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CMA Final · Direct Tax Laws and International Taxation · Assessment of Companies

Raman Industries Ltd, an Indian company, wishes to claim a deduction for a contribution to an electoral trust during the tax year. Under the Income-tax Act, 2025, the deduction for such a contribution is allowed only if the contribution is made

The contribution must be made otherwise than by cash. Section 136(1) grants an Indian company a deduction for amounts contributed, other than in cash, to a registered political party or an electoral trust during the tax year; cash contributions are not deductible.

  1. Aby any mode other than cashCorrect
  2. Bonly by cash up to a prescribed ceiling
  3. Conly by way of goods or services
  4. Dby any mode, including cash, if a receipt is obtained

Explanation

Section 136(1) allows an Indian company a deduction for the amount contributed other than by way of cash to a registered political party or an electoral trust. Cash contributions are excluded, so the option permitting cash, even with a receipt, is wrong.

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