Tata Trusts on Friday said that it was looking at legal options against a decision by the Principal Commissioner of Income Tax (I-T), Mumbai, to cancel I-T registrations of six Tata Trusts with immediate effect.
While this order of cancellation is a culmination of the decision taken by these six Trusts in 2015 to surrender, of their own volition, their registration under the Income Tax Act, the key issue is when the cancellation should come into effect.
“While the Tax Department’s order has cancelled the trusts’ registration with immediate effect, we believe that as a matter of law and consistent with the Department’s own decision in the past, the cancellation should take effect from 2015, when the registrations were surrendered and the Trusts themselves consented to cancellation,” Tata Trusts said in a statement.
If the registration of the trusts was cancelled with effect from 2015, tax would have been imposed on their earnings then. However, since the registration has been cancelled with immediate effect, the accumulated income will attract tax, said a tax law expert.
“The trusts are examining the order and will take necessary next steps in accordance with the law. The trusts have effective legal options to vindicate their grievances against today’s order both factually and legally,” it added.
Tata Trusts said that the decision to surrender the registration (an option available in law) was taken in the best interests of the trusts and to maximise the resources available to the trusts for their charitable work which is the principal object and focus of the trusts.
On October 31, the I-T Department cancelled the registration of six Tata trusts: Jamsetji Tata Trust, RD Tata Trust, Tata Education Trust, Tata Social Welfare Trust, Sarvajanik Seva Trust and Navajbai Ratan Tata Trust.
This comes even as PTI reported that a Parliamentary Panel report said that the Income-Tax Department should constitute an expert group to look into the violations committed by Tata Trusts afresh.
The Public Accounts Committee headed by senior Congress leader Mallikarjun Kharge also suggested that the Comptroller and Auditor General (CAG) should prepare a report on violations of the Public Charitable Trust and make recommendations to plug the gaps.
“We would also like to clarify that the trusts have not received any demand notice from the Income-Tax Department pursuant to the cancellation order, as has been speculated in certain sections of the media. It is equally surprising how the issue of seizure of the trusts’ assets has been raised today,” Tata Trusts said in the statement.