Skip to content

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

Zenith Pharma Ltd, an Indian company, made the following payments in a tax year under the Income-tax Act, 2025: Rs 6,00,000 by bank transfer to a registered political party under section 29A of the Representation of the People Act, 1951, Rs 2,00,000 by bank transfer to an electoral trust, and Rs 1,50,000 in cash to a registered political party. What is the deduction allowed under section 136?

The deduction is Rs 8,00,000. Section 136 permits an Indian company to deduct non-cash contributions to a registered political party or an electoral trust. The bank transfers of Rs 6,00,000 and Rs 2,00,000 qualify, while the Rs 1,50,000 cash payment is disallowed.

  1. ARs 9,50,000
  2. BRs 8,00,000Correct
  3. CRs 6,00,000
  4. DRs 7,50,000

Explanation

Section 136 allows a deduction for contributions made other than by way of cash to a registered political party or an electoral trust. Eligible amount = 6,00,000 + 2,00,000 = Rs 8,00,000. The cash payment of Rs 1,50,000 is excluded; including it would give the wrong Rs 9,50,000.

Did you get it right without looking?

One question tells you little. A timed set on Assessment of Companies shows your real accuracy, how long you take and where you lose marks.

Practise Assessment of CompaniesFree diagnostic mock

More Assessment of Companies questions