ITAT Ahmedabad Rules in Favor of Political Donation to Rashtriya Komi Ekta Party

In a significant ruling, the Income Tax Appellate Tribunal (ITAT) Ahmedabad has upheld that the donation made by Armee Infotech to Rashtriya Komi Ekta Party is genuine. The case, ACIT vs. Armee Infotech, pertained to the Assessment Year 2012-13, where the Revenue Department questioned the legitimacy and tax exemption of the political contribution.

Background of the Case

The Revenue challenged the decision of the Commissioner of Income Tax (Appeals) [CIT(A)], arguing that Rashtriya Komi Ekta Party was a registered but unrecognized political entity and that the donation should not qualify for tax exemption.

Key Arguments

Revenue’s Claim: The department contended that the donation lacked credibility as the party was not recognized under the Representation of the People Act, 1951.
Taxpayer’s Defense: Armee Infotech maintained that the donation was legally valid and the party was among the 23 registered political parties at the time.
CIT(A)’s Ruling: The appellate authority ruled in favor of Armee Infotech, confirming the authenticity of the donation.
ITAT Ahmedabad’s Verdict

The tribunal upheld the CIT(A)’s ruling, affirming that:

The donation was legally valid under the Income Tax Act.
Rashtriya Komi Ekta Party, though unrecognized, was duly registered with the Election Commission of India.
The Revenue Department failed to provide evidence discrediting the transaction.
Implications of the Ruling

Clarity on Political Donations: Donations to registered but unrecognized political parties can be genuine for tax purposes.
Legal Precedent: This case sets an example for future disputes on tax exemptions for political contributions.
Taxpayer Confidence: Donors can be assured of the legitimacy of their contributions if they comply with tax and electoral laws.
Final Thoughts

The ruling strengthens the principle that lawfully made political donations should not be arbitrarily questioned. Taxpayers must maintain proper documentation and adhere to legal provisions to avoid litigation. This judgment provides clarity on political donation taxation, setting an important precedent.