It's official; political bribery is tax-free. Ask the taxman

The Income Tax Appellate Tribunal is now allowing JMM members of parliament to keep their bribes as tax-free political donations.

R Jagannathan September 13, 2011 18:26:07 IST
It's official; political bribery is tax-free. Ask the taxman

Anna Hazare, here’s your next cause. Your crusade to create a Jan Lokpal to tackle bribery and corruption is far from over, but meanwhile law is moving in the other direction.

Even though the government has taken no view on making low-level bribes legal —as suggested by Chief Economic Advisor Kaushik Basu and supported by NR Narayana Murthy—the tax authorities are busy making big-time bribes legal —through the back-door route.

The Income Tax Appellate Tribunal (ITAT) has ruled that the four Jharkhand Mukti Morcha (JMM) MPs who took bribes from the Congress party under PV Narasimha Rao can not only keep the money, but also needn't pay taxes on it. The bribes were paid to get them to vote with the government in the 1993 confidence motion when the Congress was short of a majority.

Its official political bribery is taxfree Ask the taxman

(File) Former Indian Prime Minister Late P V Narasimha Rao. Reuters

So are political bribes fully legal now?

Not quite. What the ITAT has done is buy the fiction that the money received by JMM members for voting with the government was in the nature of a “political donation.” Since political donations are tax-free (one wonders why politicians need bribes then), the crores paid out by the Congress are thus tax-free.

Neat, that.

This is the third time our law-makers have ended up supporting what appears like a bribe to everyone else. In the first instance, Parliament, which has the right to examine the conduct of its members, didn’t bother about taking the JMM MPs to task.

Contrast this with its attitude in 2005, when another Congress-led government (UPA-1) made a big issue of MPs accepting cash for asking questions in parliament. An ethics committee was quickly formed and 11 MPs were expelled by Parliament in a sudden attack of conscience. Is it any surprise that most of the MPs belonged to the Opposition?

But, clearly, when it is a question of saving a Congress government, ethics don't matter. The bribes paid to JMM members went unpunished by Parliament.

Next, the courts, too, let off the Jharkhand MPs. The Supreme Court in 1998 held that the MPs who cast their votes committed no crime that the legal system can act on. Reason: the conduct of MPs in parliament is judged by the house, and the courts could not get into this area.

Now, for the third time running, the MPs have gotten lucky. This time it is clear that they won’t even pay tax on the bribes they received.

This is the history, for those who came in late. In July 1993, four JMM members of parliament, along with seven members of the Janata Dal, were allegedly paid Rs 8.7 crore as bribes to get them to save Narasimha Rao’s government in the trust vote.

(Coincidentally, 15 years later, the Congress-led UPA-1 government is alleged to have used bribes to secure its trust vote in the cash-for-votes scam. But surprisingly, the sting operation, now seen as something authorised by the BJP to entrap the UPA, has again spared the Congress. While two ex-BJP MPs and Amar Singh are in jail, the main beneficiary of the vote—the UPA—is watching the fun from the sidelines.)

But the JMM tax-free bribe goes one step further. It not only lets the bribe-takers go scot-free, but actually ensures that they are rewarded for it by sparing them tax.

Here’s how the arguments went at ITAT, according to an IANS report. The lawyer for one of the bribe-takers, Simon Marandi, told the judicial member of ITAT, RP Tolani, that political parties form alliances, agree to cooperate and compromise with each both inside and outside parliament.

“JMM and Congress had agreed to cooperate with each other. The Congress party approached the JMM party to help it in the national interest and not to vote against the Narasimha Rao government in parliament,” Marandi’s lawyer told ITAT.

The JMM’s reason for accepting the bribe was painted as truly patriotic. The counsel told ITAT that JMM agreed to not vote against the government as the country was going through a difficult phase, with unrest in Punjab, Jammu and Kashmir and the north-east, not to speak of the economic crisis. This was why they agreed to help the Congress survive the trust vote.

What is difficult to digest is the JMM members’ claim that the “bribe” was paid by the Congress voluntarily for the welfare of the people of Jharkhand.

Wow! Now we know how altruistic political motives were in 1993.

The irony: Narasimha Rao himself was convicted for bribery in 1999. The four JMM MPs—of whom one turned approver—Suraj Mandal, Shibu Soren, Simon Marandi and Shailendra Mahato—are now laughing all the way to the bank. Without a detour to the taxman’s office.

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