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LATEST NEWS UPDATES | Delhi HC plugs gap that allowed parties to mask illicit donations -Abhinav Garg

Delhi HC plugs gap that allowed parties to mask illicit donations -Abhinav Garg

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published Published on Mar 26, 2016   modified Modified on Mar 26, 2016
-The Times of India

New Delhi: The Delhi high court has tightened norms for political parties accepting cash donations without submitting their books for scrutiny. The move is being seen as a major boost for more transparency in political funding, plugging a vulnerability in law which could be exploited to mask illicit contributions.

A bench of Justices S Murlidhar and Vibhu Bakhru held this week that parties which fail to maintain audited books of account of voluntary contributions in excess of Rs 10,000 will be liable to be taxed for such donations deemed as "income from other sources".

The verdict, upholding an order of the Income Tax Appellate Tribunal imposing tax on voluntary contributions of Rs 25 crore received by the Congress in 1994-95 for which it failed to provide an audited account or proof of the donors, seeks to plug a loophole in campaign finance.

Political parties showed huge chunks of income as contributions from small donors for which they would not provide details, taking advantage of the absence of a rule which clearly required them to do so.

However, Jutices Murlidhar and Bakhru were unambiguous that such contributions, if not accounted for or audited, would fall into the category of "income from other sources" and, therefore, liable to be taxed.

The judges reflected upon the significance of their ruling as they called the case "symbolic of the general lack of transparency and accountability of political parties in this country". They said that lawmakers should recognise that most of the public funds spent by parties to fight elections are "unaccounted" and recommended tightening of rules to "infuse transparency and accountability".

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The Times of India, 26 March, 2016, http://timesofindia.indiatimes.com/india/Delhi-HC-plugs-gap-that-allowed-parties-to-mask-illicit-donations/articleshow/51557273.cms?utm_source=toimobile&utm_med


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