Examine each of the following independent cases of charitable trust/ institutions based on the relevant provisions of the Income-tax Act and…

(i) As per section 13B, any voluntary contribution received by an electoral trust would be exempt during the previous year, if such electoral trust - distributes to the eligible political parties during the said previous year, 95% of the total contributions received during the financial year along with the surplus, if any, brought forward from earlier previous year; andfunctions in accordance with the rules (Rule 17CA) made by the Central Government. In the present case, M/s MPL, an electoral trust incorporated in the previous year 2023-24, received voluntary contributions of 600lakhs. It spent 5lakhs for the purpose of managing its affairs. As per rule 17CA, since M/s MPL, an electoral trust incorporated in the P.Y. 2023-24, it is eligible to spend 5lakhs, being 30lakhs i.e., 5% of total contributions of 600lakhs subject to the limit of 5lakhs. Accordingly, distributable contribution for the P.Y. 2023-24 would be 595lakhs [i.e.,600 lakhs less 5lakhs]. In such a case, M/s MPL can distribute 595lakhs to a registered political party as the same exceeds 570lakhs, being 95% of total contributions received of 600lakhs. Rule 17CA provides that the electoral trust shall not accept contributions, inter alia , from an individual who is not a citizen of India. If M/s MPL received 100Lakhs as contribution from individuals who are not citizen of India, it has violated the conditions mentioned in Rule 17CA. In such case, M/s MPL, an electoral trust, would be eligible for exemption under section 13B in respect of entire contribution. Moreover, the CBDT may withdraw the approval after giving an opportunity of being heard and record the reasons in writing for the withdrawal of approval.