Hansaria: Your lordships had asked what is the manifestly arbitrary. The distinction made between the normal bank transfer from this... you're making an artificial distinction between an honest contributer who is making disclosure to all - to shareholders, public at large...
Hansaria: Political parties play a central role in the democratic set up...they are entitled with various benefits and privileges- the contributions they receive aren't taxable.
Hansaria takes the bench through the scheme of the RP Act and the RBI Act.
Hansaria: One of the arguments is that disclosure is required for candidates and not of political parties.
CJI: Originally, our law didn't speak of political parties at all. The law spoke of a party after tenth schedule was introduced in the Constitution
CJI: Let's see the Rules.
SG: Collectively they may have given to different parties but there was no rule or embargo that they could not give to one party.
CJI: Could an electoral trust say that we're going to give money only to one party?
SG: Yes there was no restriction. Instead of 5 people donating separately, they could donate through trust. Like-minded people could come together and give.
CJI: Was there any restraint on how the electoral trust could contribute? Was there a requirement of disclosure, maintaining accounts etc?
Hansaria: That is there in Rule 17(c)(a) of the Income Tax Rules, changed in 2013.
Hansaria: Through that route, companies can make donations to political parties. Any donor through electoral trust also gets an exemption.
Hansaria: I'll explain the concept of electoral trust. Five companies can make an electoral trust. The company can donate to the trust. It reflects that I've made a donation to the trust- the companies only have to show that. The trust has to make 95% donations to parties.
Hansaria: In 2003 exemptions are given to donors. Now I'm 2009, the scheme of electoral trust is introduced.