Tax Tribunal Upholds The Tax-Exempt Status Of Tata Trusts
Tax tribunal upholds the tax-exempt status of Tata Trusts, pulls up Cyrus Mistry.
The Income Tax Appellate Tribunal (ITAT) has maintained the tax-exempt status of the three trusts (trusts) of the Tata group.
The tribunal rejected the order of the Income Tax Department which called for the termination of the status on the grounds that these trusts hold shares of Tata Sons.
ITAT has also criticized former Tata Sons chairman Cyrus Mistry for providing documents to the Income Tax Department soon after his removal from office.
The Mumbai bench of ITAT President Justice PP Bhatt and Vice President Pramod Kumar passed three separate orders on December 28 to uphold the tax-exempt status of Ratan Tata Trust, JRD Tata Trust, and Dorabji Tata Trust.
ITAT said, “There is no legal basis for the matter that the Income Tax Department had issued a revised order in March 2019 to end the tax-exempt status of these three trusts.”
The trio owns around 66 percent stake in Tata Sons, the holding company of the Tata group.
Commissioner of Income Tax (Exemption) (CIT-E) had alleged that such shareholding is against the income tax laws. Tata Trust rejected CIT-E’s claim and appealed to the tribunal against it.
ITAT said that payments made to trustees of the trust by Tata Sons are based on their roles in the company.
The tribunal said, ‘For example, the pension received by Ratan N Tata and NA Sunawala is fully linked to Tata Sons Limited. It is completely wrong to call it a benefit as a trustee.
No one does what the mystery did
Along with delivering the verdict in favor of the three trusts, ITAT also pulled up Cyrus Mistry.
The tribunal said that a few weeks after Tata Sons was removed from the post of chairman, Mistry provided the documents to the Income Tax Department without the company’s permission.
It cannot be considered ‘conscience and morality’ at all.
ITAT said, “Mistry was the chairman of Tata Sons since 2013 and its director since 2006. Despite knowing everything, he remained silent for so long.
As soon as he was removed from the post of Tata Sons chairman, he incorrectly copied the documents under his control and gave them to the Income Tax Department.
Such work is not seen in the civilized corporate world. Mistry submitted the documents to the Income Tax Department three weeks after he was removed from the post in October 2016.
On the basis of these documents, the department had issued a revised order.
