AAJ TAK

Tax-exempt save of abode case: Profits Tax Division moves HC in opposition to ITAT’s Tata Trusts characterize

Synopsis

The ITAT had noticed that tax authorities ought to personal accepted the voluntary motion by the trusts to resign their registration in March 2015 – the trusts in truth gave up their tax-exempt save of abode – and that the tax division mustn’t personal embarked upon novel proceedings to execute their registration in October 2019.

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The Profits Tax Division has moved the Bombay Excessive Court docket in opposition to the Profits Tax Appellate Tribunal (ITAT) characterize of March 2021, which upheld the tax-exempt save of abode of six Tata trusts and rejected the claims of the division that the trusts had violated the authorized pointers touching on to charitable trusts by conserving shares of Tata Sons.

The ITAT had noticed that tax authorities ought to personal accepted the voluntary motion by the trusts to resign their registration in March 2015 – the trusts in truth gave up their tax-exempt save of abode – and that the tax division mustn’t personal embarked upon novel proceedings to execute their registration in October 2019.

In six separate pleas filed between March and April, below share 260 (A) of the Profits Tax Act, the tax division has contested the ITAT relief granted to the six Tata trusts.

Share 260 (A) empowers the division to file an charm in opposition to the characterize of the ITAT, a quasi-judicial institution that offers with appeals below direct tax authorized pointers.

The orders handed by the ITAT are final and an charm will also be filed with the excessive court docket entirely if a in truth huge ask of law arises for decision.

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Miniature Grounds for Allure


“The charm would personal been time-barred on April 30. The I-T Division has contested that ITAT has erred in its judgement and that there is a in truth huge ask of law on charitable trusts conserving shares in a company that requires to make certain,” said an unswerving conscious of the enchancment, who did no longer are attempting to be identified. The trusts did no longer impart on the topic.

A senior executive conclude to Tata Trusts, nonetheless, told ET on situation of anonymity, “We had anticipated the I-T Division to anguish ITAT as a topic of routine and we are able to fight it the total formulation to the Supreme Court docket. All we have carried out is to maximise the funds former for philanthropy better.”

ITAT is the best fact-finding physique lunder the Profits Tax Act, said Ashish Kumar Singh, managing accomplice, Capstone Exact. “The puny grounds on which an charm will also be filed are particular giant questions of law. The excessive court docket can not interfere unless it is miles contented that there is a in truth huge ask of law enthusiastic,” he told ET. “Mere assertion that there is wrong application of law by ITAT is in itself no longer a in truth huge ask of law.”

The six trusts – Jamsetji Tata Belief, RD Tata Belief, Tata Training Belief, Tata Social Welfare Belief, Sarvajanik Seva Belief and Navajbai Ratan Tata Belief – are locked in a bitter tax dispute with the Profits Tax Division. The division cancelled registration of those trusts on October 31, 2019, by formulation of an characterize issued by the office of the important commissioner of profits tax, Mumbai.

The dispute dates help to 2013, when the Comptroller & Auditor Customary (CAG) identified that Jamsetji Tata Belief and Navajbai Ratan Tata Belief had invested Rs 3,139 crore in “prohibited modes of investment.”

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