ITAT quashes order to cancel tax exemptions to a few Tata trusts

The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) on Monday quashed the March 2019 revision order of the Income Tax Department that sought to cancel tax exemptions to a few Tata group Trusts — Ratan Tata Trust, JRD Tata Trust and Dorabji Tata Trust. The I-T Department order had alleged that these trusts invested in shares of corporations in violation of tax norms, weren’t eligible for tax exemption as its trustees had substantial curiosity in Tata Sons Ltd — the place the three trusts have 66 per cent stake — and the trustees acquired funds from Tata Sons in contravention of the belief deeds.
The ITAT Bench, comprising its President Justice PP Bhatt and Vice-President Pramod Kumar, handed three orders noting that the I-T revision orders within the case of the three trusts are “devoid of any legally sustainable merits”.
It mentioned not one of the trustees of the trusts had any substantial curiosity in Tata Sons and the funding in Tata Sons by the belief isn’t “for the purpose of investment in shares”, however “undisputedly for the purpose of sharing the fruits of the success, of the Tata Group, for the benefit of the general public at large”. Since the investments by the trusts are within the nature of corpus, it is not going to make them ineligible for I-T exemption, it mentioned.
The ITAT mentioned the funds made by Tata Sons to trustees of those trusts was for his or her roles as its former administrators and staff and has nothing to do with the advantages given to them. “The pension payments to Ratan N Tata and NA Soonawala, for example, have been held to be wholly and exclusively for the purposes of the business of Tata Sons Ltd, and, therefore, the stand that these payments amounted to benefit to the trustees is ex facie incorrect,” it added.

The ITAT additionally mentioned that the I-T revision order is predicated on paperwork supplied by Cyrus Mistry to the Department eight weeks after his elimination from Tata Sons’ board on October 24, 2016, including “the objectivity of the averments” made by Mistry, in such a scenario is “extremely doubtful”.
“(Mistry) was chairman of Tata Sons Ltd since 2013 and its director since 2006, but apparently, knowing everything very well, he keeps quiet all along. Just as he is expelled from the office of the Chairman of Tata Sons, he gathers copies of the documents accessed by him in a fiduciary capacity and hands these documents over to the Income Tax Department. This kind of conduct is unheard of in the civilized 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,” mentioned the order.