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CA Final · Direct Tax Laws & International Taxation · Income of Other Persons included in Assessee's Total Income

A political party registered under section 29A of the Representation of the People Act, 1951 claims that its income from house property, other sources and capital gains, together with voluntary contributions, is not included in its total income under Schedule VIII of the Income-tax Act, 2025. During the tax year it received: (i) ₹2,000 in cash; (ii) ₹2,500 in cash; (iii) ₹15,000 by account payee cheque, with no record of the donor's name and address; (iv) ₹50,000 through an electoral bond. All other conditions are satisfied. Which receipt causes the party to fail a condition of Schedule VIII?

Only the ₹2,500 cash receipt breaches a condition. Schedule VIII bars donations exceeding ₹2,000 received otherwise than through permitted banking or electronic modes or electoral bonds. Cash of ₹2,000 does not exceed the limit, donor records are needed only above ₹20,000, and electoral bonds are allowed.

  1. AReceipt (i) only
  2. BReceipt (ii) onlyCorrect
  3. CReceipts (i) and (ii) only
  4. DReceipts (iii) and (iv) only

Explanation

Condition (d) bars donations exceeding ₹2,000 received otherwise than by account payee cheque or draft, electronic clearing or other prescribed electronic mode, or electoral bond. The ₹2,500 cash receipt exceeds ₹2,000 and breaches it, while ₹2,000 cash does not exceed the limit. A donor record is required only for contributions above ₹20,000 other than electoral bonds, so ₹15,000 is fine, and the electoral bond is a permitted mode.

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