I-T Dept Moves HC against ITAT’s Tata Trust Order

The Income Tax Department has moved the Bombay High Court against the Income Tax Appellate tribunal (ITAT) order of March 2021, which upheld the tax-exempt status of six Tata trusts and rejected the claims of the department that the trusts had violated the laws relating to charitable trusts by holding shares of Tata Sons. The ITAT had observed that tax authorities ought to have accepted the voluntary action by the trusts to surrender their registration in March 2015 – the trusts essentially gave up their tax-exempt status – and that the tax department should not have embarked upon fresh registration in October 2019. In six separate pleas filed between March and April. Under section 260 (A) of the Income Tax Act, department has contested the ITAT relief granted to the six Tata trusts. Section 260 (A) empowers the department to file an appeal against the order of the ITAT, a quasi-judicial institution that deals with appeals under direct tax laws. The orders passed by the ITAT are final and an appeal can only if a substantial question of law arises for determination.

“The appeal would have been time-barred on April 30. The I-T Department has contested that ITAT has erred in its judgement and that there is a substantial question of law on charitable trusts holding shares in a company that requires to be determined,” said an official privy to the development, who did not wish to be identified. The trust did not comment on the matter. A senior executive close to Tata trust did not comment on the matter. A senior executive close to Tata Trusts, however, told ET on condition of anonymity, “We had expected the I-T Department to challenge ITAT as a matter of routine and we will fight it all the way to the Supreme Court. All we have to the Supreme Court. All we have done is to maximize the funds used for philanthropy better.” ITAT is the final fact-finding body lender the Income Tax Act, said Ashish Kumar Singh, managing partner, Capstone Legal “The limited grounds on which an appeal can be filed are specific substantial questions of law. The high court cannot interfere unless it is satisfied that there is a substantial question of law involved,” he told ET. “Mere assertion that there is incorrect application of law by ITAT is in self not a substantial question of law.” The six trusts – Jamsetji Tata Trust, RD Tata trust, Tata Education Trust, Tata Social Welfare Trust, Sarvajnic Seva trus and navajbai Ratan Tata Trust – are locked in a bitter tax dispute with the Income Tax Department The department cancelled registration of these trusts on October 31, 2019, by way of an order issued by the office of the principal commissioner of income tax, Mumbai. The dispute dates back to 2013, when the Comptroller & Auditor General (CAG) pointed out that Jamesetji Tata trust had invested ₹3,139 crore in “prohibited modes of investment.” S-ET

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