary contributions become taxable income. Beyond the primary tax demand, the tribunal also upheld additional financial penalties including interest charges under sections 234A, 234B, and 234C totaling over R 35 crore, plus a Rs 10,000 fee under Section 234F for delayed filing. This brings the total financial liability to approximately Rs 234 crore, representing a substantial burden for the opposition party. The Congress had previously appealed to the CIT (appeals) but was unsuccessful, with that appeal being dismissed in March 2023. (With ANI inputs) view comments First Published: Disclaimer: Comments reflect users' views, not News18's. Please keep discussions respectful and constructive. Abusive, defamatory, or illegal comments will be removed. News18 may disable any comment at its discretion. By posting, you agree to our Terms of Use and Privacy Policy.
