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CA Final · Direct Tax Laws & International Taxation · Assessment of Trusts and Institutions, Political Parties and Other Special Entities

Bharat Democratic Party, a registered political party, received voluntary contributions of ₹25,00,000 and house property income of ₹3,00,000 in the tax year. It met every condition of Schedule VIII except that it failed to furnish its return of income on or before the due date. Under section 12(2) of the Income-tax Act, 2025, what is the position?

Income of ₹28,00,000 is charged to tax. Filing the return by the due date is a condition of Schedule VIII, and section 12(2) says that where conditions are not met, the enumerated income is taxed for that tax year, covering both contributions and house property income.

  1. AOnly the house property income of ₹3,00,000 is taxed, contributions stay exempt
  2. BOnly contributions of ₹25,00,000 are taxed, house property income stays exempt
  3. CIncome of ₹28,00,000 is charged to tax for that tax yearCorrect
  4. DNo income is taxed since the delay is only procedural

Explanation

Filing the return by the due date is condition (f) of item 1. Under section 12(2), where the conditions are not satisfied, the income enumerated in the Schedule is charged to tax for that tax year. Both heads of income lose exemption, so ₹25,00,000 plus ₹3,00,000 equals ₹28,00,000 is taxable. Treating the failure as procedural ignores that it is a stated condition.

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