Industrialist Cyrus Mistry came down heavily on the dubious order of Mumbai Bench of Income Tax Tribunal which later rectified its orders against Tata Trustees for unethical and illegal use of Trusts’ money meant for charity purposes in India. On December 28, in a controversial order Income Tax Appellate Tribunal (ITAT) gave relief to three Tata Trusts caught by Income Tax and the order went on criticising Cyrus Mistry for giving documents to Income tax. Within three days – Dec 31 – the Tribunal itself withdrew its comments against Cyrus Mistry who was not at all a party in the case.
Reacting to Income Tax Tribunal’s withdrawal, Cyrus Mistry’s office said: “We note that the Income Tax Appellate Tribunal has issued a corrigendum on its own, to correct the wild personal allegations made against Mr Mistry that formed part of its order dated 28 December, in proceedings where Mr Mistry was not even a party. The corrigendum states “inadvertent errors” had crept into the order involving Tata Trusts. The reversal of these comments acknowledges that information sent by Mr Mistry to the Deputy Commissioner of Income Tax (DCIT) had been in response to a specific summons, conduct that is expected of any law-abiding person.”
Cyrus Mistry also blasted the trustees of Tata Trust for giving millions of dollars of donation to foreign universities like Harvard.
CAG findings prompted IT to act
After Comptroller and Auditor General’s (CAG) findings in 2013, the Income Tax (IT) department started acting against the three trusts in question — Sir Dorabji Tata Trust, Ratan Tata Trust and JRD Tata Trust — which collectively hold about 66 per cent of shareholdings in Tata Sons, which is controlled by Ratan Tata who preaches ethics. This is a complete violation of the law – of charitable trusts controlling commercial firm Tata Sons and enjoying tax exemptions. IT found more than Rs.3000 crores tax exemption frauds and in 2015, these trusts even surrendered their foreign money-accepting-licenses too. The CAG in 2019 and the Public Accounts Committee (PAC) also found big fraud of charitable trusts controlling commercial companies and claiming tax exemptions worth thousands of crores.
Why donate to Harvard when it can help the needy in India?
Cyrus Mistry also blasted the trustees of Tata Trust for giving millions of dollars of donation to foreign universities like Harvard. In a statement, his office said that this money must go for the welfare of people in India and not foreign operations.
“The Tata Trusts are Public Charitable Trusts and not a family investment firm. The current trustees, who are fiduciaries, have been tasked with the noble goal of improving the lives of millions of Indians through philanthropy. Instead of seeking to blame Mr Mistry at every turn, the trustees of the Tata Trusts must introspect, why they have deviated from this path, leading to greater scrutiny on their operations by the various government bodies?
“The Trustees must introspect why in July 2018, the Public Accounts Committee, a Parliamentary Committee expressed concern that Public Charitable Trusts were being used to run businesses for profit and repeatedly violating provisions of the Income Tax Act. The CAG Report of 2019 records that the corpus funds of Trusts are being utilized to control the business of group companies instead of applying funds for charitable purposes.
“The Trustees should also introspect why they continue to donate hundreds of millions of dollars to rich foreign universities with deep pockets and worse, where one of the trustees has an association, instead of applying to the tax-exempt money for the development of educational institutes in India as mandated by the settlors of the Trusts. As fiduciaries in charge of public money, the trustees have a moral duty to avoid conflicts of interest and discharge their duties in accordance with law and the Trust deeds,” said Cyrus Mistry’s office in a statement blasting Ratan Tata controlled trustees.
How did the Mumbai ITAT goof up so spectacularly?
It is a million-dollar question as to how the Mumbai Bench of Tax Tribunal came out with such a horrible order first and then retracted? Niira Radia tapes tell us how Telecom Tribunal orders were passed in favour of Ratan Tata and Anil Ambani’s telecom companies when corporates gave prepared orders and gave to pliable members in Tribunal in a USB drive in mid-2007. The recent order of Income Tribunal providing relief to Tata Trusts case also shows that things have not changed.
 Tata-Mistry row: Tax tribunal suo moto junks negative remarks on Cyrus Mistry – Dec 31, 2020, Economic Times
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