Tax tribunal restores exemptions given to Tata Trusts

In a relief to three Tata Group trusts, the Income Tax Appellate Tribunal (ITAT) has upheld the tax exemptions given to them under Section 11 of the Income Tax Act.

The tax department, in revised assessment orders, had sought to cancel the exemption.

The I-T commissioner concerned had issued revised orders for the assessment year 2014-15 based on the additional materials received from Tata Sons’ former chairman Cyrus Mistry, some time after his ouster.

Mistry had alleged that Trustees had exercised a lot of control over the business. Besides, Ratan Tata and R Venkatramanan were taking services and benefits from Tata Sons, the commissioner had noted, as information received from Mistry.

However, the tribunal’s Mumbai bench has now noted that the revision of the orders was a tactic by the tax department to extend the time for scrutiny.

“If receipt of some inputs at the last minute from a third party cannot result in an extension of time for completion of assessment under section 143(3) directly, it cannot be done by way of invoking Section 263 either,” the order said.

Further, the tribunal questioned the veracity of evidence received from Mistry on the grounds that “his action of supplying documents to the income tax department, without any authorisation of the company even though which were apparently obtained by him in the fiduciary capacity, almost immediately after being removed as chairman of the Tata Sons parallels, cannot be said to be influenced by call of a pure conscious and high ground of morality.”

It added that this kind of conduct was unheard of in the civilised corporate world. “The inputs from those engaged in a rivalry with an assessee should be taken with a reasonable degree of circumspection and should not be placed on such a high pedestal so as to relegate all other material facts and accepted past assessment history of the case into insignificance,” the tribunal said.

The order went into detailed allegations of the Trusts’ control of Tata Sons and some Trustees deriving benefits from the parent company but saw no merit in the same.

The tribunal appreciated that under the model of ownership of Tata Sons — a holding company having investments in group companies — majority shareholding is to be collectively in the hands of various charitable institutions. This is in compliance with the articles of association of Tata Sons.