Black money vis a vis bad money Bad money belongs to society- must be forfeited without any shelter under any agreement for avoidance of double taxation.

[CA DEV KUMAR KOTHARI]

Money includes any property:

In this write-up ‘money’ includes money in cash or in form of nay property. Thus property acquired out of bad money must be regarded as bad property.

Black money:

General perception is that money on which income-tax has not been paid is black money. However, as per author, if such black money was earned by legal and legitimate means, then it is irregular money and can be regularised by payment of tax due with necessary compensation.

However, money earned by illegitimate means is not good money and should not be allowed to be regularised merely on payment of tax due. Such money must be forfeited for the society.   

Moral for classification of nature of money

In this write up, criterion for classification of money is based on principal of moral and values of human being. Money that is earned following principal of good moral and character can be called good money and money which is not so earned can be described as bad money.

Legitimately earned money:

Money earned by legitimate means and in legitimate ways by working in legitimate manner can be called legitimately earned money that is legitimate money.

Illegitimately earned money:

Money which is not earned by legitimate means, but by adoption of illegitimate ways and manner can be called illegitimately earned money that is illegitimate money.

Regular and irregular money:

Full of good which is earned legitimately may belongs entirely to the earner, if there is no overriding charge on such income or an obligation to share a part of it with others. In that case entire money earned will be regular money of the person who has earned it. Thus entire amount will be his legitimate , regular and good money.

However, a part of good money which is earned legitimately, may belongs to others,  if there is overriding charge  , over riding title on such income or in favour of other persons or authorities. An obligation to share a part of it with others casts an obligation to part with such portion to others.. In that case balance left  after discharge of over riding title or will only be  regular money of the person who has earned it. Thus, entire amount will be his legitimate income but only balance will be his  regular good money.

If the overriding title or obligations are not discharged, then money is not regular money but it is irregular money. On discharge of overriding obligations, with compensation for delay in such discharge the money can be regularised. On payment of such overriding titles and obligations, the balance money will be good money and regular money.

Illegitimately earned money can never be good and regular money:

Money which is earned illegitimately, can never be good money and it can never be regular money. This is because illegitimately earned money is   earned in illegal and immoral manner from other sections of society. Therefore, such money always belong to the society or a segment of society or any other person from the public and it cannot be called proper or regular money of the person who is holding it.

For example, anything acquired by a thief by stealing such thing of other can never be property o income of the thief. When illegitimately money is earned from society, the entire money belongs to the society.

Illegitimately earned money can never be made good and regular money:

 As discussed in previous paragraph illegitimately earned money can never be made good and regular money because such money does not belong to the person who hold it. This is like goods acquired by stealing. Therefore, even payment of overriding titles and obligations such money cannot be regularised.

Illegitimately earned money must be fully forfeited for the society ( by government):

As discussed earlier illegitimately earned money can never be made good and regular money of the person who hold It because it never belongs to him. Therefore, the society has an overriding title over it. If it belongs to a section of society, then money must go back to such section. If it does not belong to a particular section of society then it must go to appropriate government.

Illegitimate money is illegal money so there should be no shelter under

Agreements for avoidance of double taxation with foreign countries:

Illegally earned money must not be allowed shelter under agreements for avoidance of double taxation. Such money does not belong  to the holder, rather it belongs to the society/ country, so it must be fully forfeited.